PLBT

Posted by Cliff Tuttle

The proposed increase in FDIC Insurance to $250,000.00 per account is coming about under the worst circumstances, but just in time. Increased deposits in insured institutions will mean more money for community banks, credit unions and thrifts to lend for home loans, small business loans and consumer loans. While the Senate enacted it last night as a temporary measure, we predict that the House will adopt the increase in deposit insurance and it will never be permitted to lapse.

CLT

Posted by Cliff Tuttle

With the Vice Presidential Debate coming up, there has been speculation in certain quarters that Governor Sarah Palin will not be able to hold up her end of the debate. Why? Most of us didn’t know the Bush Doctrine from the Defenestration of Prague before Charles Gibson launched that torpedo. Most of us still don’t.

Amid all this speculation, CBS has been accused of leaking one segment of a yet-to-be-broadcast interview in which the Republican Vice Presidential candidate was unable to name any US Supreme Court case except Roe v. Wade.

What is going on here? Does the fact that Palin, a non-lawyer, might someday be President and thus nominating members of the judiciary, justify this kind of vetting? And is it meaningful? [Quick -- name a US Supreme Court case!] Perhaps her rival, Senator Biden, who might someday appoint a future Secretary of the Interior, should also be given a quiz on Alaskan wildlife and natural resources. Of course, that won’t happen. It wouldn’t be as much fun as picking on little Sarah.

However, in the spirit of the game, I have put together a few unfair questions about the Supreme Court that might be used to try to embarrass anyone.

Q: What is the issue raised in Locke v. Karass, scheduled to be the second of three cases to be heard by the United States Supreme Court on October 6?

A: This case addresses whether a public-sector union may include litigation costs, funded through pooling arrangements with other unions, in the service fee it charges non-members. Click here for more on this fascinating subject.

Q: In the case of Clevenger v. Cutlar, currently in the United States District Court for the District of Columbia, jurisdiction was asserted under Bivens v. Six Unknown Federal Narcotics Agents, 403 U.S. 388 (1971). What is a Bivens action?

A: In this case the United States Supreme Court held that an individual has an implied cause of action when his/her Fourth Amendment freedom from unreasonable search and seizure is violated by federal agents. If you don’t believe it, or maybe you do, click here.

Q: What is the holding in the Landmark Supreme Court Case of Marbury v. Madison and why is it important?

A: Marbury v. Madison held Section 13 of the Judiciary Act of 1789 unconstitutional, since Congress cannot enlarge the original jurisdiction of the Supreme Court beyond that permitted by the Constitution. This case is credited with establishing the principle of judicial review of Acts of Congress. To improve your education on Constitutional Law, click here.

Q: Some Congressional critics of the Emergency Economic Stabilization Act of 2008 expressed concern that that the Bush proposal would represent an unconstitutional delegation of spending powers granted to Congress by Article I of the US Constitution. What is Article I about?

A: Too long — click here.

And one more:

Q: How many types of Polar Bears are there in Alaska?

A: Look it up. Click here.

CLT

Posted by Cliff Tuttle

What happens when a landlord gives back a tenant’s security deposit and subsequently sues for damages? Thirty days have passed and no list of damages was given by the landlord to the tenant. Does this failure to provide a list of damages bar recovery pursuant to Section 512(b) of the Pennsylvania Landlord and Tenant Act of 1951?

Section 512(b) states:

“(b) Any landlord who fails to provide a written list within 30 days as required in subsection (a), above, shall forfeit all rights to withhold any portion of sums held in escrow, including any unpaid interest thereon, or to bring suit against the tenant for damages to the leasehold premises.”

Seems pretty clear, doesn’t it? No list – no suit!

Read on.

These circumstances arose in Allegheny County Common Pleas Court, in the case of Bonfield v. Cassler, 16 D&C. 3d 716 (1980), decided by Judge R. Stanton Wettick. Judge Wettick held that the failure of the landlord to give notice under these facts did not preclude recovery.

Judge Wettick reasoned that the 30 day list requirement was not intended by the Legislature to apply to a landlord who had already given back the security deposit. Reading Section 512 (a) (b) and (c) together, he stated, indicated that the intention of the statute was to assure that tenants either received a list of damages or the security deposit in 30 days. The prohibition against suit, read in the context of the entire section only made sense when the landlord was keeping the security deposit. Now read the entire section:

“(a) Every landlord shall within 30 days of termination of a lease or upon surrender and acceptance of the leasehold premises, whichever first occurs, provide a tenant with a written list of any damages to the leasehold premises for which the landlord claims the tenant is liable. Delivery of the list shall be accompanied by payment of the difference between any sum deposited in escrow, including any unpaid interest thereon, for the payment of damages to the leasehold premises and the actual amount of damages to the leasehold premises caused by the tenant. Nothing in this section shall preclude the landlord from refusing to return the escrow fund, including any unpaid interest thereon, for non-payment of rent or for the breach of any other condition in the lease by the tenant.

“(b) Any landlord who fails to provide a written list within 30 days as required in subsection (a), above, shall forfeit all rights to withhold any portion of sums held in escrow, including any unpaid interest thereon, or to bring suit against the tenant for damages to the leasehold premises.

“(c) If the landlord fails to pay the tenant the difference between the sum deposited, including any unpaid interest thereon, and the actual damages to the leasehold premises caused by the tenant within 30 days after termination of the lease or surrender and acceptance of the leasehold premises, the landlord shall be liable in assumpsit to double the amount by which the sum deposited in escrow, including any unpaid interest thereon, exceeds the actual damages to the leasehold premises caused by the tenant as determined by any court of record or court not of record having jurisdiction in civil actions at law. The burden of proof of actual damages caused by the tenant to the leasehold premises shall be on the landlord.”

Judge Wettick observed that the statute made available a penalty against the landlord (double net damages) when the landlord keeps the money for damages without providing the list. But if the security deposit is relinquished in the thirty days, the purpose of the statute has been fulfilled. So, if the landlord delivers either the deposit or the list, there is no penalty.

Okay, but what happens if the security deposit is $100.00 and the damages are $1,000.00? Once again, the landlord fails to give written notice of damages within 30 days. But he also keeps the deposit. Does the holding in Bonfield v. Cassler apply here?

Yes, Judge Wettick decided this case, too. See Taylor v. Fitzhenry, 48 Pa. D&C. 3d619 (1987). His analysis is a bit complex, but no one can state it better. Moreover, any lawyer venturing into Judge Wettick’s courtroom to argue about security deposits is in serious danger if he or she has not mastered Taylor v. Fitzhenry. The opinion states:

“We recognize that the language of subsection 512(b) forfeiting the right of the landlord who fails to provide a written list “to bring suit against the tenant for damages to the leasehold premises” suggests that the landlord who fails to provide a written list may not sue the tenant for any damages to the leasehold premises. But the language of subsection 512(c) making the landlord liable for ‘double the amount by which the sum deposited in escrow . . . exceeds the actual damages to the leasehold premises’ suggests that the landlord who retains the security deposit and fails to provide a written list may fully defeat the claim of a tenant for the return of the security deposit by proving actual damages to the leasehold premises in an amount equal to or in excess of the security deposit. Such a result would provide very little incentive to a landlord to furnish a written list of damages to the tenant because the landlord who fails to do so would be treated in almost the same manner as the landlord who provides the written list. Both classes of landlords could defeat a claim for the return of the security deposit by showing that the tenant caused damages in an amount at least equal to the amount of the security deposit. Both classes of landlords would be liable for double the amount of proceeds withheld in excess of actual damages to the rental premises. Under this construction of section 512, the only difference between these classes of landlords would be that the landlord who provides the written list may sue for damages to the leasehold premises in excess of the amount of the security deposit while the landlord who fails to provide the written list cannot do so.

Landlords obtain security deposits because they do not expect to be able to collect a judgment from a tenant after the premises are vacated, so we would be giving very little incentive to the landlord who keeps the security deposit to provide a written list of damages to the tenant if the only penalty for the failure to provide the written list is forfeiture of a right to sue the tenant. As we discussed in Bonifield v. Cassler, supra, section 512 was intended to protect tenants by requiring landlords who keep security deposits as payment for damage to the leasehold premises to provide written lists of damages. This can be achieved only by construing section 512 in a manner that provides a remedy to the tenant whenever a landlord who keeps any portion of the security deposit for this purpose fails to furnish a written list of damages.

We can accomplish this result if we construe subsections 512(b) and 512(c) in a manner which gives primary emphasis to the portion of subsection 512(b) which states that the landlord who fails to provide the list ’shall forfeit all rights to withhold any portion of sums held in escrow.’ If this portion of subsection 512(b) is intended to provide for the return of the full amount of the security deposit whenever the landlord fails to provide the list, then the subsequent portion of subsection 512(b) forfeiting the landlord’s right ‘to bring suit against the tenant for damages to the leasehold premises’ is intended only to prevent the landlord from raising a claim for damages to the leasehold premises for purposes of defeating the tenant’s claim for the return of the security deposit. If we construe subsection 512(b) in this fashion, we can then construe subsection 512(c) as permitting evidence of damages to the premises to be introduced only for purposes of barring the claim for double recovery. Illustration: The landlord did not provide a list of damages and withheld a $ 1,000 security deposit as payment for damages to the premises. The tenant sues for double the amount of the security deposit under subsection 512(c). The landlord shows actual damages to the premises of $ 900. The tenant is entitled to keep the full amount of the security deposit because of the landlord’s failure to provide a list of damages ($ 1,000) plus a partial double recovery in the amount of the security deposit ($ 1,000) less actual damages ($ 900) for a total recovery of $ 1,100.

Under this construction of subsections 512(b) and 512(c), a landlord who keeps the security deposit and fails to provide a written list may sue for damages to the leasehold premises but may not defeat a tenant’s counterclaim for the amount of the security deposit by showing damages to the premises. Illustration: The landlord did not provide a list of damages and withheld a $ 1,000 security deposit as payment for damages to the premises. The landlord, who continues to retain the security deposit, sues for damages to the premises in the amount of $ 10,000. The tenant counterclaims for double the amount of the security deposit. If the landlord proves actual damages to the premises of $ 10,000, the landlord will recover this full amount on his or her claim for damages to the premises. The tenant will recover $ 1,000 on his or her claim for the return of the security deposit because the landlord kept the security deposit and failed to provide a list of damages.”However, the tenant’s claim for double recovery will be defeated because the actual damages exceed the amount of the security deposit. Consequently, the landlord’s total recovery will be $ 9,000.

This construction of section 512 gives meaning to the forfeiture provision of subsection 512(b). It gives incentive to the landlord to provide a written list of damages in every case. It provides a uniform remedy for failure to provide a written list of damages of the amount of the security deposit that was withheld for payment of damages to the premises.

Finally, this construction of section 512 avoids a result which is unreasonable and inconsistent with the legislative purposes. The legislature could not have intended to permit a tenant who destroyed a $ 100,000 premise to defeat a damage claim by showing that the landlord had retained a $ 100 security deposit and had failed to provide a written list of damages. See Secretary of Revenue v. John’s Vending Corp., 453 Pa. 488, 309 A.2d 358 (1973), where the court stated, ‘In order to avoid an absurd and harsh result, a court may look beyond the strict letter of the law to interpret a statute according to its reason and spirit and accomplish the object intended by the legislature.’ The purpose of this legislation was not to reward those tenants who caused the most destruction to the premises. To the contrary, the provisions of subsection 512(c) barring double recovery to the extent that actual damages were sustained show that the legislature intended to give greater protection to the tenant who did not damage the premises.”

In my example above, where the security deposit was $100.00 and the damages were $1,000.00, Judge Wettick would award the tenant the security deposit of $100.00 (because the list of damages was not given) but no double damages. The landlord would also be able to counterclaim for $1,000.00. So the net recovery by the landlord is $900.00. This penalizes the landlord for not providing the list, but still permits a recovery of actual damages.

Are these two cases the law in Pennsylvania? Probably not — at least not yet. To my knowledge, Taylor v. Fitzhenry has not been cited in any published opinion. I doubt whether Magisterial District Justices, who hear the overwhelming majority of such cases, are inclined to interprete Section 512 (b) any way but literally. That having been said, if you are representing a landlord, one or both of these cases, with the finely tuned arguments of one of the best judges on the bench, may help keep you from being shut out from recovering damages.

CLT

Posted by Cliff Tuttle

Here is a concise Q&A on the current economic upheaval as guest posted on the Freakonomics blog by two experts from the University of Chicago School of Economics. Required reading during a week when the words “since the Great Depression” are starting to appear everywhere. Click here.

CLT

Posted by Cliff Tuttle

Once again, the Wall Street Journal Law Blog featured a case in the United States District Court for the Western District of Pennsylvania. District Judge Terrance McVerry held that cell phone records sought by police for the purpose of establishing the whereabouts of a suspect require a warrant. Here is the WSJLB story.

Judge McVerry, as many Pittsburghers undoubtedly remember, was, during the late 60’s and early seventies, himself a prosecutor and thus no stranger to the point of view of law enforcement agencies. He then served the South Hills area for many years in the Pennsylvania House of Representatives, held a seat on the Allegheny County Court of Common Pleas and was the Allegheny County Solicitor.

According to the Washington Post article embedded in the WSJ Post, this particular question has not been decided and the United States Attorney, Mary Beth Buchanan is considering an appeal to the Third Circuit.

CLT

Posted by Cliff Tuttle

September is hereby declared to be Landlord-Tenant Month on Pittsburgh Legal Back Talk. Check your knowledge of basic LL/TT law in this little True and False Quiz. Then, watch this blog every day for articles about the topics covered by this Quiz and more. Make a record of your answers to these ten questions before checking the Official Answers.

1. Matters arising under the Landlord and Tenant Act of 1951 are under the jurisdiction of the Magisterial District Judge unless the amount claimed is over $8,000.00.
T or F

2. A plaintiff before the Magisterial District Judge may waive the portion of his claim over $8,000.00 to retain jurisdiction with the Magisterial District Judge.
T or F

3. If the defendant appeals the final order of the Magisterial District Judge, any waiver of the claim over $8,000.00 is automatically wiped out.
T or F

4. Wages, salaries and commissions of individuals in the hands of an employer may be attached or levied for unpaid rent to satisfy an unpaid judgment for rent.
T or F

5. Military personnel, including members of the Pennsylvania National Guard, have a right to early termination of a residential lease if they receive change of station orders for a period of over three months.
T or F

6. A landlord may require up to two months rent as a security deposit during the first year of a lease, but only one month security deposit in the second year.
T or F

7. All security deposits over $100.00 must be deposited in an insured bank account.
T or F

8. If a landlord fails to provide a written list of damages to a tenant within 30 days following termination of the lease or surrender of the premises, the landlord loses his right to sue for damages.
T or F

9. If the landlord does not pay the tenant the difference between the damages to the premises and the security deposit within 30 days after termination of the lease or surrender of the premises, the landlord will be liable to the tenant for double the difference.
T or F

10. A mobile home park owner must refund the installation or removal cost to the tenant of a mobile home space at the time the space is recovered or be liable to the tenant for treble their amount plus treasonable attorneys fees.
T or F

The Official Answers can be found in the first entry in Comments. While you are there, leave a comment to disagree with an answer, ask a question or suggest a Landlord-Tenant topic you would like to see discussed this month.

CLT

Posted by Cliff Tuttle

The following item appeared this morning in the New York Times on line:

“INTERNAL G.P.S. First, tracking devices were installed in cars so they could be found if stolen. Then, pet owners began putting chips in their dogs and cats. Now it’s human beings who are being “chipped.” An epidemic of kidnappings has led wealthy and even middle-class Mexicans to pay $4,000 to have tiny transmitters implanted that can pinpoint their location by satellite.

Chipping people has already begun in the United States, where VeriChip has inserted chips in 200 Alzheimer’s patients for a pilot program. Future Big Brother applications are not hard to imagine, like chipping prisoners, the mentally ill and teenagers who lie about where they’re really spending Friday night.”

Of course, house arrest is enforced by the wearing of bracelets that perform the same purpose. These prisoners consent voluntarily, just for the privilege of serving the period of incarceration at home. Lawyers are aware that it is possible to obtain the “voluntary” agreement of people to rather onerous contract terms when the alternative is worse. It is not hard to imagine many situations where people will agree to be chipped in exchange for something and thus, not strictly against their will. That teenager, for example, can either stay home or be chipped — his choice.

Even when voluntary, it just doesn’t seem right, does it? Should we permit people to voluntarily consent to such an invasion of their body? Who should be permitted to relinquish so much privacy? Would you agree to be chipped in exchange for something you really need? Like a job? Like a life-saving operation?

Back Talk is requested. Leave a comment.

CLT

Posted by Cliff Tuttle

On August 8, PLBT posted a story about a study which concludes that 61% of plaintiffs who passed up a settlement offer and went to trial ended up getting less money than if they had taken the offer. Although defendants made the wrong decision far less often, when they did, the costs were much higher.

One of the study authors suggested that one explanation lies in the fact that taking a risk by turning down the offer and going to trial costs the contingent fee plaintiff nothing, while the defendant usually pays more counsel fees and takes more risk by going to trial. Plaintiffs would be more willing to take a risk when faced with a choice between small gain and potential large gain than would the defendant faced with the choice of small loss and risk of large loss.

A comment to the PLBT post suggested that one answer might be found in a book released earlier this year called “Predictably Irrational: the Hidden Forces that Shape our Decisions” by Dan Ariely, a professor at MIT’s Sloan School of Management. Ariely’s work is part of a growing trend to apply social science methods to the study of economic behavior.

Ariely does not deal directly with the issue of why plaintiffs appear to want to try cases that should be settled, but he does discuss the power of zero cost in biasing economic decision making. For example, Amazon.com sells a lot of extra books by offering free shipping for multiple orders. The cost of the extra books usually exceeds the value of the shipping and there is evidence that the extras wouldn’t even be sold. Ariely reports that when Amazon began this practice it had a big increase in sales. However, in France, where shipping had been offered at the price of one Franc, sales remained the same. When the one Franc offer was replaced with the multi-book free shipping offer, sales in France jumped to match increases in other parts of the world. In reality, one Franc for one book was a better deal, but the “power of free” was too strong. Ariely says:

“What is it about zero cost that we find so irresistible? Why does free! make us so happy? After all, free! can lead us into trouble: things that we would never consider purchasing become incredibly appealing as soon as they are free! For instance, have you ever gathered up free pencils, key chains, and note pads at a conference, even though you’d have to carry them home and would only throw most of them away? Have you ever stood in line for a very long time (too long), just to get a free cone of Ben and Jerry’s ice cream? Or have you bought two of a product that you wouldn’t have chosen in the first place, just to get the third one for free?
What is it about free! that’s so enticing? Why do we have an irrational urge to jump for a free! item, even when it’s not what we really want?
I believe the answer is this. Most transactions have an upside and a downside, but when something is free! we forget the downside. Free! gives us such an emotional charge
that we perceive what is being offered as immensely more valuable than it really is. Why? I think it’s because humans are intrinsically afraid of loss. The real allure of free! is tied to this fear. There’s no visible possibility of loss when we choose a free! item (it’s free). But suppose we choose the item that’s not free. Uh- oh, now there’s a risk of having made a poor decision—the possibility of a loss. And so, given the choice, we go for what is free.”

Defense counsel in personal injury suits have long argued that many cases would never be filed if the plaintiffs had to pay the fees. Perhaps the same observation applies to pretrial settlement. Ariely cites experimental evidence that we all tend to overvalue what we own, which would presumably include a cause of action.

How do you overcome that bias? Ariely suggests getting feedback from neutral parties.

Going beyond the covers of the book let me suggest a thought. When the arbitration limit was raised, many cases that would have gone to trial before a judge began to be argued before arbitrators. After the arbitrators decision, many of those cases settled. Many others were dropped and never appealed. Although reasons vary, in some cases the losing party accepts the arbitrator’s decision as the probable outcome on appeal and simply quits. This was one of the reasons for the institution or pre-trial arbitration in our U.S. District Court. Also, courts which hold mini-trials as a prelude to big cases, like medical malpractice suits, report a high rate of settlement after the verdict of the mock jurors is heard.

If you wish to read a comprehensive review of “Predictably Irrational, click here.

Posted by Cliff Tuttle

Two days ago my wife Marylyn traded email with our friend Robin, a professional dog groomer in Denham Springs, LA, a short distance from Baton Rouge. She was loading the crated dogs at the Lucky Puppy Rescue for the evacuation from the path of Hurricane Gustav.

We have a warm place in our hearts for Robin, her family and the Lucky Puppy Rescue. We adopted one of our two dogs, now called Froggy, then called Duke, through this Shelter a little over a year ago. Marylyn had been looking for a rescue dog (all of our dogs over 35 years have been rescued) and found a picture of Duke posted on the internet.

No, our dog was not rescued from Katrina. But had it not been for the kindness and devotion of Robin and her family, we would have never been able to adopt a wonderful dog. Now, she is about the business of saving other dogs in every meaning of the word. We are grateful that there are deeply devoted people in the world like Robin. We hope and pray that Robin, her family and every one of their dogs, are safe and dry tonight and that they will soon be safe at home.

If you want to see some very lucky pups, click here.

CLT

Posted by Cliff Tuttle

I just completed the quadrennial renewal of my Notary Commission. I’ve been doing so since the Reagan Administration and it has always been a tedious and expensive proposition. Notaries are paid a pittance so that few do it for the notary fees alone. It is the sine qua non of real estate closings, motor vehicle transfers and a few other businesses that require a steady flow of notarized documents.

About 20 years ago, complaints were heard that notaries were charging more than the lawful $3.00 per punch. The Department of State decreed that every notary must post a fee schedule in the waiting room or conference room of his or her office in full view of the customer. At that time, I and many others stopped charging notary fees.

Despite the poor pay, the barriers to joining the select fraternity/sorority of notaries are growing higher all of the time. Unless you are an old-timer like me, you’ll have to take (and pay for) a prescribed number of professional education courses every four years with a test at the end. Then you must obtain the endorsement of your State Senator (don’t worry, he endorses everyone) on a form, send it to Harrisburg with $40.00 and wait a couple of months. Eventually, you receive a form to take to a bonding company where you pay $75.00.

In Allegheny County, you record your bond at the Department of Real Estate (formerly Recorder of Deeds) and pay another fee. Until this August 25, you were required to run around to the former Prothonotary (now Department of Court Records, Civil Division) and the former Clerk of Courts (now Department of Court Records, Criminal Division) to sign cards and pay fees. It was like trick-or-treat, except that the trick was on you and they got the treat.

From this August 25 onward, the new or renewing notary need only visit the Department of Real Estate. I guess this is part of the benefit for consolidation we were promised when these elected Row Offices were eliminated. I renewed on August 24. I will have to wait four years to find out if the fees are any cheaper under the new system.

What is the point of renewing a notary commission? Do we actually forget how to notarize and need retraining? Is there a danger that someone will start using our equipment? The answer is: None of the above. Being a notary is so easy that the essentials of most notorial duties (except perhaps motor vehicles and a few specialties) can be learned in 15 minutes. The real purpose of the quadrennial renewal process is to collect fees. Yes, they are user fees, but did you ever consider that the fee is for the purpose of processing the renewal and if there were no renewals, there would be no need for fees?

Notaries with no special expertise are in demand for in-home real estate closings. They work cheaper than lawyers and other real estate professionals (both of whom were also notaries) who used to do the majority of closings. The notary is instructed to get all required signatures, notarize when required, make copies and get the package returned. Under no circumstances is the notary to explain the documents. After all, you are a mere notary. Just tell them to sign.

Yes, it is the sad truth that notaries get no respect. They are charged big time for the privilege of being a notary and that is not going to change. They are ordered around by the Commonwealth, their bosses and sometimes even the customers. There is a Pennsylvania Association of Notaries, but this organization is actually a service company, conducting the continuing education classes and collecting fees from notaries for providing them with newsletters, special information and forms. There is no chance that notaries will ever stop playing the doormat unless we take it upon ourselves to cast off our chains.

So, fellow notaries, do you think it makes more sense to have our commissions renew, say, every ten years? If so, let your State Senators and Representatives know about it. Did I mention that there are 84,000 of us? See the article in Wikipedia.