Taking the Bullet

No. 890

It seems that every time there is a mass murder, like the one that occurred in Aurora, there are unpredictable acts of heroism. Three young men died in that theater, each shielding their girlfriends from a shower of bullets. We heard similar stories occurring during the attempted assassination of Gabby Giffords, the Virginia Tech shootings and especially on September 11. And that is only the beginning.

Too bad that we have to learn about the heroes who are living among us in this way. Yet it is comforting at times like these to know that ordinary people will do great things in the midst of tragedy.

God bless them all.

CLT

Clinton for Vice President?

No. 889

The internet is jumping with rumors of a Vice-Presidential switch for Hillary Clinton. The Washington Post says this talk will not die. Her poll numbers are high and she would definitely bring something to the campaign.

If the President were to change running mates in 2012, it would be a loud statement that his re-election was in serious trouble — which it isn’t. However there are plenty of good reasons why Hillary Clinton might want to be Vice President.

1. As Secretary of State she is very busy. As Vice President she can have as much or as little to do in the government as she pleases. That would enable her to spend most of her time putting the Clinton political organization back together for 2016 and campaigning for Democratic candidates around the country.

2. No former Secretary of State has won the Presidency since James Buchanan. Many former Vice Presidents have won, including sitting Vice Presidents. The last was George H W Bush.

3. Regardless of what she says, she still wants to be President. That passion, once acquired, does not easily go away. Moreover, she undoubtedly does not view other potential Presidential contenders in both parties to be in her class.

4. Seven Vice Presidents have succeeded to the Presidency in mid-term, three times in the Nineteenth and four times in the Twentieth Century. In the Nineteenth Century, there was John Tyler, Andrew Johnson and Chester Arthur. In the Twentieth, Theodore Roosevelt, Harry Truman, Lyndon Johnson and Gerald Ford. The odds aren’t that bad — almost 1 in 6.

5. She is married to Bill Clinton. As a team, they are without precedent in American Politics. The Clintons may have come up short in 2008, but they learn from experience.

CLT

Category: 2012

Lien Priority Under Mechanics Lien Law

No. 888

Under the Mechanics Lien statute before it was amended, construction lenders had to take special measures to prevent contractors from obtaining a lien priority by starting excavation before the mortgage was recorded. The Mechanics Lien Law of 2006, which became effective on January 1, 2007 changed that — or did it?

In Metro Bank v. Kessler & Ricker, 2012 Pa. Super 100, the Kesslers hired a builder (Ricker) to construct their dream house with financing from Metro Bank. The excavation occurred in 2006, prior to the recording of the open end mortgage in 2007.

A mortgage foreclosure was commenced after Kesslers failed to pay Metro Bank, followed by a mechanics lien filing by Ricker. However, with the sheriff sale yet to occur, both parties recognized that they had a lien priority question on their hands. So, they agreed to submit the issue to the common pleas court.

The common pleas judge entered a order holding that the mechanics lien had priority over the mortgage since the mechanics lien came into existence before the effective date of the amended statute. The Bank appealed.

A very interesting discussion of whether the appeal was interlocutory appears in the main opinion and carries over into a spirited dissent by Senior Judge Strassburger. The majority held that the matter on appeal was in the nature of a declaratory judgment action, even though it arose during the course of a mortgage foreclosure. A declaratory judgment is final and thus appealable. In a mortgage foreclosure, liens are not fixed until the sheriff’s return is filed after the sheriff sale. Thus, according to Strassburger (and I’ll wager he’s right) the court’s decision is interlocutory (not final) and can’t be appealed. Say’s Strassburger: If you call a cat a dog, its still a cat.

Nevertheless, the majority declared the cat a declaratory judgment, accepted the appeal, and we move on.

Although, under the amended law, a mechanics lien still attains lien status when construction begins, usually through excavation, there are exceptions.

“(c) Any lien obtained under this act by a contractor or subcontractor shall be subordinate to the following:

(1) A purchase money mortgage as defined in 42 Pa.C.S. § 8141(1) (relating to time from which liens have priority).

(2) An open-end mortgage as defined in 42 Pa.C.S. § 8143(f) (relating to open-end mortgages), the proceeds of which are used to pay all or part of the cost of completing erection, construction, alteration or repair of the mortgaged premises secured by the open-end mortgage.”

49 Pa.C.S.A. § 1508, amended June 29, 2006, P.L. 210, No. 52, § 3, effective January 1, 2007

In this case, Metro had filed an open-ended mortgage and the funds were apparently used in part to pay construction costs.The majority of the panel had no problem applying the 2007 amendments, stating:

“Section 1508, as amended, states that, “[a]ny lien obtained under this act by a contractor or subcontractor shall be subordinate to…[a]n openend mortgage…” 49 Pa.C.S.A. § 1508 (emphasis added). The use of the term “any” is unequivocal, meaning that the amendment applies to all liens obtained after the effective date, regardless of whether the work on the contract secured by the lien commenced prior to the effective date of the amendment. While Ricker and the trial court rely upon 1 Pa.C.S.A. § 1926 for the principle that statutes are not to apply retroactively unless clearly intended by the Legislature, we believe that the plain language of the amended Section 1508 makes the Legislature’s intent clear.”

Thus, the open-end mortgage has priority, right?

Not so fast.

Ricker argues that, even if the exception applies generally, the mortgage in this case does not qualify for the exception.

It seems that the proceeds of the open-end mortgage were used for purposes other than construction costs. After scrutinizing the plain language of the statute, it concluded that the mortgage indeed did not qualify for the exception. This issue was closely argued on both sides and if you want to get into the subject in depth, read the opinion, linked above.

AS an additional issue, the Mechanics Lien Claim ruled by Ricker was examined and while not in strict compliance, the court held that it was in substantial compliance. Again, read the opinion for details,

Practical Impact: Don’t permit the proceeds of a construction loan to be used for closing costs. That’s how it was done before competition lead to relaxation of the rules. Now, if a lender wants to assure that its lien position is secure, it had better cleave faithfully to the traditional practice that construction loan proceeds must be used ONLY for construction draws.

And, incidentally, the draws must also be mandatory. That means that under the mortgage terms, once the builder completes the specified work, payment is mandatory, But that’s another story.

CLT

Category: Real Estate
Tags: mechanics lien > open-end mortgage

Unexpected Consequences Department: Negative Home Equity is Boosting Prices.

No. 887

Although there is a growing surplus of owners that would like to sell their houses, many cannot because there is negative equity. In other words, the mortgage balance is higher than the current fair market value. While some are forced to seek short sales, that guarantees that the seller will walk away with no cash. As a result, a large number of potential sellers simply stay out of the market. And that in turn, boosts prices. If there had been more sellers, competition would drive prices down. Here’s a report that discusses this trend.

This phenomenon has the same effect on assessments. Properties under water stay off the market. This deprives non-selling owners of comparable sales at true market value — lower than the mortgage in many cases. Short sales and sales by banks are often culled by assessors as not being representative of the market. Sometimes they are wrong — those low values ARE the market.

CLT

Category: Property Assessments, Real Estate, Reassessment 2012
Tags: assessment appeals > real estate > Short sales

Stephen M. Covey, Leader.

No. 886

Stephen M. Covey died today at 89.

He taught us many things. Not the least of which was to live as much of our life as possible in Quadrant II — Important but not Urgent.

Too often we rarely get out of Quadrant I, the Urgent. We thought we were simply busy. He explained that we were dodging bullets. The Urgent, we learned, was often important only because we had not been paying attention when a situation had not become an emergency.

Thank you, Mr. Covey, for these and so many more insights.

CLT

Category: News Commentary, Personal Productivity
Tags: Seven Habits of Highly Successful People

PRCP 4009.1 Amended to Address Format of Electronic Documents.

No 885

An Amendment to Rule of Civil Procedure 4009.1 which contains clarification concerning discovery of electronic documents, will go into effect on August 1.

Here is the text of the amendment, with deletions from the existing Rule in bold with brackets like [this] and the additions in bold and underlined. The new provision states that a party requesting electronic documentation may request the format and the opposing party may object. Here is the new Rule 4009.1:

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Rule 4009.1. Production of Documents and Things. General Provisions
(a) Any party may serve a request upon a party pursuant to Rules 4009.11 and 4009.12 or a subpoena upon a person not a party pursuant to Rules 4009.21 through 4009.27 to produce and permit the requesting party, or someone acting on the party’s behalf, to inspect and copy any designated documents (including writings, drawings, graphs, charts, photographs, [electronically created data, and other compilations of data from which information can be obtained, translated, if necessary, by the respondent party or person upon whom the request or subpoena is served through detection or recovery devices into reasonably usable form] and electronically stored information), or to inspect, copy, test or sample any tangible things or electronically stored information, which constitute or contain matters within the scope of Rules 4003.1 through 4003.6 inclusive and which are in the possession, custody or control of the party or person upon whom the request or subpoena is served[;], and may do so one or more times.

(b) A party requesting electronically stored information may specify the format in which it is to be produced and a responding party or person not a party may object. If no format is specified by the requesting party, electronically stored information may be produced in the form in which it is ordinarily maintained or in a reasonably usable form.

Category: Pittsburgh Legal Back Talk

Accusations Against Justice Baldwin While Acting as GC at Penn State Should Not Be Taken As Fact.

No. 884

Photo: Pittsburgh Post-Gazette

In response to the allegations made by special investigator Louis Freeh, Charles DeMonaco, counsel to former Penn State General Counsel, Cynthia Baldwin, issued the statement reprinted below. An article appearing in the Sunday Pittsburgh Post-Gazette focused on the allegations in the Freeh report, including confusion over whether she was representing the University (which she was) or the individual officers of Penn State.

Here is the statement by DeMonaco:

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“In light of the ongoing legal proceedings, it would be inappropriate to comment publicly on specific issues referenced in the Freeh Report. However, Cynthia A. Baldwin, as the Vice President and General Counsel of the Pennsylvania State University, along with the University’s Office of General Counsel, cooperated fully with the Special Investigative Counsel led by Judge Freeh.

You should be aware that much of the information in the Freeh Report is factually inaccurate as it relates to Ms. Baldwin, and no one should draw conclusions until all the facts are known. As Judge Freeh made clear in his Report, no one, not even his client, the University, had an advance copy of the Report so that inaccuracies could be corrected. Ms. Baldwin was never given the opportunity to review the content of the interviews that she provided to Judge Freeh’s agents so that any mistakes in note-taking or understanding could be corrected.

My client Cynthia Baldwin, as the General Counsel of the University, has chosen to maintain confidentiality and to uphold her ethical obligations to her client, the University, and to her profession,
and no one should use her silence to speculate and make statements that serve to ruin her long and stellar legal reputation as a practicing lawyer, an academic, a Common Pleas Court Judge, a Supreme Court Justice in the Commonwealth of Pennsylvania, and as General Counsel for The Pennsylvania State University. Those who know Cynthia Baldwin know the stories that have been written about her thus far are inaccurate.

Cynthia Baldwin at all times fulfilled her obligations to the University and its agents. Penn State’s website should serve as guidance as to the proper role of Penn State’s General Counsel. It states as follows: “The Office of General Counsel provides legal advice and representation to the Board of Trustees, the President and other administrators in their capacity as agents conducting university business. The attorneys in the office do not provide legal services to faculty, staff or students in their personal matters.” Cynthia Baldwin’s actions were consistent with this policy.

The Attorney General asked Cynthia Baldwin, as General Counsel, to accept subpoenas for the President and other administrators at the University, who were agents of the University. She at all times served the interests of her client, the University, and its agents.

Contrary to the representations made in the Freeh Report, Cynthia Baldwin hired a team of criminal and civil experts when it was appropriate to do so.

Cynthia Baldwin knows the importance of due process and how legal issues need to play out in courts of law and not in the media. As a result, it is not her intent to publicly address facts and legal issues that are properly before the courts. Ms. Baldwin will address the inaccuracies in the Freeh Report with the University and in legal proceedings, not with the media.” [End of DeMonaco Statement]

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COMMENT BY AUTHOR OF THIS BLOG:

It should be emphasized that the statements in Freeh’s report are only allegations. The Free-for-all (pun intended) of accusations that has attended the Sandusky debacle is, perhaps, to be expected. But it should not be tolerated by fair-minded people. The truth may never be fully known, but a great deal of it will be sorted out over the course of the next decade. Yes, decade. That’s what it will probably take for trials to be held and appeals to be heard. And even then, the verdict of history will take longer.

Justice Baldwin has had a distinguished career of service that can be matched by few others in this Commonwealth. She is entitled to the presumption that she represented Penn State in a prudent and effective manner.

CLT

Category: Case Update, Civil Litigation, Civility and Courtesy in the Practice of Law., Criminal Law
Tags: Cynthia Baldwin > General Counsel > Penn State > Sandusky case

Cowabunga, Howdy! You Changed Our Culture!

No. 883

If you watched the Howdy Doody Show, you are probably eligible for Social Security. I watched it on Channel 3 (Dumont TV Network), later Channel 2 in Pittsburgh at 5 PM, Monday through Friday in the 1950’s. The regular characters, Howdy Doody, Buffalo Bob Smith, Dilly Dally, Flub-a-dub, Mr. Bluster, Clarabell the Clown, Chief Thunder Thud, Princess Summer-Fall-Winter-Spring are all still familiar names.

Most of the characters were puppets, the kind that were operated with strings from above. The strings were quite visible, but after all, we were just kids and not very critical of TV shows.

In case you have forgotten this important stuff, here is a short description of the main characters.

Howdy Doody was a puppet with a freckled face and red hair who bore a striking resemblance to Arthur Godfrey. He wore jeans and a cowboy shirt, complete with neckerchief. His hometown of Doodyville was apparently named for him, although he was just a kid, like you and me.

Buffalo Bob Smith was a grown-up who was dressed as a pioneer with Davy Crocket fringe, except in white to emphasize that he was one of the good guys. He was a real person, not a puppet. He acted as the host of the show, interacting with the kids in the peanut gallery and assisting Howdy in overcoming evil.

And speaking of evil, Phineas T. Bluster, a puppet, was the Mayor of Doodyville, although the election must have been rigged. He wore a three piece suit complete with spats. He was always plotting something, but was thwarted by Howdy and Buffalo Bob at the last minute.

Then there was Clarabell, a human clown who didn’t speak. Instead, he wore a box on his belt (equipped with a seltzer bottle which he used liberally) with a bicycle horn on each side. One was marked Yes and the other No. He was often asked questions requiring a yes or no honk, which sometimes revealed the plots of Mr Bluster. Clarabell was later rumored to be Bob Keishon of Captain Kangaroo fame, but there was no way to tell, since Clarabell was well disguised.

Chief Thunderthud was an Indian Chief , human, who wore a full-sized war bonnet and was often accompanied by Princess Summer-Fall-Winter-Spring, also human. Thunderthud was always being amazed or surprised by something, whereupon he exclaimed, in a loud voice, “Cowabunga!”

Flub-a-dub was a mongrel animal puppet who was composed of eight animals, with a duck bill, seal flippers, a dachshund body and if you must know the rest, click the link above. Flub-a-dub talked a blue streak, but rarely said anything worthwhile.

Dilly Dally was a puppet friend/foil of Howdy who was not all that smart. He wore overalls and a baseball hat cocked to the side.

This was a pioneering kids show that established the format of many others to follow. It taught us that good triumphs over evil and urged us to ask Mom and Dad to take us to church or synagogue over the weekend. It was the first time I had ever heard of synagogue. I had to ask my mother what it meant.

And, yes, the Howdy Doody Show lives on in our culture. Chief Thunder Thud’s famous expletive “Cowabunga” is still in our vocabulary, thanks in part to Bart Simpson. So is the term “peanut gallery”, a prototype studio audience, where a noisy bunch of kids were massed in a grandstand, ready to react to any misdeeds by Mr. Bluster by screaming their heads off to warn Howdy.

Scary, isn’t it?

CLT

Category: Pittsburgh Legal Back Talk

Nutmeg Lawyer: The Cheers Marketing Model

No. 882

Here is a quick refresher course in marketing and client relations for lawyers and anybody else who serves clients, courtesy of Nutmeg Lawyer. You can find Nutmeg Lawyer in the blogroll that is located far down the left hand column of this blog.

CLICK THIS LINK TO NUTMEG LAWYER NOW.

CLT

Category: Legal Marketing, Links
Tags: client relations > Everybody Knows Your Name > marketing

Commenter Attacks My January 22, 2012 Post Calling For Apology to Paterno.

No. 881

On January 22, 2012, I published the following post, No. 791. At the time I wrote it, Joe Paterno had already died, but that fact was not publicly announced. I received a comment today that stated that I should probably withdraw my post. Well, I won’t.

Paterno may have been powerful and influential, but he was not the decision maker. If others made wrong decisions based upon his power and influence, the legal responsibility for those decisions still rests with the decision makers.

Louis Freeh conducted an internal investigation at the request of the Penn State Board. I haven’t read it, but have no doubt that it was carefully prepared and sought to focus on evidence. I understand that it contains evidence that Mr. Paterno participated in at least one meeting that lead to the cover up and that the allegations of other witnesses are at variance with the grand jury testimony of Mr. Paterno and others. This information is disturbing and could well lead to the convictions of members of the Penn State hierarchy. But the report is still only an accusation, not a verdict of a court. There will be trials and liability will be determined based upon the weight of the evidence. Until that day, you and I can speculate but we do not know.

The comment I received this evening is reproduced following this post.

CLT

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THE JANUARY 22, 2012 POST

The way the Penn State Board fired Joe Paterno was cowardly and wrong. They bowed to overwhelming pressure of a media-driven lynch mob. Ultimately, in cooler times, Mr. Paterno will be vindicated before the law and in the court of public opinion. He did what every subordinate in an organization should do, he reported the information to the highest authorities in the University hierarchy, the ones who had the responsibility to make those decisions. That group included the supervisor of the University’s private police force. In time, when the hysteria has dispersed, that truth will be generally recognized. But it appears that JoPa won’t be around to see that day, so it is imperative that Penn State apologize in person and in public now. But if the craven leadership won’t do it, and they probably won’t, then the rest of us should.

I’m not a Penn Stater, but I once attended an alumni function where I learned something very important. In response to one of the speakers the gathered alumni repeated a football cheer, but in a somewhat hushed and even reverential mode. “We are,” said the speaker, “Penn State,” responded the crowd. After several repetitions, the room was silent while the meaning of those words sunk in.

We Pennsylvanians are all Penn Staters, whether we attended class there or not. It is one of our state’s premier universities. And Joe Paterno did as much as any one person could to make it a great institution of higher education. If the school’s administration won’t do it, we must. After all, we are Penn State.

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COMMENT RECEIVED ON JULY 12, 2012

Tom Robertson
July 12th, 2012 @ 10:20 pm edit

So, it has now (July 12, 2012) been discovered that Penn State AND Paterno knew about Sandusky’s sexual preferences since AT LEAST 1997. You should probably remove your pathetic post at this point. These people stood around and did NOTHING to protect those poor kids. Penn State is the most disgusting educational institution on earth.

Category: Criminal Law, News Commentary

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CLIFF TUTTLE has been a Pennsylvania lawyer for over 45 years and (inter alia) is a real estate litigator and legal writer. The posts in this blog are intended to provide general information about legal topics of interest to lawyers and consumers with a Pittsburgh and Western Pennsylvania focus. However, this information does not constitute legal advice and there is no lawyer-client relationship created when you read this blog. You are encouraged to leave comments but be aware that posted comments can be read by others. If you wish to contact me in privacy, please use the Contact Form located immediately below this message. I will reply promptly and in strict confidence.

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