Claims And Issues

Business Owners' Life Insurance Beneficiaries: What is the Evidence?

   One David Shomers claimed to be the proper beneficiary on a Life Insurance Policy taken out on the life of the co-founder of his business, one Anthony R. Andreoni.  Mr. Andreoni died.  One Miriam Andreoni, who apparently also claimed to be a beneficiary, assigned her interest to the Federal Trade Commission.  The Life Insurance Company filed suit, Mr. Shomers was named a Defendant, and the FTC was granted leave to intervene.  This complicated set of facts comes from Reassure America Life Insurance Co. v. Warner, Download Reassure America Life Insurance Co. v. Warner (S.D. Fla. Case No. 08.22664, Order on Motions For Summary Judgment Filed Nov. 17, 2010) PUBLIC ACCESS also published as 2010 WL 4782776 (S.D. Fla. November 17, 2010)(authorized password required to access Westlaw).

   Mr. Shomers died after he filed a Verified Answer and before he was deposed in the case.  There came an issue of whether the following Paragraph 43 of his Verified Answer was admissible under the Federal Rules of Evidence:

Andreoni [the decedent whose life was insured in the policy at issue in this case] duped Shomers into signing the form of the request for change of beneficiary of the Policy (which Andreoni later altered and forwarded to [Valley Forge Life Insurance Company] ) by presenting Shomers an incomplete form, falsely representing that it was required in connection with a pending policy renewal, intimidating him in executing same, and then, when Shomers said he would hold on to the executed form until he obtained clarification from the court appointed Monitor, Andr[e]oni grabbed the form and fled.
Verified Answer ¶ 43. Because of his death, Shomers will not be able to testify to these facts at trial.

Reassure America Life Insurance Co. v. Warner, 2010 WL 4782776 at *2.  The Court in this Case held, for various reasons including lack of corroboration, that this Verified Paragraph was not admissible.

   Thereafter, the Court granted the FTC's Motion for Summary Judgment for the Life Insurance proceeds, and denied the Shomers Estate's Motion for Summary Judgment.  Id. at *9.

The author is Co-Chair of the American Bar Association's Subcommittee on Life, Health, and Disability Insurance of the Insurance Coverage Litigation Committee.

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Deposition Costs or Sanctions: Errata and Corporate Rep. on Underwriting.

   A U.S. Magistrate Judge faced unique issues concerning Depositions, Errata Sheets and a proper Corporate Representative, in AIG Centennial Insurance Co. v. O'Neill, Download AIG Centennial Insurance co. v. O'Neill (S.D. Fla. Case No. 09.60551, U.S.M.J. Order Filed October 22, 2010) PUBLIC ACCESS, also published as 2010 WL 4363176 (S.D. Fla. U.S.M.J. Order October 22, 2010)(authorized password required to access Westlaw).

   The Insurance Coverages at issue in that case did not at first present themselves in what seemed to be a universally appealing way, it is fair to say.  "This matter arises out of an insurance dispute over a luxury yacht."  The Marine Insurance Policy at issue provided contested Property Damage Coverage "for an agreed value of $2,350,000.00, with a deductible of $47,000.00 for hull damage claims."  AIG Centennial Insurance Co. v. O'Neill, 2010 WL 4363176 at *1.

   The Policyholder retained several Experts to present the cause of loss.  AIG Centennial issued a Reservation of Rights letter and filed suit for Declaratory Judgment that there was no Coverage under its Policy, according to the Court.  Id. at *2-*3.  

   In the DJA, the Policyholder noticed the Deposition of a Corporate Representative of the Defendant to address specified Underwriting Issues.  The Defendant produced one Roethke as its Corporate Representative.  After the Corporate Rep Deposition concluded, Mr. Roethke filed an Errata Sheet which may or may not have changed his substantive testimony.  In addition, it did not appear that he was the appropriate person to testify about at least some of the specified Underwriting Issues; he said so himself.  See id. at *3.

The Issue of the Errata Sheet.  In reaching a holding on this issue, the Magistrate Judge first pointed out that there is a conflict in the case law.  Some Federal Courts allow substantive changes to be made in Deposition Errata Sheets; others do not.  The Federal Courts that do allow substantive changes to be made in Deposition Errata Sheets are reportedly of the view that there is nothing in Federal Rule of Civil Procedure 30(e)(1)(B) which prohibits them.  The Federal Courts that do not allow substantive changes to be made in Deposition Errata Sheets construe the same Rule, "narrowly," and allow "changes in substance only when the transcript evidences 'obvious confusion' ...."  Id. at *4.

   Noting that the Eleventh Circuit Court of Appeals "has not ruled directly on this issue in a binding decision," the Court in this case allowed substantive changes to be made in the Corporate Representative's Deposition Errata Sheet "[w]here, as here, the deponent timely submits changes to his deposition testimony and an opportunity remains for the court to allow the reopening of the deposition should the court deem it necessary ...."  However, the Magistrate Judge coupled costs and fees to this holding as well.  "[T]o the extent that this Court finds that a party deponent materially altered his testimony in a substantive way, this Court will require the deponent to pay the costs and fees associated with re-opening the deposition."  Id. at *5.

The issue of Costs and Fees for the Rule 30(b)(6) Underwriting Corporate Representative.   Working under a different Rule of Federal Civil Procedure, i.e., Rule 30(b)(6), the Magistrate Judge declined to assess fees and costs as sanctions in this Case.  It appears that, in this Case, the deponent was finished testifying at the end of the day anyway.  There would not likely have been much time left to also depose another Corporate Representative who might be able to address the Underwriting Issues.  Under the circumstances of this peculiar Case, the Magistrate Judge denied a Motion for Sanctions "with the understanding that [the Defendant Insurance Company] will ensure the immediate availability of ... some other suitable corporate representative prepared to testify regarding the underwriting issues."  Id. at *12.

  Dennis Wall is the Author of the leading book on Insurance Bad Faith, "Litigation and Prevention of Insurance Bad Faith" (Shepard's/McGraw-Hill Second Edition; West Publishing Company 2010 Supplement), and he has handled many Insurance Coverage and Bad Faith Cases and Catastrophe Claims.  Mr. Wall will speak on a panel at the American Conference Institute's Bad Faith Litigation Conference in Orlando, Florida on November 30, 2010.  The author has been advised by the American Conference Institute that the ACI is continuing to offer its discount to readers of this Blog:  Download ACI Advises Readers of the Insurance Claims and Issues and Insurance Claims and Bad Faith Law Blog are entitled to a discount.

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Discovery in Bad Faith Case From Injured Claimant's Attorney.

EVERY DAY, WE HAVE MUCH FOR WHICH WE OUGHT TO GIVE THANKS!  TOMMORROW, HAVE A HAPPY THANKSGIVING!

   For various reasons, the following post is based strictly on the language of the Order at issue.

   In a Third-Party Bad Faith failure-to-settle case, the Defendant Insurance Company served a subpoena for documents upon the injured claimant's attorney.  (The attorney in question actually represented the personal representative of the estate in a wrongful death case, apparently, and all references in this post to "the injured claimant" will mean the estate in the underlying case as well).  The subpoena apparently contained five paragraphs of requests for documents, but ...

[o]nly the first request is in dispute here, that is, [the Defendant's] request that [the injured claimant's attorney] produce "all calendars, planners, appointment books and similar documents that reflect the date(s) and time(s) of meetings, conferences and/or telephone calls with [the personal representative of the wrongful death estate, i.e., the client of the subpoenaed lawyer] between [certain dates].

Thompson v. Cincinnati Insurance Co., Download Thompson v. Cincinnati Insurance Co. (N.D. Fla. Case No. 3.10cv318, Order of Magistrate Judge Filed November 9, 2010) PUBLIC ACCESS, also published as 2010 WL 4667100 *1 (N.D. Fla. November 9, 2010)(authorized password required to access Westlaw).  Note that the Federal Court online docket of this case ("Pacer") reflects that the attorney for the injured claimant filed an appeal of this Order on November 23, 2010. 

   The subpoenaed lawyer, a nonparty, objected.  In part here pertinent, the lawyer raised the Attorney-Client Privilege as a reason to reject the Insurance Company's subpoena.  Id. at *3.  The United States Magistrate Judge in this case disagreed.  The information which the Insurance Company subpoenaed, "that is, information relating to the dates and times [the injured claimant's lawyer] met, conferred, or otherwise communicated with" his client, "is clearly not protected by the attorney-client privilege, as such information does not disclose the substance of any communications" between the client and the attorney.  Id. at *5.  In addition, the Court held that the information was reasonably calculated in that case to lead to the discovery of admissible evidence.  "Thus," the injured claimant's attorney's "motion to quash will be denied."  Id.

   That was not all, however.  The Magistrate Judge further held that the injured claimant's attorney could if he chooses, but need not, comply with the Insurance Company's subpoena in this regard by producing the documentation demanded, "with appropriate redactions".  The Magistrate Judge in this case also provided an alternative way to comply with the subpoena in this regard.  The injured claimant's attorney "may provide the same information in another form, such as a typed list or other document that accurately reflects the information contained on his appointment books, calendars, and the like."  Id. 

  Dennis Wall is Author of the leading book on Insurance Bad Faith, "Litigation and Prevention of Insurance Bad Faith" (Shepard's/McGraw-Hill Second Edition; West Publishing Company 2010 Supplement), and he has handled many Bad Faith Cases and Catastrophe Claims.  Mr. Wall will speak on a panel at the American Conference Institute's Bad Faith Litigation Conference in Orlando, Florida on November 30, 2010.  The author has been advised by the American Conference Institute that the ACI is continuing to offer its discount to readers of this Blog:  Download ACI Advises Readers of the Insurance Claims and Issues and Insurance Claims and Bad Faith Law Blog are entitled to a discount.

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"Something Old, Something New; Something Borrowed, Something Blew"... Florida Hurricane.

   Three important points were made by Florida's First District Court of Appeal in this Hurricane Ivan Coverage Case:  Citizens Property Insurance Corp. v. Ashe, Download Citizens Property Insurance Corp. v. Ashe (Fla. 1st DCA Case No. 1D09.1546, Opinion Filed November 17, 2010) PUBLIC ACCESS, STATED NOT FINAL, also published as 2010 WL 4628915 (Fla. 1st DCA November 17, 2010)(authorized password required to access Westlaw).  Although this case involves many interesting issues, including the application or not of Florida's Valued Policy Law, the three important points summarized here do not address them all.

   First, the reason for the Appellate Court's decision was the same as the reason for the Trial Court's main ruling challenged on appeal, which the Appellate Court reversed:  the "other insurance" clause in a Wind Policy when the Policyholder or other Insured also has a Flood Policy.  "It is not applicable when the insured has a wind policy and a flood policy, each covering a different peril."  Citizens Property Insurance Corp. v. Ashe, 2010 WL 4628915 at * 4.

   Second, the Florida Appellate Court went beyond its self-described "dispositive" reason for decision in order "to assist the trial court and the parties on remand."  Id. at *5.  The Court adroitly side-stepped "the total loss recovery rule" applied in some other jurisdictions.  (Individual holdings or a handful of rulings is and are sometimes described, by lawyers, judges, or litigants, as a "rule".  This appears to be one of those occasions.)  This "total loss recovery rule" is "applied in other jurisdictions."  Id. at *3.  "The total loss recovery rule limits the insured to recover the lesser of either the pre-storm value of the insured property or the total policy limit for perils that led to the property's destruction."  Id. at *5.  [Emphasis added.]  Instead of explicitly adopting or rejecting such a rule in Florida, the First District panel announced a potentially much farther-reaching decision.

   In the Ashe case, Mr. Ashe's house was damaged during Hurricane Ivan.  Mr. Ashe requested and received Flood Insurance proceeds.  (Mr. Ashe was not asked by the Flood Insurer, however, to submit a Proof of Loss, and he did not submit a Proof of Loss to the Flood Insurer.)  The First District panel ruled that the amount was irrelevant, but the fact of requesting and receiving Flood Insurance proceeds was relevant to Mr. Ashe's Insurance Coverage Claim upon the Citizens Property Insurance Policy at issue in this case:

Evidence that such flood insurance benefits were received was relevant to the issue of whether flood or wind caused the total loss of the home, and the trial court abused its discretion in excluding such evidence.  Where Ashe now claims that his house was totally destroyed by wind, the jury can and should be allowed to hear evidence that he sought and accepted payment from his flood insurer, which by contract only provided compensation in the event of losses from a flood peril.

Id. at *7.  [Emphasis by the First District Court of Appeal.]

   Third and finally, the Appellate Court announced a second ruling on Evidence Law that will have effects on many other Insurance Claims in suit.  In this case, the First District panel also addressed Mr. Ashe's argument that evidence he requested Flood Insurance benefits, was inadmissible as evidence of compromise or settlement, prohibited by Section 90.408 of Florida's Evidence Code.  The Court rejected this argument.

   For one thing, even if the statute applied on its face to this case, the statute did not apply to exclude evidence of "settlement discussions between ... Ashe and his flood insurer," only to exclude "evidence of settlement discussions between Ashe and Citizens," the Appellate Court ruled.  "Furthermore," the Court noted, "Ashe presented no evidence that his receipt of flood insurance proceeds was the result of a compromise or settlement negotiation, rather than simply a payment of insurance benefits.  For this court to accept his argument here, every payment of insurance benefits would constitute a settlement rather than simply fulfilling a contractual duty."  Id. at *9.  [Emphasis added.]

 Insurance Questions including how to handle Catastrophe Claims Investigation and Evaluation, have in general terms been addressed by many Courts, many Insurance Companies, and lots of Insureds, in many decided Cases.  Dennis Wall is Co-Author of the leading book on Insurance Coverage for Catastrophe Claims, "CATClaims:  Insurance Coverage for Natural and Man-Made Disasters" (West Publishing Company 2008; 2010 Supplement in process).  An experienced Expert Witness in Insurance Cases himself, Mr. Wall will speak on a panel at the American Conference Institute's Bad Faith Litigation Conference in Orlando, Florida on November 30, 2010 on "Dealing With Catastrophic Disasters:  How to Properly Investigate and Handle Overwhelming Claims".  The author has been advised by the American Conference Institute that the ACI is continuing to offer its discount to readers of this Blog:  Download ACI Advises Readers of the Insurance Claims and Issues and Insurance Claims and Bad Faith Law Blog are entitled to a discount.

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Florida Questions Catastrophe Computer Models.

   Florida newspapers slowly continue to publish reports in which Insurers' Catastrophe Computer Models are questioned, in a subject addressed here in posts that began "on or about" December 3, 2006.

   First up in the current newspapers is Paige St. John, "Insurers' Computer Models Deeply Flawed" (Sarasota Herald Tribune Online Monday, November 15, 2010), part of a series of reports over a year in the making in Florida's Sarasota Herald Tribune.

   More to come, and the more responses and answers to these many questions, the better.

 Insurance Questions including how to handle Catastrophe Claims Investigation and Evaluation, have in general terms been addressed by many Courts, many Insurance Companies, and lots of Insureds, in many decided Cases.  Dennis Wall is Co-Author of the leading book on Insurance Coverage for Catastrophe Claims, "CATClaims:  Insurance Coverage for Natural and Man-Made Disasters" (West Publishing Company 2008; 2010 Supplement in process).  An experienced Expert Witness in Insurance Cases himself, Mr. Wall will speak on a panel at the American Conference Institute's Bad Faith Litigation Conference in Orlando, Florida on November 30, 2010 on "Dealing With Catastrophic Disasters:  How to Properly Investigate and Handle Overwhelming Claims".  The author has been advised by the American Conference Institute that the ACI is continuing to offer its discount to readers of this Blog:  Download ACI Advises Readers of the Insurance Claims and Issues and Insurance Claims and Bad Faith Law Blog are entitled to a discount.

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MORE: Federal Immunity for Foreclosure False Swearing?

   As is now generally known, Foreclosure False Swearing in Lawsuits has caused a crisis in Mortgage Insurance and in Title Insurance both.  See the many recent previous posts here in particular under the Categories of Mortgage Insurance and Title Insurance.

   Apropos of proposals for Federal Immunity for Foreclosure False Swearing:

   The banks and other players in the securitization industry now seem to be looking to Congress to snap its fingers to make the whole problem go away, preferably with a law that relieves them of liability for their bad behavior.  But any such legislative fiat would bulldoze regions of state laws on real estate and trusts, not to mention the Uniform Commercial Code.  A challenge on constitutional grounds would be inevitable.

   Asking for Congress's help would also require the banks to tacitly admit that they routinely broke their own contracts and made misrepresentations to investors in their Securities and Exchange Commission filings.  Would Congress dare shield them from well-deserved litigation when the banks themselves use every minor customer deviation from incomprehensible contracts as an excuse to charge a fee?

Yves Smith, "How the Banks Put the Economy Underwater" p. 9, col. 1 (New York Times "Week In Review" Section, Sunday, October 31, 2010).

   Anybody else care to answer that last question?

   I will try for an answer:  "Heck, yes."  Expect a bill or bills to be introduced in the U.S. House of Representatives this week, tabled by the current majority, and passed by the majority to come in January, 2011.

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UPDATE ON OUR PREVIOUS POSTS on Residential Mortgage ...

  ... Foreclosure False Swearing Issues.  Our Previous Posts can be accessed primarily in the Categories of Foreclosures, Mortgage Insurance and Title Insurance.  Some Previous Posts are also archived under Deceptive and Unfair Practices Acts, Fraud and Misrepresentation, and Market Performance.

    Not to be left out, Rolling Stone magazine just released an article on what the reporter clearly sees as the ill effects of Foreclosure Frauds by some Plaintiff Lenders and Mortgage Servicers, or perhaps as the ill effects of Foreclosure Lawsuit Systems as inherent Frauds, by Matt Taibbi, "Courts Helping Banks Screw Over Homeowners" (Rolling Stone Online, November 10, 2010; print publication issue November 25, 2010).

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Medical Loss Ratio/Minimum Loss Ratio Health Insurance Regulation Recommended ...

,,, by the National Association of Insurance Commissioners, to which the United States Congress delegated the task.

   In recent original reporting posted here on October 22, 2010, I chronicled my unsuccessful efforts at "Tracking Down Health Insurance 'MLR' at the National Association of ... Insurance Commissioners" Fall National Meeting here in Orlando.

   The NAIC has apparently now sent a 43-page recommendation to Congress, accessible through this link: 

 http://www.naic.org/documents/committees_ex_mlr_reg_asadopted.pdf

.

   Time will tell what it means.

   The author is Co-Chair of the Health, Life and Disability Insurance Subcommittee of the American Bar Association Insurance Coverage Litigation Committee.

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MORE on "Force-Placed" Insurance by Lenders and Mortgage Servicers.

   This updates the discussion in a series of posts here of False Swearing and other practices apparently indulged by some Foreclosure Plaintiffs, most recently on Wednesday, November 10, 2010.

   The selection of "force-placed" Insurance, with Premiums to be paid by Borrowers in amounts added to their Mortgage Payments, is under scrutiny according to recent reports.  Mortgage Servicers and their Insurance subsidiaries which are funneled the business, are of particular concern to some observers.  "With little regulatory oversight or even private investor awareness, force-placed insurance has helped make drawn-out foreclosures lucrative for servicers -- far more so, in some cases, than helping a borrower return to performing status.  As the intermediary between borrower and investor, servicers appear to be benefiting themselves at the expense of both."  See Jeff Horwitz, "Ties to Insurers Could Land Mortgage Servicers in More Trouble" (American Banker, Wednesday, November 10, 2010).

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MORE ABOUT Fraud Upon Courts by Foreclosure PLAINTIFFS, Insurance Crisis.

"I'm very concerned about activity by some I read about that go to the integrity of the system.  But we're tied to (ruling on) what comes before us in a case.  And if no one is there to say it's not true, we're in a tough position."  Honorable J. Thomas McGrady, Florida Circuit Court Judge, quoted by Kris Hundley, "Judge:  Foreclosure Cases Starting to Clog the System" (St. Petersburg Times Online, Friday, November 5, 2010).

This post continues from posts which began on Sunday, October 31, 2010  and continued on Monday, November 1, 2010 and on Wednesday, November 3, 2010.

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   Another Congressional Response:  Immunize All Foreclosure Plaintiffs Who Have Filed False Affidavits.

   Congress is reportedly likely to confront proposed Bills to immunize all Foreclosure Plaintiffs who have filed false affidavits and otherwise sworn falsely in Foreclosure Lawsuits.  Whether the Bills pass or not is open to question, apparently.  See Marketplace on Public Radio, "Weekly Wrap:  What Lies Ahead" (Friday, October 29, 2010) .

   The immunity would presumably extend to subrogation suits filed by Mortgage Insurance Companies who are going broke paying for defaulting Mortgagors (i.e., for the Defendants in the Foreclosure Suits) but who do or may have remedies available as a result of the false Affidavits filed in Court.  See, e.g., Dakin Campbell, "Genworth's Profit Misses Analysts' Estimates on Mortgage-Insurance Losses" (Bloomberg.com, Thursday, October 28, 2010)( "Mortgage insurers, which pay lenders when homeowners default and foreclosures fail to recoup costs, have lost money over the past three years because of the surge in soured loans."); Michael Powell, "Owners Seek to Sell at a Loss, But Bankers Push Foreclosure" p. A1, col. 2 (New York Times Nat'l ed., Monday, October 25, 2010)("And lenders can try to collect on private mortgage insurance.").

   Parenthetically, in some cases Mortgage Insurance Premiums lead to Foreclosure Suits because they are too high to pay when they are the result of "force-placed" Insurance, i.e., forced by the Lender.  See Gary Blankenship, "Sloppy Paperwork Exacerbates the Foreclosure Crisis/'People Weren't Paying Attention to the Paperwork, and They are Trying to Fix it During the Foreclosure Process'" p.1, col. 1 (Florida Bar News, October 15, 2010)("Lenders require that owners maintain insurance.  But if an error accidentally lets that insurance lapse for a few days, the lender can bring in an insurer, with the premiums passed to the owner.").

   The proposed immunity would also presumably extend to bar recoupment suits by those Title Insurance Companies which have issued Title Insurance Policies to people who bought Foreclosure homes.  The state of the title on many Foreclosure homes now is or may be questionable.  Title questions on Foreclosed homes are likely subject to legal actions and other expense incurred by the Title Insurance Companies to clear the title.  See, e.g., Andrew Martin and David Streitfeld, "Halt in Foreclosures a New Blow to Home Sales" p. A1, col. 3 (New York Times Nat'l ed., Friday, October 8, 2010); Anjali Fluker, "Foreclosure Halt Stymies Local Realtors, Investors" p. 1, col. 4 (Orlando Business Journal, Oct. 15-21, 2010).

   In fact, at least some Title Insurance Companies have stopped issuing Title Insurance for these very reasons.  David Streitfeld, "Document Flaws Have Put Brakes on Foreclosures" p. A1, col. 6 (New York Times Nat'l ed., Friday, October 1, 2010).

   Like Mortgage Insurance Companies, Title Insurance Companies are also losing money as a result of the many lenders' Foreclosure Lawsuits.  See Kathleen M. Howley, "Foreclosure Errors Cloud Homeownership With 'Blighted Titles'" (Bloomberg.com, Friday, October 1, 2010)("The costs for title insurers to defend customers and reimburse for lost properties rose 14 percent to $480.5 million in 2010's first half from a year earlier ....").

   CONCLUSION:

Some people have a right to swear falsely and submit false Affidavits, if we let them.  But they have no right to call their False Swearing the Truth.

   There is a crisis.  It is a crisis of False Swearing, part of a business model fueled by cash and ways to generate more. 

   It has within it the potential of Fraud and the certainty of greed.

   The Judicial System is in question because of numbers.  Foreclosure Plaintiffs have filed so many Lawsuits that the basis for these Lawsuits is often disregarded, including who is the proper Plaintiff and who has the Note and who holds the Mortgage.  There is no question that the owners are most often in default.  The questions come because of the conduct of the Foreclosure Plaintiffs.  There are few questions caused by the conduct of the Foreclosure Defendants.

   "It's not the money, stupid."  "It's the Justice," far more than money or the pursuit of money.

   Time will tell whether the litigious Foreclosure Plaintiffs, with great wealth and plans to make more, will be allowed to overwhelm the Court System with False Swearing as a way of doing business, and be immunized in all Foreclosures from the consequences of their conduct in litigating some Foreclosures.  Or whether they will face the consequences of False Swearing, just as other Plaintiffs in past cases have faced the consequences of False Swearing.

   To say again, Time will Tell.  In the meantime, Mortgage Insurance Companies and Title Insurers are going broke, they are being sued by the litigious Foreclosure Plaintiffs, and the Judicial System is under attack.

   The outcome is not certain.

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Association Boards and Homeowners', Unit Owners' Personal Liability Without Insurance?

   Statutes in California reportedly immunize Homeowners and Unit Owners who are members of their Homeowners' Association or Condominium Association, respectively, if certain conditions are met.  One of those conditions is the purchase and maintenance of appropriate Commercial or other General Liability Insurance Coverage, and Directors and Officers Coverage.  If the required Insurance Coverage is maintained, then Statutes in California reportedly provide that "the individual owners in an association" shall not be personally liable for Damages assessed against the Association and, further, that a "'volunteer' director," i.e., member of the Association Board, cannot be held personally liable either so long as certain required Insurance Coverage is maintained by the Association.  [See your jurisdiction's Statutes to determine if these things hold true in your jurisdiction as well.]

   Parenthetically, another requirement for board members to be immunized from personal liability is that their acts must have been committed in Good Faith.  Stephen Glassman and Donie Vanitzian, "Homeowners Association Insurance Protects Board and Titleholders From Liability/Without The General Insurance and Directors and Officers Coverage, Directors and Officers Can Be Held Liable and Would Be Negligent in Permitting Individual Titleholders to Be Liable as Well" (Los Angeles Times Online, Sunday, November 7, 2010).

   In fact, there is a view in California that as a result of these Statutes and the immunities they confer if followed, that failure to purchase the Insurance Coverage the Statutes require may be Negligence:

   Without the general association insurance and directors and officers coverage, the individual directors and officers may not only be held liable but also would be negligent in permitting individual titleholders to be held liable.

Id.

   According to the authors of the linked Q and A report from California, if any Insurance can be canceled it "is the coverage for the management company and its personnel.  A professional company should carry and pay for its own insurance.  If the management [company] cannot provide its own insurance coverage, it should not be providing services to your association."  Id.

   Note that standard Commercial General Liability or "CGL" Policies ordinarily include "Your Real Estate Manager" as an Additional Insured, for which there typically will  not be a separately stated Premium.

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Wall Street, The Country Should Listen to This Guy: Robert F. Kennedy, Jr.

   He said he knew from the beginning what a career in environmental law would mean.  The purpose is to protect people, not wildlife and rocks.  That is what Robert F. Kennedy, Jr. said last night at Rollins College in Winter Park, Florida.

   Mr. Kennedy contrasted what I would call environmental concerns, on the one hand, with pollution on the other.  In his view, these represent two different business models.  Protection of the environment involves protection of assets.  These are assets held jointly and in common.  What is being protected is sustainable capitalism.  It involves the continued presence of the environment for making a profit not just now, in the present, but in the future and always, the use of resources held by all for the good of all.

   The competing business model involves, he said, a comparative few making short-term profit for themselves and always at the expense of other people.  This is not even a free-market model.  Show me pollution, he said, and based on his experience in the field, you will always find subsidies distorting the free market in favor of the few who receive them.

   I had not thought of environmental concerns in these terms before.  I have thought about the Gulf Oil Spill Disaster, for example, as a Catastrophe which will give rise to many Insurance Coverage Issues, some of which are as yet unknown.  But I had not thought of protecting the environment in terms of a business model involving protection of assets held in common, as sustainable capitalism for the good of all, rather than liquidation of common assets for the immediate gain of a handful at the expense of the many.

   Have you?

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"Fraud Upon the Courts?" Insurance Crisis Result of False Swearing.

   Third in a series:

This post continues from posts which began on Sunday, October 31, 2010  and continued on Monday, November 1, 2010.

   Some people have a right to swear falsely and submit false Affidavits, if we let them.  But they have no right to call their False Swearing the Truth.

   There are so many Foreclosure Lawsuits that the sheer number of them overwhelmed the abilities of the people and organizations responsible for filing them.  There is a current Crisis in False Swearing as a result.  Affidavits have apparently been filed in many Foreclosure Lawsuits in an effort to obtain Summary Judgments without Trial, because many Plaintiffs cannot prove their Foreclosure Cases if they have to go to Trial.  "The foreclosure machinery that has forced millions of Americans out of their homes is beginning to seize up as some lenders and their lawyers are accused of cutting corners in their pursuit of rapid home repossessions."  David Streitfeld, "Document Flaws Have Put Brakes on Foreclosures/Focus on Cut Corners" p. A1, col. 6 (New York Times Nat'l ed., Friday, October 1, 2010).

   The effects have been felt by Title Insurance Companies, for example, which have refused to issue Title Insurance to cover title to properties foreclosed on by certain mortgage servicers and lenders who are suspected of filing false Affidavits in Foreclosure Lawsuits.  See id.  As one report put it:

   The missteps stemmed from the affidavits the lenders file as they seek a quick or summary judgment in thousands of foreclosure cases.  The affidavits state certain facts about the case, including the amount owed, which the signer indicates [actually, testifies] he has personal knowledge of.  Without the affidavit, the lender would have to prove the facts at trial.

Id.

REMEDIES FOR THE FALSE FORECLOSURE AFFIDAVITS "CRISIS".

   First, there is no "crisis" at all. There are apparently some litigious Foreclosure Plaintiffs who are willing to lie under oath in order to make money.

   So what is new?  "'The whole essence of this crisis is fraud and unless we restore the rule of law and transparency of disclosure, we are not going to fix this.'"  Professor Laurence J. Kotlikoff, quoted by Gretchen Morgenson, "Fair Game/One Mess That Can't Be Papered Over" p. 1, col. 2 (New York Times Nat'l ed., "SundayBusiness" Section, Sunday, October 24, 2010).

   This is not the first time that people may have lied under oath.  If it can be proved that they did, they are subject to the same consequences as any other person previously proven to have lied under oath.  See Gretchen Morgenson, "Banks' Flawed Paperwork Throws Some Foreclosures Into Chaos" p. A1, col. 3 (New York Times Nat'l ed., Monday, October 4, 2010), quoting Linda M. Tirelli, Esquire:  "'This is not about getting a free house for my client.  It's about getting a level playing field.  If I submitted false documents like this to the court, I'd have my license handed to me.'"

   Fifty (50) State Attorneys General are jointly investigating whether the False-Swearing-Affidavits-in-Foreclosures procedure is an unfair and deceptive trade practice by Lenders and Mortgage Servicers in their States' Courts.  If this business practice exists of backing up Foreclosure Cases with false testimony, they vow to take appropriate action to prevent it.  See National Association of Attorneys General Press Release, "50 States Sign Mortgage Foreclosure Joint Statement," October 13, 2010.  Parenthetically, the Federal-State prosecutor relationship is reportedly frayed past the point of forbearance due to the Feds favoring the Banks.  See Joe Nocera, "Talking Business/The States Take on Foreclosures" (New York Times Online Friday, October 29, 2010).

PREVIOUS FEDERAL RESPONSES TO FORGIVE THE FRAUD; DEAD ON ARRIVAL. 

   A Congressman from Texas has reportedly introduced a bill in  many past Sessions of Congress, without success until this year, which would require all States and the District of Columbia to accept Affidavits at the lowest common denominator favored by any one State, which could theoretically include no oath, no personal knowledge, no notary, and so on.  The Bill, as noted, passed Congress this year.  President Obama vetoed it by refusing to sign it while Congress was in recess, a process called a "pocket veto".  See Jackie Calmes and David Streitfeld, "Obama Will Veto Notary Bill That Could Speed Foreclosures" p. B1, col. 1 (New York Times Nat'l ed., "Business Day" Section, Friday, October 8, 2010).

More About Suggestions for a "Fix" For Foreclosure False Swearing "Crisis" to Come, and More to Come on the Insurance Crisis that REALLY is the result of the False Foreclosure Swearing ....

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False Swearing: Part of a "Fraud Upon the Court?"

   Some people have a right to file false Affidavits, if we let them.  But they have no right to call their false Affidavits the Truth.

   A witness giving testimony in an Affidavit must ordinarily swear or affirm under Oath.  She or he swears that what's in the Affidavit is the Truth and that it is based on the personal knowledge of the person testifying in the Affidavit.

   Failure to comply with these requirements is not a "procedural defect" or a mere failure to "follow the letter of the law in preparing foreclosure paperwork."  Gary Blankenship, "Sloppy Paperwork Exacerbates the Foreclosure Crisis/'People Weren't Paying Attention to the Paperwork, and They are Trying to Fix it During the Foreclosure Process'" p.1, col. 1 (Florida Bar News, October 15, 2010).  See Press Release, National Association of Attorneys General, "50 States Sign Mortgage Foreclosure Joint Statement," October 13, 2010 (Statement of action based on appearance of "procedural defects" in Mortgage Foreclosure Lawsuits).

   If a person swears to Truth as her or his own personal knowledge, and that is not the Truth, it is a fraud upon the Court.

   A witness giving testimony in an Affidavit must also execute (sign) the Affidavit in front of a Notary, ordinarily.  The Notary is supposed to administer an Oath before the witness signs the Affidavit.  In my own personal experience, some Notaries seem not to know how to do that, or even that they have to.

   No-one disputes, however, that witnesses swearing to Affidavits filed in Foreclosure Lawsuits, were swearing or affirming to the Truth of what was in the Affidavits, even if they did not take an Oath before they signed the Affidavit and even if they said they did.

   An Affidavit is also ordinarily required to be executed in the presence of the Notary.  Existing practice has never accepted notarized signatures from people who signed in other States or at other times when the Notary was not present.  One of the problems that may exist with some Affidavits in some Foreclosure Lawsuits is that witnesses executed Affidavits in different States and otherwise at times when Notaries were not present in some cases.

   If witnesses do not execute their Affidavits in the presence of the Notary, but swear that they do, it is not simply a "technical omission" or simply "shoddy paperwork."  See Gary Blankenship, "Faulty Filings Hamper Clearing Foreclosures" p. 1, col. 4 (Florida Bar News, October 1, 2010).

   In that case, it is a lie.

   The Law's (or perhaps many Trial Lawyers') and the Good Book's treatment of lying are based on the same experience:  Human beings are sometimes reluctant to be honest when being honest stands in the way of personal preferences, such as making money.  Arguably, says the experienced Trial Lawyer, those who cannot be trusted in small things, cannot be trusted in large ones.

   If swearing or affirming the Truth of testimony is a "small thing," then that witness is likely not to be trusted in larger things, such as:

   That a Note or other document necessary to proceed with the Foreclosure on a person's home are somehow "missing," and that the absence of that documentation should be excused accordingly; or

   The identity of the correct Plaintiff in the Foreclosure Lawsuit; or

   The correct amount owed by the Defendants.  (In some reports, it is to be doubted whether the Defendants are correctly named as Defendants at all; in some cases, reportedly, Foreclosure Lawsuits have been filed against Homeowners who are either current in their Mortgage payments, or who do not even have a Mortgage.)

To be continued including regarding the Effects of False Swearing on Title Insurance, Mortgage Insurance, and the Court System ....

Please Read The Disclaimer.