Cost Cutting and Legal Fees

No. 460

Andrew Carnegie, the unofficial patron saint of Pittsburgh, was a great practitioner of the art and science of cost cutting, which in turn enabled price cutting. We tend to forget (or never knew) that the great industrialists of the Guilded Age achieved their dominance during the “Long Depression” which began in 1873 and after two decades marked by partial recoveries, plunged again in 1893. In that era, competition was often cut-throat and survivors like Carnegie were usually able to undercut competitors when the marketplace demanded it. Economist Paul Krugman writes today in the New York Times that he believes that the world is embarking on a “Third Depression” which is more akin to the Long one than the Great one. He points to unemployment stuck at 10% as proof.

Cost cutting is not synonymous with cuts in investment. To the contrary, cutting costs may provide extra funds to take advantage of investment opportunities.

An excellent place to start cutting costs is attorney’s fees. I often wonder who legal clients think pays for the first class office space they visit. With a little bit of investigation, you can find an attorney with just as much expertise as the one you are paying $250.00 an hour or more for, say, $125.00 — half price. Or, even better, you may be able to negotiate a fixed fee for a particular task.

Of course, in order to offer you the lower fee, an attorney must have already cut his or her costs. This is not as unusual as you might think. Pittsburgh in particular, and indeed all America, is full of experienced and capable sole practitioners and small firms, some being refugees from larger and more expensive firms. They may have learned their craft at high-priced establishments, but, although they are gone, they have not forgotten. They often work in home offices and use technology instead of extra people. Because their cost base is lower, they can provide you with equal or better service at a lower fee.

Where do you find such lawyers? Generally speaking, you don’t find them in lists of so-called “Best Lawyers in America” or “Super Lawyers”. You find them on the AVVO Board or by asking people who are likely to know.

Of course, legal fees are not the only criteria for choice. A low fee does you no good if you lose the case. Moreover, an astute lawyer can create extra value in innumerable ways. Dogged determination, alertness, poise under fire, ingenuity, sound judgment are all components of what you purchase when you hire a good lawyer.

CLT

Category: Uncategorized

Landlord and Tenant: The Secret Lease Addendum

No. 459

I just received an email from a man who signed a lease and later learned that there was an addendum he hadn’t seen requiring him to subscribe to a cable package that includes features he didn’t want.

A lease is a contract dealing with rights in land and real estate improvements. In order to be enforceable such agreements must be in writing. In order for a modification to be enforceable, it must also be in writing. In order to prove that the parties agreed it has long been the custom for such contracts to be signed. If the addendum is not referenced in the agreement and attached, then it too should be signed by both parties.

CLT

Category: Uncategorized

Protecting Tenants at Foreclosure Act.

NOTE: The author has written a more detailed discussion of this topic as a Legal Guide in AVVO ANSWERS.

Judging from the number of questions by tenants on the AVVO Question Board, there are a great number of tenants being displaced by mortgage foreclosures on the residential properties they rent. Moreover, the attorneys who are answering the questions seem to be unaware of the “Protecting Tenants at Foreclosure Act.” This statute, effective last Spring, permits most residential tenants of foreclosed properties to stay for at least 90 days and perhaps until the end of the lease term. However, the statute is not completely clear, so here is the full text:

Public Law 111-22, Effective Date May 20, 2009

TITLE VII–PROTECTING TENANTS AT FORECLOSURE ACT

SEC. 701. SHORT TITLE.

This title may be cited as the `Protecting Tenants at Foreclosure Act of 2009′.

SEC. 702. EFFECT OF FORECLOSURE ON PREEXISTING TENANCY.

(a) In General- In the case of any foreclosure on a federally-related mortgage loan or on any dwelling or residential real property after the date of enactment of this title, any immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to–

(1) the provision, by such successor in interest of a notice to vacate to any bona fide tenant at least 90 days before the effective date of such notice; and

(2) the rights of any bona fide tenant, as of the date of such notice of foreclosure–

(A) under any bona fide lease entered into before the notice of foreclosure to occupy the premises until the end of the remaining term of the lease, except that a successor in interest may terminate a lease effective on the date of sale of the unit to a purchaser who will occupy the unit as a primary residence, subject to the receipt by the tenant of the 90 day notice under paragraph (1); or

(B) without a lease or with a lease terminable at will under State law, subject to the receipt by the tenant of the 90 day notice under subsection (1),

except that nothing under this section shall affect the requirements for termination of any Federal- or State-subsidized tenancy or of any State or local law that provides longer time periods or other additional protections for tenants.

(b) Bona Fide Lease or Tenancy- For purposes of this section, a lease or tenancy shall be considered bona fide only if–

(1) the mortgagor or the child, spouse, or parent of the mortgagor under the contract is not the tenant;

(2) the lease or tenancy was the result of an arms-length transaction; and

(3) the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property or the unit’s rent is reduced or subsidized due to a Federal, State, or local subsidy.

(c) Definition- For purposes of this section, the term `federally-related mortgage loan’ has the same meaning as in section 3 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2602).

SEC. 703. EFFECT OF FORECLOSURE ON SECTION 8 TENANCIES.

Section 8(o)(7) of the United States Housing Act of 1937 (42 U.S.C. 1437f(o)(7)) is amended–

(1) by inserting before the semicolon in subparagraph (C) the following: `and in the case of an owner who is an immediate successor in interest pursuant to foreclosure during the term of the lease vacating the property prior to sale shall not constitute other good cause, except that the owner may terminate the tenancy effective on the date of transfer of the unit to the owner if the owner–

(i) will occupy the unit as a primary residence; and

(ii) has provided the tenant a notice to vacate at least 90 days before the effective date of such notice.’; and

(2) by inserting at the end of subparagraph (F) the following: `In the case of any foreclosure on any federally-related mortgage loan (as that term is defined in section 3 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2602)) or on any residential real property in which a recipient of assistance under this subsection resides, the immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to the lease between the prior owner and the tenant and to the housing assistance payments contract between the prior owner and the public housing agency for the occupied unit, except that this provision and the provisions related to foreclosure in subparagraph (C) shall not shall not affect any State or local law that provides longer time periods or other additional protections for tenants.

SEC. 704. SUNSET.

This title, and any amendments made by this title are repealed, and the requirements under this title shall terminate, on December 31, 2012.

Category: Uncategorized

Plain Language Consumer Contract Act: An Idea Whose Time Hasn’t Come Yet.

A tenant posting a question on the AVVO website wanted to know if a lease was unenforceable if the print was below a specified font size. We’ve all seen the “fine print.” It is usually not only very small, but quite lengthy and filled with difficult terms.

The Landlord and Tenant Act doesn’t say anything about print size in pre-printed leases. However, a little known statute called the “Plain Language Consumer Contract Act” 73 P.S. 2202 – 2212 does. While it doesn’t specify the font size, it does contain guidelines, including the following “visual guideline”: ” The contract should have type size, line length, column width, margins and spacing between lines and paragraphs that make the contract easy to read.”

Most of the statute contains guidelines, including a preference for using pronouns, like “you” and “me”, over legal words like landlord and tenant and for putting captions in boldfaced type.

How provisions such as this translate into legal remedies is interesting, to say the least. They include actual damages and statutory damages of $100.00 (or the amount of the contract, if less). Also included are attorneys fees and equitable relief ordered by the court.

But here’s the zinger: Section (b) states: “A violation of this act is deemed to be a violation of . . . the Unfair Trade Practices and Consumer Protection Law.”

The Unfair Trade Practices and Consumer Protection Law (“UTPCPL”, no kidding) is a consumer protection statute that authorizes treble damages. It has to do with consumer fraud and has been heavily litigated. The application of UTPCPL has been rather tricky and grounded in case law.

So what kind of violation of the Plain Language statute will get you into the treble damages jackpot? Certainly not violation of a group of guidelines that look like a style sheet for a writing class. (eg “The contract should not use double negatives or exceptions to exceptions.”)

But how about this one:” A contract shall have a statement that contains the following:

(i) A general description of the property that may be taken or affected by reason of a security interest or contract, if the consumer does not meet the terms of the contract. The statement is not required to list all possible exemptions. As it may apply, the following statement may be used: ‘If you do not meet your contract obligations you may lose your house, the property that you bought with this loan, other household goods and furniture, your motor vehicle or money in your account with us.’

(ii) contract waivers of consumer’s rights in residential leases.”

What exactly is this section trying to get us to do? Does this mean that whenever there is the potential of suing for damages and getting a money judgment, the contract must warn that the consumer (sorry, you) might lose house, car, goods and money in the bank? Apparently so.

And what might be the consequence of failing to mention the possibility of wage garnishment, a remedy that landlord sometimes have against tenants? Taking the act literally, your damages would be the amount of the judgment. Then triple it under UTPCPL. Does anyone think a judge has ever been minted who will buy that one?

As to contract waivers in a lease, how are landlords to obtain waivers unless they put them in leases?

There is one provision that is quite clear, both as to meaning and consequence. If you wish to create a contract under seal, you must say the following or its equivalent:”This is a contract under seal and may be enforced under 42 Pa. C.S. Sec. 5529(b) (relating to 20 year statute of limitations.)” Wow. Maybe I ought to be putting this in all of my contracts!

There hasn’t been much litigation involving this Plain Language statute — a fact that you might have guessed by now. There were a couple of cases involving releases found in small print on the back of admission tickets. Frankly, there is a lot of difference between small print on the back of a ticket to a ski lift, where the available space is about one square inch and a rental contract, where the space is in theory endless.

CLT

Category: Uncategorized

Fourth Amendment and DUI: Blood Tests at the Hospital.

No. 456

On May 24, 2010 the Superior Court of Pennsylvania, sitting en banc, held that the trial court had erred in suppressing blood test results taken by hospital staff because in the absence of specific indications to the contrary, it is presumed that the blood was drawn for independent medical purposes, not for the purpose of convicting defendant and could, by statute, be obtained by police with a search warrant. Commonwealth v. Keith A. Miller, No. 884 MDA 2008.

Miller drove his black Ford Probe into a telephone pole. He was found in the driver’s seat by the police in a state of unconsciousness, emitting a strong odor of alcohol. A case of beer was behind the driver’s seat.

An officer accompanied the ambulance to the hospital. He did not request a blood test and there is no indication on the record that the hospital performed such a test for the purpose of aiding a prosecution.

The police obtained the hospital records with a search warrant, including the record of driver’s blood alcohol content (BAC), which was 2.2. Based on the information contained in the hospital records, the driver was charged with DUI and careless driving. The driver filed a motion to suppress.

After the suppression hearing, the trial court granted the motion to suppress the medical records. It reasoned that the Commonwealth had the burden of proving that the procurement of the blood sample did not violate the Fourth Amendment and had failed to provide any evidence. While the police had probable cause for a warrant to obtain the medical records, the hospital may not have had probable cause to draw blood, if it was done for the purpose of prosecution for DUI.

The Commonwealth filed an appeal to the Superior Court and a panel of the Court affirmed. The Commonwealth requested en banc reargument, which was granted. The Court en banc reversed, with three Judges dissenting.

The Commonwealth asserted that when there was no evidence of the purpose of a blood test, absent circumstances that indicate the blood was drawn to establish the blood alcohol level, it should be presumed that the purpose was medical.

The import of this assertion is that the hospital must have probable cause to draw blood to establish the blood alcohol level for criminal prosecution, since it is acting as an agent of the State. However, no probable cause is required to draw blood to be used for medical purposes.

Since the police can obtain the medical records with a warrant, the effect of this presumption is to avoid the possibility that the hospital actually took the blood to establish the blood alcohol level without probable cause.

A strong dissenting opinion was written by Judge Allen, perhaps assuring that the case will ultimately be decided on further appeal by the Pennsylvania Supreme Court.

CLT

Category: Uncategorized

500, 501, 502

No. 455

Overnight PittsburghLegal achieved its 500th, 501st and 502d followers on Twitter.

No. 500 is Richard Russeth, a lawyer from Colorado who had previously been connected as RichardRusseth. His Twitter bio says: “VP/GC $2B+ Private Company. Wise Counselor. Vision Creator. Poet. The Last Generalist.” His Linkedin page gives further illumination. Thanks for the follow, Richard.

No. 501 is Jonathan Lea, a lawyer with Follett Stock Solicitors in Great Britain whose Twitter bio states: “Lawyer, business strategist and fixer. Interested in media, corporate finance, politics and sport.” Thank you, Jonathan.

No 502 is Pacific Legal Foundation. Its Twitter bio states: “PLF is the most successful public interest legal organization that litigates for limited government and free enterprise in courts across the country.” Additional information is available on its website. The pulldown menu marked “About PLF” contains a timeline of its significant cases since 1973. Thank you for the follow, PLF.

CLT

Category: Uncategorized

499 Followers and Waiting.

No. 454

PittsburghLegal has 499 followers on Twitter at this writing. Too tired to wait up for 500. I suppose we’ll have to wait until morning.

CLT

Category: Uncategorized

Bad Vibes.

No. 453

An Allegheny County resident posted a question on “AVVO Answers” on whether a bill collector could garnish wages after judgment in Pennsylvania.

The first lawyer to answer the question, from Georgia, got it completely wrong. She said “yes.” In Pennsylvania, with a few exceptions, there is no wage garnishment for civil judgments.

The second lawyer, a Pennsylvania lawyer, corrected her rather rudely, which may have accounted for the thumbs down evaluation by the original questioner.

The third lawyer, a New Yorker, gave a rather lengthy discussion of the federal statutory protection of debtors in garnishment proceedings. This was off point, since Pennsylvania doesn’t generally permit garnishment.

Then I came along. It struck me that none of the prior answers mentioned that the debt collector had threatened garnishment when there was no legal right. This was a clear violation of federal law, as discussed in my recent post on the Jurman case.

Category: Uncategorized

BETTER THAN PERFECT

No. 452

By now, every American has heard the fascinating story. Detroit Tigers’ pitcher Armando Galarraga pitches a perfect game, except for a call at first base with two out in the bottom of the ninth, which the replays show was clearly wrong and the umpire himself emphatically admits it immediately. Then, Baseball Commissioner Bud Selig refuses to reverse the call, leading to a chorus of boos and catcalls like the one that appeared on the editorial page of the Post Gazette on Sunday, June 6.

The PG , like every other media outlet we’ve heard, said that the Tigers’ ace was robbed of a sterling moment. They are all wrong.

Everybody in America knows Mr. Galarraga pitched a perfect game. Everybody knows that he is wrongfully being deprived of the honor of having his name subscribed in the record book with the select number of pitchers who have recorded this signal achievement. There have been only 21 in the entire history of major league baseball.

But, perhaps you heard that two other perfect games were thrown last month. Amazing — three in one month! Now, tell me who the other two pitchers were.

I thought so. I don’t know either. I heard their names on the news and quickly forgot. And so, most likely, did 99% of the people who don’t live in the cities involved. And that’s the point.

We remember Galarraga and we don’t remember the others whose perfect games were recorded without incident.

Meanwhile, Mr. Galarraga is justly praised from all quarters for his sportsmanship and even awarded a $52,000.00 sports car by General Motors. Sportswriters are already talking about the Hall of Fame. I’ll bet you a month of breakfasts that before the month is over he’ll be posing with the President in the Rose Garden.

This reminds me of another great pitcher who actually failed to pitch a perfect game. One summer night in 1959, Harvey Haddix pitched twelve perfect innings and lost the game in the 13th. They haven’t stopped talking about it in Pittsburgh ever since.

I’d take it Galarraga’s way.

CLT

Category: Uncategorized

Landlord-Tenant: Pugh v. Holmes, the end of Caveat Emptor.

No. 451

It has been over thirty year since the Pennsylvania Supreme Court definitively laid to rest the venerable doctrine of caveat emptor in landlord tenant law and replaced it with the warranty of habitability. In Pugh v. Holmes, 486 Pa. 272, 405 A.2d 897 (1979), the Supreme Court stated that the ancient common law doctrine was rooted in an agrarian world where the land, not the dwelling was the focus. The house that came with the farm acreage in the era when caveat emptor was adopted predated electricity, indoor plumbing and all the modern amenities. The tenant was expected to inspect the dwelling and demand repairs at the time the lease was negotiated.

Today’s tenant, by contrast, is a consumer of residential services. He wants electricity, heat and plumbing that works. If these essential amenities break down, he expects them to be promptly repaired.

In place of caveat emptor, the Court asserted that the modern tenancy was subject to an implied warranty of habitability. In order to constitute a breach of the warranty, the defect must be of a nature and kind that will prevent the use of the dwelling for its intended purpose, to provide a residence fit for habitation. At a minimum, this means that the premises must be safe and sanitary. However, this does not require the premises to be aesthetically pleasing.

Whether a particular breach of this warranty is material depends on the facts and must be determined on a case-by-case basis.

Breach of the warranty of habitability may be asserted by a tenant-plaintiff as a cause of action or by a tenant-defendant as a defense to an action for possession or rent. It may also be plead as a counterclaim.

The tenant, either as plaintiff or defendant, has the burden of proving that he gave notice of the defect or condition to the landlord and the landlord had a reasonable opportunity to make repairs. However, it is not necessary for the tenant to prove that the defect or condition violated any statute or building code.

In Pugh, the tenant had filed an answer to a complaint for possession and damages asserting that premises were uninhabitable due to a leaky roof, lack of hot water, leaking toilet and pipes, cockroach infestation, as well as hazardous floors and steps. The plaintiff had filed preliminary objections, asserting that under caveat emptor such matters were not a defense. The Supreme Court remanded the case, stating that if the defendant can prove the conditions exist, it could defeat both the action for possession and for rents.

The severity of the condition will determine whether the rent is to be partially or totally abated. And if the rent is totally abated, the Court stated, the plaintiff is not entitled to possession, because no rent is due.

Of course, the tenant may vacate the premises, if the condition constitutes a breach of the warranty of habitability. But he need not do so. If the landlord fails to respond to a reasonable request for a repair, he may make the repair himself and deduct the cost from the rent. He may also invoke other contract remedies, such as specific performance.

Although one method of determining damages would be to subtract the actual rental value of the premises from the contract rent, the Court stated that a tenant was not required to present such evidence. The fair market value of a defective residence is problematical. In a perfect world, no one would wish to rent a dwelling with a serious defect, making the value zero. But experience has shown that tenants do rent defective properties, sometimes from desperation or a lack of choices. Or they believe representations by the landlord that the conditions are temporary and will be corrected. Moreover, such proof usually requires an expert witness, which is beyond the capability of many, perhaps most, tenants to afford.

CLT

Category: Uncategorized

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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.

Pittsburgh Legal Back Talk

Legal topics of interest to lawyers and consumers with a Pittsburgh and Western Pennsylvania focus.

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Categories

Cost Cutting and Legal Fees

Landlord and Tenant: The Secret Lease Addendum

Protecting Tenants at Foreclosure Act.

Plain Language Consumer Contract Act: An Idea Whose Time Hasn’t Come Yet.

Fourth Amendment and DUI: Blood Tests at the Hospital.

500, 501, 502

499 Followers and Waiting.

Bad Vibes.

BETTER THAN PERFECT

Landlord-Tenant: Pugh v. Holmes, the end of Caveat Emptor.

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