Source: http://news.lawreader.com/?m=200801&paged=2
Timestamp: 2019-04-26 12:18:17+00:00

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The Kentucky courts have rapidly been developing new theories regarding slip and fall tort actions. The trend is to recognize greater duties on the part of property owners.
the actual language of the lease states, “The Lessee shall save the Lessor harmless . . . from any liability . . . on account of injury to employees, or to customers or to the general public and/or growing out of the occupancy of the said Premises by the Lessee . . . .” (Emphasis added.) “And/or” is defined as “a function word to indicate that two words or expressions are to be taken together or individually.” Merriam-Webster’s Collegiate Dictionary (2003). Newlon v. Newlon, 310 Ky. 737, 740, 220 S.W.2d 961, 963 (1949), the court stated that “[a]nd/or” means “‘either and or or.‘” (Emphasis in original.) Thus, the indemnification clause, read literally, appears to require Mussetter to indemnify Community Trust “from any liability . . . on account of injury to employees, or to customers or to the general public,” from any cause, in any location, and regardless of whether or not the damages arise from Mussetter’s occupancy of his leased office suite. Such an indemnification clause is simply too broad and would be against public policy, as found by the circuit court.
Applying the above to the Schroaders’ case, we must reverse the circuit court’s decision. Homestead relies on PNC Bank, Kentucky, Inc. v. Green to support its position that it owed no duty to Mrs. Schroader. However, PNC Bank is distinguishable on its facts. In PNC Bank, wintry precipitation had been falling throughout the day. Bank employees had, at various times, put some type of deicer on the sidewalk in front of the bank. Approximately one and a half hours after the deicer had been applied, Green slipped and fell on ice that had accumulated in the interim. The Supreme Court of Kentucky held that “given the fact that it was intermittently snowing and sleeting that day, it would have been virtually impossible for bank employees to have maintained a constant watch over the condition of the sidewalk. More importantly, nothing that PNC Bank did made the natural hazard any less obvious or increased the likelihood that Green would slip and fall.” PNC Bank, 30 S.W.3d at 187-88.
Homestead did not have any duty to remove the snow and ice, which were obvious natural hazards. However, once it undertook to clear the parking lot, Homestead had the duty to do so reasonably so as not to escalate the hazard associated with the snow and ice. In determining whether Homestead breached its duty, the questions are: (1) whether Homestead acted reasonably when it had the snow removed but did nothing to remove the underlying ice, particularly in the face of several complaints from its own employee; and (2) whether the removal of the snow, while leaving the ice, acted to escalate the nature of the hazard. As this Court noted in Estep, the question of whether Homestead “acted reasonably is a classic jury question, which precludes summary judgment.” 843 S.W.2d at 914-915. Therefore, we must reverse the circuit court and remand this matter for trial.
In support of their argument that Dr. Witten was not negligent as a matter of law, Appellants cite to a number of slip and fall cases where the issue of negligence was for the jury to decide.1 However, we do not find the slip and fall cases to be controlling with respect to medical malpractice actions.
We do find persuasive the cited medical malpractice cases where the physician was not held to be negligent as a matter of law. For example, it was not negligence as a matter of law when a dentist slipped while drilling on a patient’s tooth, Neal v. Wilmoth, 342 S.W.2d 701 (Ky. 1961), or when a dentist left a broken fragment of a tooth embedded in a patient’s jaw, which could have been easily discovered, Butts v. Watts, 290 S.W.2d 777 (Ky. 1956).
On the other hand, Appellee contends that the present case is analogous to medical malpractice actions where a foreign object is left in a patient’s body during surgery. With respect to retained foreign bodies, this Court held that a surgeon who closed an incision after an inaccurate sponge count had failed to show that a sponge was missing was negligent as a matter of law. Laws v. Harter, 534 S.W.2d 449 (1975). However, we decline to extend the rationale of Laws to the present case. In Laws, there was no legitimate explanation for the sponge being left in the patient’s abdomen other than an act or omission by the physician. In this matter, however, we do not know who or what caused the slippery condition on the operating room floor. Moreover, we do not know whether the accidental slip caused the hip dislocation because, as pointed out by Appellants, dislocation is a risk of hip replacement surgery. We therefore hold that the question of whether or not Dr. Witten was negligent was appropriately submitted to the jury.
The Court of Appeals additionally determined that Dr. Witten’s testimony that he slipped in the operating room constituted a judicial admission of negligence. “A judicial admission … is a formal act of a party (committed during the course of a judicial proceeding) that has the effect of removing a fact or issue from the field of dispute; it is conclusive against the party and may be the underlying basis for a summary judgment, directed verdict, or judgment notwithstanding the verdict.” Robert G. Lawson, The Kentucky Evidence Law Handbook § 8.15, at 590 (4th ed. LexisNexis 2003) (emphasis omitted). Testimony of a party may constitute a judicial admission if “deliberate and unequivocal and unexplained or uncontradicted.” Bell v. Harmon, 284 S.W.2d 812, 815 (Ky. 1955). However, judicial admissions should be “narrowly construed.” Lewis v. Kenady, 894 S.W.2d 619, 622 (Ky. 1994). Whether a statement is a judicial admission is a question of law that we review de novo. Reece v. Dixie Warehouse and Cartage Co., 188 S.W.3d 440, 448 (Ky. App. 2006).
We disagree with the Court of Appeals that Dr. Witten’s testimony constituted a judicial admission of negligence. Although Dr. Witten admitted to slipping, he denies that it caused Mr. Pack’s hip to become dislocated. Dr. Witten testified that, soon after he slipped, he put Mr. Pack’s hip through a range of motion to confirm that he had not dislocated it. In fact, there was a disputed issue of fact among the witnesses as to whether the slip caused the dislocation. In particular, Appellants presented expert testimony that dislocation is a known risk of hip replacement surgery. Moreover, there was no expert testimony indicating that the slip constituted a breach of the standard of care.
Thus, it was for the jury to decide whether Dr. Witten was negligent when he slipped on liquid in the operating room while holding Mr. Pack’s leg. Therefore, we conclude that the Court of Appeals erred in holding that Dr. Witten was negligent as a matter of law, and that the circuit court correctly denied Appellee’s directed verdict motion. See Bierman, 967 S.W.2d at 18.
Gary S. Logsdon appeals from an order of the Warren Circuit Court awarding summary judgment to the appellees upon his claims of negligence. Logsdon alleges that the appellees negligently caused his outdoor slip and fall accident by failing to adequately maintain their shopping center parking lot following a snowstorm. Because this case is not distinguishable from the Standard Oil Co. v. Manis, 433 S.W.2d 856 (Ky. 1968) line of cases, we affirm.
On June 24, 2005, Logsdon failed a Complaint in Warren Circuit Court. The Complaint alleged that the appellees3 were negligent in causing his December 23, 2004, slip and fall in that they failed to maintain their business premises in a reasonably safe condition; and/or failed to warn him of the unreasonably safe conditions; negligently undertook snow and ice removal activities; and failed to comply with City of Bowling Green Ordinances requiring owners and occupiers to keep sidewalks and other areas adjacent to their premises free from ice and snow.
The law regarding liability for injury due to natural outdoor hazards was defined by our Supreme Court Standard Oil Co. v. Manis, 433 S.W.2d 856 (Ky. 1968). In Standard Oil, the Court held that “natural outdoor hazards which are as obvious to an invitee as to the owner of the premises do not constitute unreasonable risks to the former which the landowner has a duty to remove or warn against.” Id., at 858. This standard was reaffirmed in the most recent significant published case in this area, PNC Bank v. Green, 30 S.W.3d 185 (Ky. 2000). However, “whether a natural hazard like ice or snow is obvious depends upon the unique facts of each case.” Schreiner v. Humana, Inc., 625 S.W.2d 580, 581 (Ky. 1981).
Applying the foregoing to the present circumstances, the hazard faced by Logsdon — snow, ice, and freezing slush — was created by natural elements. It was outside, and while it was not full daylight, Logsdon makes no claim that deficient lighting contributed to his fall. Being a frequent shopper at the store, Logsdon was familiar with the parking lot area and had traversed the same path only 15 minutes prior to his slip on his way into the store. He was fully aware of the accumulation of ice and snow in the area. Upon entering the store he realized that the area surrounding his vehicle was damp and slushy. Upon exiting the store he noticed that it had become colder. Therefore, that there might be additional freezing or refreezing was a distinct possibility. Under these circumstances we are of the opinion that the defendants could not have reasonably foreseen that Logsdon would proceed without exercising commensurate caution. Standard Oil at 859.
There was no duty on the defendants to stay the elements or make its parking lot absolutely safe. Nor was there a duty to warn Logsdon that the obvious natural conditions may have created a risk. If the firelane area was damp and slushy, and the temperatures were falling, whatever hazards those conditions constituted was as apparent to Logsdon as it was to the defendants. We are unable to find a breach of duty by the latter. Id; Corbin Motor Lodge v. Combs, 740 S.W.2d 944 (Ky. 1987).
In the event that the court might not be persuaded that the relevant standard of care in this case is established by KOSHA regulations, Pennington contends in the alternative that the trial court erred by failing to apply the burden-shifting approach adopted by Kentucky in certain slip-and-fall cases. Pennington argues that this case is governed by the principles adopted by the Supreme Court of Kentucky Lanier v. WalM-art Stores, Inc., 99 S.W.3d 431 (Ky. 2003). Under Lanier, Pennington contends that he enjoys a presumption that MeadWestvaco was negligent, thus, precluding the entry of summary judgment.
In Lanier, the plaintiff slipped on an unidentified clear liquid while shopping in a grocery aisle at a Wal-Mart store. Lanier could not prove that Wal-Mart was negligent because she could not prove how long the liquid had been on the floor. Nor could she prove that the store’s employees either caused it to be there or had notice of its presence for a sufficient time to have removed or warned of the potential hazard. She lost in the trial court.
[A]s between two apparently innocent parties, one being a business proprietor having a duty to maintain his premises in a reasonably safe condition for the use of his customers and the other being the invited customer, the burden of proof with respect to the cause of the unsafe condition of the premises should be on the one with the duty to prevent it.
Lanier, 99 S.W.3d at 434. (Emphasis added).
In contrast, the cause of the allegedly unsafe condition in this case is not at issue. Additionally, the length of time that the condition existed and whether MeadWestvaco had notice of the condition are not issues raised either by Pennington or MeadWestvaco. The undisputed facts show that Pennington had at least constructive notice of the condition and that the condition was open and obvious. Pennington had been instructed to await Antkowiak’s supervisory assistance prior to moving machinery within the restricted area. He failed to follow this directive and moved into the area on his own. The facts do not support the existence of any duty owed by MeadWestvaco under Kentucky law that would support Pennington’s common law negligence claims. Ralston Purina Co. v. Farley, 759 S.W.2d 588 (Ky. 1988).
In contrast to Ferguson, this is not a “slip-and-fall” case. Lunsford was not injured after slipping on dangers created by the elements; she testified that the steps were free of mud and ice. Instead, the evidence is undisputed that the steps simply collapsed under her while she was leaving the mobile home. There is nothing in the record to indicate that mud, ice, snow, or any other natural outdoor hazard had anything to do with the incident. Thus, snow and mud on the ground adjacent to the clear steps in no way warranted an apportionment instruction.
While Lunsford as an invitee had a duty to exercise reasonable care for her safety, she was not required to undertake an actual inspection. As noted in Humbert, supra, a general observation was sufficient. An invitee “is not obliged to make an inspection of the premises to assure himself that they are safe, and he is contributorily negligent only when the peril is obvious to a person of ordinary prudence in the situation.” (Emphasis added). Milby v. Mears, 580 S.W.2d 724, 729-30 (Ky.App. 1979). An invitee is also “not required to look for danger when there was no reason to apprehend danger.” Winn-Dixie Louisville, Inc. v. Smith, 372 S.W.2d 789, 792 (Ky. 1963).
After reviewing the record, we cannot conclude that Lunsford had a reason to apprehend danger or that she otherwise failed to exercise reasonable care in using the steps. Although she stated that she did not look directly at the steps, she also testified that they appeared usable and stable. She testified that she and her family were able to use the steps to enter the mobile home and that her family members were able to leave the mobile home using those same steps immediately before they collapsed beneath Lunsford. Lunsford directly observed that the steps were free of ice and snow, indicating that she did take general notice of the surface upon which she was about to walk. Humbert, supra. There was no testimony or evidence to indicate that Lunsford’s accident in any way resulted from her failure to exercise reasonable care or to take note of any obvious risks or dangers. In res ipsa loquitur fashion, the steps simply collapsed beneath her for reasons beyond her control. Since there was no evidence to demonstrate any fault whatsoever on her part, there was no predicate upon which to base an apportionment instruction or to require an instruction relating to her failure to adhere to any duty. We find no error on the part of the trial court in refraining from so instructing.
he must also act reasonably to inspect the premises to discover possible dangerous conditions of which he does not know, and take reasonable precautions to protect the invitee from dangers which are foreseeable from the arrangement or use of the property.
Id., quoting William Prosser and W. Page Keeton, Prosser and Keeton on Torts, § 61, at 425-26 (5th ed. 1984).
Bishop contends that he was only responsible for those perilous conditions of which he either “knew or should have known,” and that his “knowledge was an issue for the jury.” However, the question of whether Bishop knew or should have known of the dangers presented by the mobile home steps was properly presented to the jury for its consideration. “Instruction No. 1(b)” advised the jury that “[y]ou will find for PLAINTIFF if, and only if, you are satisfied from the evidence as follows: . . . that the stairs were in a state of repair so as to cause an unsafe condition, that was known or should have been known to the DEFENDANT.” (Emphasis added). We find no error as to the trial court’s instructions on Bishop’s owed duties.
The jury verdict and judgment of the Clay Circuit Court is AFFIRMED.
This litigation arose over a slip and fall that occurred on December 27, 2002, at an apartment complex owned by Blue Lick Apartments, Ltd. and managed by L.E.A. Properties, LLC. Whatley was a tenant at the complex who lived in a second-floor apartment. The complex had a policy requiring residents to dispose of their garbage in a community dumpster or face a $25.00 fine if garbage was left elsewhere. A wooden staircase connected the second-floor apartments to the sidewalk below. The staircase was located in a breezeway that was open to the elements. On the day in question, Whatley intended to stay in bed all day due to a back ailment. The weather was inclement, with freezing temperatures and intermittent sleet. Whatley claims that she ventured from her apartment to take a bag of garbage to the dumpster because she feared being fined by the apartment complex if she left the garbage outside her door. Whatley left her apartment wearing pajamas “like a baby’s pajamas with the feet in them.” Whatley admitted she saw that “chunks” of ice covered the stairs. She scrutinized the first step and thought it looked relatively free of ice. Unfortunately, the stair was slick and Whatley tumbled to the sidewalk below. Whatley sustained a back injury as a result of the fall.
Whatley brought a negligence claim against Blue Lick and L.E.A., but the circuit court granted the defendants’ motions for summary judgment and dismissed her complaint.
On appeal, Whatley contends that the circuit court erred by granting summary judgment because factual questions exist as to whether Blue Lick and L.E.A. breached the duty of care owed Whatley.
In this case, material issues of fact exist as to the reasonableness of the parties’ actions. Consequently, summary judgment was improper.
The summary judgment dismissing Whatley’s complaint is vacated, and this case is remanded to Jefferson Circuit Court for further proceedings.
There is no precedent in Kentucky for expanding this new approach to cases involving asbestos-exposure by an employee of an independent contractor. If the approach is to be expanded to include cases such as this, we believe it is best left to the Kentucky Supreme Court to do so. Therefore, we agree with the circuit court that the new burden-shifting approach is not applicable under these circumstances.
 “Slip and fall” cases are traditionally based on the duty of care that a possessor of land owes to an invitee. “A business visitor is a person who is invited to enter or remain on land for a purpose directly or indirectly connected with business dealings with the possessor of the land.” Restatement (Second) of Torts § 332(3) (A.L.I. 1965).
 (c) fails to exercise reasonable care to protect them against the danger. Id. at § 343.
 And, if the possessor of the property holds it open to the public for entry for his business purposes, he is subject to liability to members of the public while they are on the property for business purposes for physical harm caused by the accidental, negligent, or intentionally harmful acts of third persons if the possessor failed to exercise reasonable care to either: a) discover that such acts are being done or are likely to be done, or b) give warning adequate to enable the business visitors to avoid the harm, or otherwise protect them against it. Id. § 344.
 The occupier must not only use care not to injure the visitor by negligent activities, and warn him of hidden dangers known to the occupier, but he must also act reasonably to inspect the premises to discover possible dangerous conditions of which he does not know, and take reasonable precautions to protect the invitee from dangers which are foreseeable from the arrangement or use of the property. William Prosser and W. Page Keeton, Prosser and Keeton on Torts, § 61, at 425-26 (5th ed. 1984).
 These general principles relate only to the duty owed by a business proprietor to his customers and not to the burden of proof as to whether that duty has been violated.
Where the floor condition is one which is traceable to the possessor’s own act — that is, a condition created by him or under his authority — or is a condition in connection with which the possessor is shown to have taken action, no proof of notice of the condition is necessary. However, where it is not shown that the condition was created by the possessor or under his authority, or is one about which he has taken action, then it is necessary to introduce sufficient proof by either direct evidence or circumstantial evidence that the condition existed a sufficient length of time prior to injury so that in the exercise of ordinary care, the possessor could have discovered it and either remedied it or given fair adequate warning of its existence to those who might be endangered by it. Cumberland College v. Gaines, Ky., 432 S.W.2d 650, 652 (1968) (citing Kroger Co. v. Thompson, Ky., 432 S.W.2d 31 (1968)).
This Supreme Court panel is reviewing doctrines of law, and is not afraid to toss out those theories they disagree with. Recently they overruled a decision of the prior Supreme Court panel on jury strikes, and that prior ruling was only about a year old. This week, the decisions for January came down, and four new legal doctrines were adopted.
On January 24th., the Ky. Supreme Court adopted four rulings that will substantially change case law as it has previously been interpreted on the topics discussed. The following Keywords posted on LawReader accompany the more detailed synopsis available to our users, along with links to the full text of these decisions.
a police officer working a traffic stop may exercise discretion to conduct a pat-down search for weapons of a vehicle’s passenger who exited the vehicle to accommodate a search of the vehicle incident to the driver’s arrest, even if the officer has no independent suspicion that the passenger is guilty of criminal conduct. …..it logically follows that an officer may order a passenger to exit a vehicle while that vehicle is searched incident to the lawful arrest of the driver. …..We have decided to adopt the automatic companion rule in the narrow realm of cases involving facts similar to the case at hand.
frisk the passenger under these circumstances.
PAPA JOHN’S INTERNATIONAL INC FLOYD ET AL.
We adopt a rule in which the franchisor is vicariously liable for the tortious conduct of the franchisee when it, in fact, has control or right of control over the daily operation of the specific aspect of the franchisee’s business that is alleged to have caused the harm. ……….Under the doctrine of respondeat superior, an employer can be held vicariously liable for an employee’s tortious actions if committed in the scope of his or her employment. In the area of intentional torts, the focus is consistently on the purpose or motive of the employee in determining whether he or she was acting within the scope of employment.
we now reverse the Court of Appeals and adopt the initial permission rule as the standard for determining whether a non-owner’s use of a vehicle exceeds the scope of permission given to that person .
Now as long as permission is initially given to a person to use a vehicle, insurance coverage may extend to subsequent vehicle users through the language of the omnibus clause as long as those subsequent users have permission from the initial borrower to use the vehicle.
BENNY LEE HODGE, ET AL.
HON. EDDY COLEMAN, SPECIAL JUDGE, LETCHER CIRCUIT COURT, ET AL.
Again, final words have been very sparse this past week in the C-J sports section page C-3. On the 25th, there were these “notable numbers:�?
“Miami Heat center Shaquille O’Neal earns nearly $2 million a month, according to a financial affidavit that is part of his divorce files obtained by ExtraTV.com.
“And he spends a lot of it.
“The document shows expenditures such as $22,000 in maid services, $17,000 a month on clothing, $110,000 on monthly vacations, and $23,000 a month at gas stations. But the real kicker: a $1,500 monthly cable bill.�?
Miami, which sports the NBA’s second-worst record at 9-33 (Minnesota is last), snapped a league season-worst 15-game losing streak yesterday in beating Indiana 98-96. O’Neal has sat out most of the season because of injuries.
It is sometimes said that snitches are the lifeblood of police work. The question is: Are they also a poison?
Formally known as C.I.’s, for confidential informants, they are a detective’s best friend. They act as eyes and ears. They serve as secret tipsters. They take the police, by proxy, to the dangerous and privileged places where badges cannot go.
At the same time, they present problems of administration — and sometimes of temptation — to those who uphold the law. Petty crime is often tolerated in exchange for information. Detectives can be duped by an informant’s agenda. While cases of corruption are rare, it is fairly common to have more “give�? in this delicate give-and-take.
The officers are not suspected of making any illegal profit, and one law enforcement official has said police officers’ trading of drugs for information in the pursuit of arrests could be described as “noble-cause corruption.�? The practice would, however, shatter police policy, break the law and, in the view of police commanders and prosecutors, erode the integrity of officers.
The use of informants has been attracting attention in various jurisdictions. In July, the House Judiciary Committee held hearings on informants, prompted by the fatal shooting by the police in Atlanta of a 92-year-old woman in a drug case involving an informant. A New York assemblyman has proposed a bill to increase oversight of informants and in effect restrict their use.
The informants themselves have been public targets. A Web site, whosarat.com, is devoted to exposing “rats of the week,�? witnesses who cooperate with the government. There is even a street campaign to convince people not to become informants. Popular T-shirts show a stop sign imprinted with the words “Stop Snitchin’.�?
The list of what informants do for the police is long and varied: They infiltrate criminal groups that investigators cannot personally approach; they vouch for undercover officers trying to establish credibility on the streets; they identify safe houses, stash houses and cellphone numbers; they help set up surveillance and, in the process, save the police countless hours of work and significant amounts of money.
“With confidential informants we get the benefit of intimate knowledge of criminal schemes by criminals, and that is a very effective way to investigate crime,�? said Daniel J. Castleman, chief of the Investigative Division of the Manhattan district attorney’s office. “It’s no secret that people conduct criminal activities not alone but in combination, and if you can flip someone involved in the criminal scheme, it makes it much easier to investigate and to prosecute.�?
To avoid problems, it is standard practice in police departments and federal law enforcement agencies to closely vet and watch informants — a process that one official in the New York field office of the Drug Enforcement Administration called “knowing them from womb to tomb.�?
In the New York Police Department, once informants are approved for use they are photographed, fingerprinted and entered into a closely guarded registry. Any officer who deals with them is required to log the contact in the registry, with a record of any payments made.
Of course, the habitués of drug dens and dark alleys are not known for their honesty, and several former and current law enforcement officers said they took care to vet their informants often and personally, even after they were entered in the registry.
“The bottom line is you need a back door, as we say, to get in to check once in a while to make sure they are being honest with you,�? said a law enforcement official who frequently works with informants. Like several other officials interviewed, he declined to be named because of the sensitivity of the issue and the secrecy involved in using informants.
William Oldham, a former detective with the elite Major Case Squad and a co-author of “The Brotherhoods: The True Story of Two Cops Who Murdered for the Mafia,�? gave this procedure for keeping informants honest on the street: Before any operation, search the informant thoroughly. Note all money and any drugs on the informant’s body. Put on the recording device, if one is to be used. Hand over the marked money for the drug buy, making sure it was photocopied in advance for serial numbers. Try not to lose sight of the informant during the deal. Search again when the informant returns.
Mr. Oldham said his own choice in dealing with illegal drugs was to use, in order of preference, an undercover officer, an informant working in exchange for lightening a sentence, and, only as a last resort, an informant who was working for the cash.
“There’s no real upside to a paid informant,�? he said. “If they’re working for the money, their heart’s not really in it.�?
Beyond logistical concerns, there are moral questions surrounding the use of informants. It is legal to pay an informant with money rather than drugs, but is it right? What if he uses the money to buy drugs? What if he gets high and commits another crime? What if he overdoses, perhaps fatally?
The four officers arrested in the Brooklyn South case stand accused of paying their informants with drugs, an allegation that stunned one former undercover officer currently assigned to a precinct in the district. He said it was relatively easy to secure money from the department to pay informants.
“You index it under who you got it from,�? he said, “and then just voucher it.�? A lawyer for one of the officers has said the officers were merely trying to make drug arrests and were not being accused of trying to steal for their own benefit.
The American Civil Liberties Union maintains a Web log, titled Unnecessary Evil, tracking news coverage of informants, especially in drug cases.
According to news reports cited on the blog, the authorities in New Jersey decided in November not to prosecute a police detective who impregnated a drug informant in 2005. The same month, a police department in South Carolina was found to have been paying an informant to participate in drug deals even as a local sheriff’s office was chasing the same man for crimes he had committed while on the payroll. And according to The Plain Dealer of Cleveland, a federal judge there decided to free 15 men from prison last week, ruling that their convictions were based on the testimony of a government informant who lied on the stand.
“The practice of using confidential informants in the war on drugs has its own special pathologies,�? said Alexandra Natapoff, an associate professor of law at Loyola Law School in Los Angeles. She said the frequent use of informants can degrade other weapons of law enforcement, like wiretaps and undercover work. In extreme cases, she said, it can result in “the police relying on criminals to tell them who their targets should be.�?
At the same time, the dangers of informing are felt in the communities where the cooperators live. Assemblyman Joseph R. Lentol, a Brooklyn Democrat, said that the police are relying on informants so heavily in some neighborhoods that residents have become suspicious of one another, giving rise to the “Stop Snitchin’ �? backlash.
“This kind of informing stuff that is going on in the ghettos of today is not unlike what had gone on in the ghettos of Warsaw and Eastern Europe and East Berlin,�? Mr. Lentol said.
He proposed a bill in Albany last year to give defense lawyers more power to challenge an informant’s testimony, prohibit or require court approval when prosecutors drop serious charges in exchange for testimony, and require that the police file annual public reports on their use of informants. The bill was not voted on last year but was again referred to committee this month.
“All of these snitches have stopped people from wanting to cooperate with the police because nobody knows who to trust,�? Mr. Lentol said. “It’s like a community poisoning.�?
While most law enforcement officials would oppose restrictions on the use of informants, they acknowledge its pitfalls. “It’s like playing with fire,�? said the law enforcement official who frequently works with them. “Fire, in certain times, is good: if you have to burn something out, kill it, delete it. But if you let it get out of hand, it can destroy the village.�?
Tuesday is deadline for filing to elective office.
The deadline for filing for this year’s Ky. Elections is.4:00 P.M. Tuesday, Jan. 29.
At 4 p.m., all candidates for the 2008 election must have filed paperwork with the secretary of state’s office, meaning that lawmakers will either be able to breathe a sigh of relief or gear up for the sharp scrutiny of a race.
There are several judicial vacanies to be filled around the state, and numerous seats in the state legislature.
At 7 P.M. the Governor will give his eagerly awaited Budget Proposals for the next two years.
The U.S. Marshals Service (USMS) offers property for sale to the public which has been forfeited under laws enforced or administered by the United States Department of Justice, its investigative agencies (Drug Enforcement Administration, Federal Bureau of Investigation, and Bureau of Alcohol, Tobacco and Firearms), and certain other federal law enforcement agencies. More than 8,400 items of forfeited property are sold annually with gross sales of $97 million. The property offered for sale consists of residential, commercial real estate, Land, business establishments, Financial Instruments and a wide range of personal property such as motor vehicles, boats, aircraft, jewelry, art, antiques, and collectibles.
$1.00 to Federal Citizen Information Center, Dept. 319P, Pueblo, CO 81009.
Telephone: Call 1-888-878-3256 and request Item 319P.
WASHINGTON, Jan. 24 /PRNewswire-USNewswire/ -- Grace C. Becker, Acting Assistant Attorney General for the Civil Rights Division, together with James A. Zerhusen, Acting U.S. Attorney for the Eastern District of Kentucky, and Tracy Reinhold, Special Agent in Charge of the Louisville Division of the FBI, announced today the indictment of three former officials at the Grant County Detention Center in Williamstown, Ky.
The indictment charges three former deputy jailers with conspiring to violate the civil rights of a young man who was in their custody at the jail, and with obstructing justice in connection with the investigation of the civil rights violations.
investigations, as well as one count of witness tampering.
According to the indictment, on Feb. 14, 2003, defendants Sydnor, Lanham, and Freeman, along with other deputies not named in the indictment, while on official duty, taunted an 18-year-old high school student who had been brought to the detention center on a speeding charge. The deputies teased the teenager about his physical appearance and told him that he would make a good "girlfriend" for the other inmates. The indictment alleges that the defendants then solicited a group of convicted felons housed in a general population cell to sexually assault the teenager.
Additionally, the indictment alleges that defendants Sydnor, Lanham, and Freeman wrote false reports to conceal their actions, and that defendant Sydnor falsified a daily log and attempted to intimidate a witness into making false statements.
If convicted, defendants Sydnor, Lanham, and Freeman face maximum sentences of life imprisonment and fines of $250,000.
The case is being prosecuted by Trial Attorneys Kristy L. Parker and Forrest Christian of the Criminal Section of the Justice Department's Civil Rights Division and by the U.S. Attorney's Office for the Eastern District of Kentucky.
The state courts system plans to use fees from the courthouse sales of foreclosed homes to fund a 23 percent pay raise for beginning employees and substantial raises for other non-elected officials, many of whom now qualify for food stamps and other state assistance.
The average annual salary for the state’s 1,551 non-elected court workers is $31,553, although the 725 who have been on the job less than five years average $21,384.
With foreclosures spiking as the state’s economy slumps, increased court fees are likely to produce the $28 million needed to fund the raises over the next two years, said state Supreme Court Chief Justice Joseph Lambert.
However, the state might need to kick in money from the General Fund in future years, since foreclosure rates will presumably dip when the economy improves, Lambert told a panel of lawmakers Wednesday.
• $3.5 million over two years to boost pay for judges by 5 percent.
• $2.7 million over two years to increase the pay of circuit court clerks to levels enjoyed by other countywide elected officials.
• $4 million over two years to sustain drug courts in Eastern Kentucky that were funded by a discontinued federal grant. “We don’t want to close drug courts anywhere, but we are fearful that we’re going to have to do just that,” Lambert said.
• $5.5 million over two years to begin implementing an electronic filing system.
FRANKFORT, Ky., Jan. 24, 2008 — The Judicial Nominating Commission, led by Chief Justice Joseph E. Lambert, today announced the three nominees to fill a vacant district judgeship for the 27th Judicial District, Division 2, consisting of Knox and Laurel counties.
The three attorneys named as nominees to fill this vacancy are David Randall (Randy) Azbill and John Paul Chappell, both of Laurel County, and Gilbert Edward Holland of Knox County.
The District Court judgeship was left vacant by Judge Michael Caperton, who was elected to the Court of Appeals.
When a judicial vacancy occurs, the executive secretary of the Judicial Nominating Commission publishes a notice of vacancy in the judicial circuit or the judicial district affected. Attorneys can recommend someone or nominate themselves. The names of the applicants are not released. Once nominations occur, the individuals interested in the position return a questionnaire to the Office of the Chief Justice. Chief Justice Lambert then meets with the Judicial Nominating Commission to choose three nominees. Because the Kentucky Constitution requires that three names be submitted to the governor, in some cases the commission submits an attorney’s name even though the attorney did not apply. A letter naming the three nominees is sent to Gov. Steve Beshear for review. The governor has 60 days to appoint a replacement, and his office makes the announcement.
District Court is a court of limited jurisdiction which hears civil cases involving $4,000 or less, juvenile matters, city and county ordinances, misdemeanors and cases relating to domestic violence and abuse, guardianships for disabled people, traffic offenses, small claims, probate of wills and felony preliminary hearings.
The Administrative Office of the Courts in Frankfort supports the activities of 4,000 Kentucky Court of Justice employees, including the elected offices of justices, judges and circuit court clerks.
“There are things happening everywhere, enough to call it a movement,�? said Deborah Epstein Henry, who founded Flex-Time Lawyers, a consulting firm that creates initiatives encouraging work-life balance for law firms, with an emphasis on the retention and promotion of women. “The firms don’t think of it as a movement, because it is happening in isolation, one firm at a time. But if you step back and see the whole puzzle, there is definitely real change.�?
“What is happening now is not just about the needs and demands of women,�? said Lauren Stiller Rikleen, who directs the Bowditch Institute for Women’s Success.
Law is responding to a confluence of factors, said Ms. Rikleen, the author of “Ending the Gauntlet: Removing Barriers to Women’s Success in the Law�? (Thomson Legalworks, 2006).
In addition, “you can’t ignore the generational piece,�? Ms. Rikleen said. On one end of the spectrum are baby boomers, nearing retirement and mindful of the flexible schedules that did not exist at the start of their careers. At the other end are Gen Y workers, some nearing 30 and in want of a life.
Andrew Bruck, a president of the Stanford group, told the Legal Times: “Just because something always has been doesn’t mean that it always must be.�?
“Those dates are smack in the middle of our children’s winter breaks, which are sometimes the only times to be with our children,�? the lawyers wrote.
Analysis by LawReader Senior Editor Stan Billingsley.
Senate Bill 71 (SB 71/LM/CI (BR 390) – R. Jones II, E. Worley) is an attempt to toughen up the already tough Slammer Bill relating to DUI offenses. It takes a few steps in that direction and one major step backwards.
The bill is very poorly worded and is certain to have some draconian and perhaps unintended consequences. In most instances it increases penalties, but in one instance it creates a new defense to a DUI charge that is certain to free many who currently could be convicted.
Extend the period of time after which a prior DUI “expires�? from five years to ten years. This will allow a second DUI occurring within 10 years of the last DUI to have vastly increased penalties.
2. It lowers the degree of alcohol intoxication necessary to obtain enhanced penalty from the current .18 BA reading to .15. This reading determines if aggravating circumstances exist that justify a longer jail sentence.
The bill raises constitutional issues by repealing the existing provision of the DUI law that permits a person a 10 minute period before taking a BA test, in which he can attempt to call his lawyer.
The bill adds a provision that creates a defense to DUI that current law does not permit. Under the new amendment (see wording below) If a person is under the influence of a controlled substance, which includes alcohol, prescribed by a physician and he has taken the prescribed dosage, then he cannot be convicted. For 25 years the law has provided that any drug (whether or not prescribed by a physician) could justify a conviction if it impaired the motorists driving skills.
“ Section (4) The fact that any person charged with violation of subsection (1) of this section is legally entitled to use any substance, including alcohol, shall not constitute a defense against any charge of violation of subsection (1) of this section, except that it shall be a defense to subsection (1)(d) of this section if the accused consumed the controlled substance under a valid prescription from a practitioner, as defined in KRS 218A.010, acting in the course of his or her professional practice, and complied with the dosage restrictions�?
The new statute does not provide a definition for “controlled substance�?. It may be argued that if a person shows up in court with a prescription from his physician to drink alcohol (to help his heart ??) he now can use that as a defense. Further, if he has taken prozac or other mood altering drug, but only in the prescribed amount, and even if he was driving like a wild man, he can’t be convicted under the new amendment. This allows a driver to ingest marihuana, morphine, sleep aids, etc. and as long as his doctor prescribed the medication and he followed the correct dose on the bottle, then he has an absolute defense to a DUI charge.
The current law has been interpreted strictly by the Court of Appeals to allow a conviction of eating too many “prunes, if it impairs your driving�?. This new defense conflicts with the long standing provision that allowed a conviction for use of any substance that impairs ones driving.
However, the DUI amendment does not refer to Chapter 218A, and therefore that definition does not apply. The current DUI law does not have a definition of “controlled substance�?, therefore the courts will be required under long standing legal principles, to give the term its plain and simply meaning. i.e. any substance which is controlled. That would include “contraband drugs�?, cigarettes in jurisdictions where smoking is prohibited, marihuana, and any prescription drug, One could argue that under this loose wording that “water�? is a controlled substance, since water quality is regulated by the state.
The following is the provision in the current law which allows a driver to consult with an attorney before agreeing to take a BA test. This provisions will be repealed by the new law. This conflicts with the 6th. Amendment (Right to Counsel) in the U.S. constitution.
(3)[ During the period immediately preceding the administration of any test, the person shall be afforded an opportunity of at least ten (10) minutes but not more than fifteen (15) minutes to attempt to contact and communicate with an attorney and shall be informed of this right. Inability to communicate with an attorney during this period shall not be deemed to relieve the person of his obligation to submit to the tests and the penalties specified by KRS 189A.010 and 189A.107 shall remain applicable to the person upon refusal. Nothing in this section shall be deemed to create a right to have an attorney present during the administration of the tests, but the person's attorney may be present if the attorney can physically appear at the location where the test is to be administered within the time period established in this section.
The civil justice system allows ordinary citizens to advocate for their rights and protect themselves against undue harm from unsafe products, unscrupulous business practices, and abuses of government power, through the public courts. Drum Major Institute for Public Policy’s (“DMI�?) report, Election ’08: A Pro-Civil Justice Presidential Platform outlines six key challenges to our civil justice system along with common-sense solutions that would improve the lives of countless Americans. America needs a leader who will not only recognize the significance of these challenges, but who will develop and implement clear and effective policies to address them. Some of policies we offer in this report have already been proposed as legislation and simply require Presidential support. Other policy solutions are the focus of movements growing at the grassroots level. And within this discussion are proposals that will enable the next President to exert meaningful leadership through our federal agencies. All told, the common-sense solutions discussed herein would strengthen our civil justice system and make it fairer and more accessible to Americans.
While our laws guarantee a person a lawyer if he runs the risk of going to prison, no such guarantee exists for a person facing equally dire circumstances like the loss of a home or services that help him feed his family. “And justice for all�? remains a promise unfulfilled for low-income Americans who lack access to a lawyer but are entwined in critically important legal matters. Pro bono representation and legal aid services help, but to effectively provide representation to people facing a legal crisis, the next President must create a federal right to counsel in important matters like eviction proceedings, child custody hearings, and proceedings over eligibility for public benefits. A growing movement urges the creation of this right—known as “Civil-Gideon �?—for those who cannot afford a lawyer in matters involving basic human needs, such as matters pertaining to housing, sustenance, safety, health, and child custody.
Far too many victims of harms like employment discrimination, medical malpractice, predatory lending, and breach of contract find that they have inadvertently waived their Constitutional right to a jury trial when they signed a contract containing a binding mandatory arbitration “agreement.�? Virtually every adult American has signed such a provision, now commonly nestled in the fine print of employment, consumer, and other contracts. Binding mandatory arbitration clauses send disputing parties to a private arbitrator rather than a public court. Unfortunately, however, arbitration’s burdensome costs, lack of procedural protections and the documented anti-consumer bias of some arbitration companies make it particularly harmful to individuals and beneficial to companies.
The Federal Arbitration Act (“FAA�?) is a federal law originally designed to allow equally powerful companies to agree to arbitrate, but increasingly used to enforce arbitration between corporations and people, denying individuals their Constitutional right to access the civil justice system. Our next President must support the Arbitration Fairness Act of 2007, which will amend the FAA by prohibiting pre-dispute arbitration agreements in all contracts involving employees, consumers or franchisees, and “in disputes arising under any statute intended to protect civil rights or to regulate contracts or transactions between parties of unequal bargaining power.�? Concepts of justice and fundamental fairness demand that American citizens be free from binding mandatory arbitration contracts in their consumer, employment, and service agreements.
Plaintiffs, their lawyers, and even judges face external pressure to move settlements forward — even at the expense of the public’s right to know about harmful business practices. When parties to a lawsuit decide to settle, a common condition of settlement is that they promise not to disclose important information revealed during the course of the lawsuit. If this information could impact the public’s health or safety, such an agreement creates a conflict between individual compensation and the public benefits that result when the civil justice system is allowed to function as intended. This kind of agreement also unfairly enriches corporations for bad behavior, which they can pay for through settlements while still profiting from continuing the harmful practices.
High rates of injuries and deaths due to medical malpractice have created a crisis in healthcare and taken its toll on the economy. The cost to society in the form of additional medical treatment costs, the victims’ lost income, lost household productivity, and victims’ physical disability, is estimated to be between $17 billion and $29 billion per year. Various structural features of the health care system weaken and even remove incentives for hospitals to take measures to improve safety systems. The civil justice system provides the only means for victims of malpractice to hold medical facilities accountable for their injuries. Misguided pushes for tort “reform�? suggest that the solution to the malpractice crisis is to restrict patients’ access to the courts. Instead, something must be done to encourage improvements in patient safety and reduce preventable medical errors so that fewer people are injured in the first place. The next President should allocate funding for electronic medical records and improved patient safety programs, both of which will save the health care system billions of dollars and prevent the occurrence of errors caused by unsafe procedures and systems. These funds should support a national agency dedicated to meeting the challenges of and demand for emergency medical records and improved patient safety systems. The President should also support the implementation of a national mandatory medical error disclosure system, which would equip patients and their families with the information they need about the quality of their care. Support for improved patient safety benefits everyone because it saves lives as well as money.
A 1945 law prohibiting the federal government from regulating or applying antitrust laws to the insurance industry, the McCarran-Ferguson Act, has created a culture of opportunism in the insurance industry, where a growing pattern and practice of bad faith claim denials have produced record-setting profits for companies and decreased protection to consumers. Something must be done to protect responsible, forward-thinking Americans who invest their earnings in insurance policies only to face the same uncertainty and vulnerability as those who never had insurance at all. The next President should support the repeal of the McCarran-Ferguson Act and the establishment of national “bad faith�? legislation that would protect policyholders against the unfounded rejection or improper resolution of their insurance claims. This legislation should create incentives for insurance companies to act in good faith, such as imposing civil penalties on insurance companies that deny claims without good cause.
Candidate Filing Deadline One Week Away. Several judicial vacancies to be filled.
(Frankfort, KY) Time is running out for potential candidates to place their name on the ballot for the 2008 primary elections. Primary candidates, including political party candidates and candidates for non-partisan races that file with the Secretary of State, have until January 29, 2008 to file for office.
“We are one week away from the deadline,�? said Secretary of State Trey Grayson, the Commonwealth’s chief election officer. “Our office’s election staff is already extremely busy, and we anticipate that filings will continue up until the last minute.�?
Candidates for offices that file with the Office of the Secretary of State may file their papers with the office until 4:00 p.m. EST on January 29th. If candidates choose to mail their filing papers, the documents must still be received by 4:00 p.m. on the 29th, and thus, candidates are asked to plan accordingly.
In order to help the hundreds of candidates, both new and old, seeking political office, the Office of the Secretary of State has updated its ballot access procedural manual titled: Declaring Your Candidacy. Kentuckians can use this manual as a quick guide to filing for political office.
Although the publication focuses primarily on candidate filing procedures, sample forms for attaining ballot access, and qualifications for each elective office, it also includes other important and pertinent election information that may affect candidates. The manual contains an election schedule, contact information for state election agencies, and answers to candidates’ most frequently asked questions.
“Candidates would be wise to file prior to the final deadline, in the event their documents are not acceptable for filing,�? stated Mary Sue Helm, election administrator for the Secretary of State. “There is no opportunity for correction of documents after that date and time.�?
For more information about filing to run for elected office in Kentucky, to obtain a copy of Declaring Your Candidacy, or to view a list of candidates who have filed for office, please visit www.sos.ky.gov/elections.
There were no decent “final words�? for last week but there are some incredible “notable numbers�? that appeared on C-J sports section page C-3 on Dec 11th: “A look at the financial losses – totaling an estimated $142 million – incurred by Atlanta Falcons quarterback Michael Vick, who was sentenced on Dec. 10th to 23 months in a federal prison for his role in an illegal dog-fighting operation: “$71 million: Salary in the final seven seasons of his Falcons contract, which the team is expected to terminate when salary-cap ramifications are resolved. “$50 million: Estimated endorsement income lost over the next decade, according to the University of Oregon. “$19.97 million: Previously paid bonuses that an arbitrator has ruled the Falcons can recoup from Vick. (This ruling is currently being reviewed by a US District Judge.) “$928,073: Funds Vick put into an escrow account, as part of his plea agreement, to fund the care of about 54 pit bulls found on his property.�? Update: I think that, since Dec. 11th, Atlanta has officially terminated Vick’s salary over the course of his contract, and that the court awarded to Atlanta the bonuses that had been paid to Vick. However, Vick does not have the funds the pay almost $20 million back to the Falcons, and I believe that he has filed bankruptcy.
Jan. 22, 2008 – Hold onto your seats, this could be a bumpy ride.
Stocks Open Sharply Lower Despite Interest-Rate CutWithin minutes of the opening bell in New York, the Dow Jones Industrial Average fell nearly 500 points, or 4 percent, and other major indexes also slid. The Nasdaq Composite was down more than 5 percent.
By midmorning the drop was reduced to the 150′s.
The Federal Reserve, responding to an international stock sell-off and the likelihood of a sharp drop in the U.S., cut its benchmark interest rate by three-quarters of a percentage point.
There they go again. The media paints spirited debate as NASTY.
I enjoyed the Democratic debates last night. Everyone asked some tough questions, and had to defend prior votes and positions on issues. This morning the pundits in the media were almost universally using words like “mean spirited�?, “below the belt�? and “nasty�? to describe the give and take at the Myrtle Beach, S.C. debate hosted by CNN.
What world are they living in? They all ought to attend a session of District Court or motion day in Circuit Court. They would soon see that asking hardball questions is not “nasty�? it is merely the way that truth is exposed. Nasty is when you attack someone’s race or gender or heritage. It is not nasty to question a politicians prior vote on a specific issue. It is nasty to generalize and stereotype. It is not nasty to expose a fraud. It is nasty to call a war hero a traitor. Iit is nasty to allow a candidate to have one standard of conduct for himself and a stricter standard of conduct for his/her opponent. It is nasty to bring a candidate’s child into a debate. It is not nasty to ask a candidate why he/she takes money from Walmart or a slum lord. An embarrassing question is not necessarily nasty.
The media refuses to do much investigative reporting and see which comments by a candidate are true and which are inconsistent with prior statements and which are outright distortions. Well, we excuse John Stewart of the Daily Show from that generalization, but it applies almost everywhere else. We love it when Stewart shows video clips of a politician who made one statement a year ago and denies making the statement in a more recent video clip. Now that is reporting. Some call the Daily Show a comedy show. The real comedy show is when the media calls last nights debate “Nasty�?.
One of the great job benefits of being a trial judge was the opportunity to see good attorneys who had researched their cases, exposing any claims by their opponent which were not supported by the facts.
Presidential debates are important. If a candidate is a pompous puffball who regularly changes his/her position on important issues crucial to the future of the world, just to pimp the audience, they should be exposed. That isn’t Nasty, that Nice.
The job of the media is to take the time to really dig deep into statements made by politicians and report any inconsistencies. Unfortunately the media, in an attempt to boost ratings, looks for a way to create false conflict by trying to make honest debate look like a character flaw. Debates help us determine if a candidate can stand up to tough questions. It is not a bad thing. Americans are far tougher people than the media realizes. We can take it, even if the media can’t.
Anyone who feels that last night’s debate was “nasty�? ought to forfeit their right to vote and should never be allowed to sit on a jury, because they aren’t adult enough to deal with the real world.
The more people Shelby W. Bonnie can get arguing over politics, the better.
More than a year after leaving CNet Networks, the online media company he ran for six years, Mr. Bonnie is into his next project, Politicalbase.com, which is as much an online political forum as a stockpile of election data.
One of a growing number of Web 2.0 companies — a category of Web sites that let visitors modify content and contribute material — Political Base has features ranging from serious blogs and a variety of YouTube videos to campaign finance data displayed on a Google map.
Mr. Bonnie recently named Mr. Nickolas as Political Base’s lead editor and content manager.
The idea for Political Base, which is based in Sausalito, Calif., came from Mr. Bonnie’s own longtime appreciation of politics and his fascination with election seasons as “great sport.�? Mr. Bonnie started the site last fall with the help of four former CNet employees, Mike Tatum, Ethan Lance, Dave Snider and Andy McCurdy, who financed the company themselves.
Mr. Bonnie, a Democrat, sees the site as a place for people of all political stripes to educate themselves on the issues and candidates while they participate in blogs and create new ways of looking at election data.
Political Base is a “structured wiki,�? meaning users can edit most of the text but cannot change the underlying database. The site uses the same publicly available Federal Election Commission data used by dozens of other sites. The site lets users correlate data, creating comparison charts and maps showing candidate strongholds.
One of the more useful features, the 2008 Primaries Quiz, will match you with candidates given your position on several dozen issues ranging from the withdrawal of American troops from Iraq and illegal immigration to school vouchers.
Mr. Bonnie says the first challenge is to build a solid audience. His goal is to start running advertising — from campaigns as well as consumer products companies — as early as this spring.
But won’t whatever audience he can attract disappear after the first Tuesday in November? Political Base insiders insist the business model will sustain itself far past the ballot counting because voters will turn to other elections and other political causes.
“This is a long-term project,�? Mr. Nickolas said. “It’s not just about the presidential race, but about the system.�?
The Market and Lender collapse presents great business for lawyers.
Everyone wants to know who is to blame for the losses paining Wall Street and homeowners. The answer, it seems, is someone else.
A wave of lawsuits is beginning to wash over the troubled mortgage market and the rest of the financial world. Homeowners are suing mortgage lenders. Mortgage lenders are suing Wall Street banks. Wall Street banks are suing loan specialists. And investors are suing everyone.
The legal and regulatory wrangles could dwarf the ones that followed the technology stock bust and the Enron and WorldCom debacles. But the size and complexity of the modern mortgage market will make untangling the latest mess even trickier. Some cases stretch across continents. Others are likely to involve state and federal regulators.
“It will be a multiring circus,�? said Joseph A. Grundfest, a professor of law and business and co-director of the Rock Center for Corporate Governance at Stanford. “This particular species of litigation will be manifest in many different types of lawsuits in many different jurisdictions.�?
The legal battles stretch from Main Street to Wall Street and beyond. Homeowners and subprime mortgage lenders are squaring off in scores of cases that claim some lenders engaged in predatory lending practices and other wrongdoing. Cleveland and Baltimore are pursuing cases against Wall Street banks, saying local residents are suffering because the banks fostered the proliferation of high-risk home loans.
Two questions lie at the heart of many of the cases. The first is whether lenders and investment banks alerted borrowers and investors to the risks posed by subprime loans or securities backed by them. The second is how much they were legally obliged to disclose. “Those are the two issues that are frequently raised,�? said Jayant W. Tambe, a partner at the law firm Jones Day.
As defaults and foreclosures rise, the various players in the housing market are all pointing fingers at each other. State prosecutors like Andrew M. Cuomo, the attorney general of New York, are investigating whether investment banks that packaged mortgages into securities disclosed the risks to investors and credit ratings agencies. Investment banks, in turn, are accusing lenders and mortgage brokers of shoddy business practices.
“What strikes me here is that this a tainted system from A to Z,�? said Tamar Frankel, a law professor at Boston University. “Everybody blames everybody else. If you look at what is being said, there isn’t one who doesn’t blame another and there is half-truth in everything.�?
Wall Street banks that sold mortgage investments around the world face legal complaints from as far away as Australia and Norway. Lehman Brothers, the Wall Street bank with the biggest mortgage business, is being sued by towns in Australia that say a division of the firm improperly sold them risky mortgage-linked investments. Lehman has denied the charges and has said the unit, formerly known as Grange Securities, acted properly.
Closer to home, members of a New Jersey family have sued Lehman for $4.14 billion, saying the firm steered them into complex securities that have become difficult to sell, Bloomberg News reported Friday. Lehman denied the accusations.
In the United States, Lehman is suing at least six mortgage lenders and brokers like Fremont Investment and Loan and the Fieldstone Investment Corporation, claiming they sold Lehman dubious loans. Lehman claims that borrowers’ incomes were overstated, appraisals were inflated and the homes were in poor condition. In most cases, the lenders are fighting the allegations and Lehman’s demand that they buy back defaulted or otherwise problematic loans.
In another case, the PMI Group, a mortgage insurer, sued WMC Mortgage, a subprime lender that has stopped making loans, and its corporate parent, General Electric, in California Superior Court. PMI is trying to force the companies to buy back or replace loans that the firm was hired to insure and that it says were made fraudulently or in violation of the standards that the lender said it was using.
According to the lawsuit, a review of loans found “a systemic failure by WMC to apply sound underwriting standards and practices.�? Reviewing a sample of the nearly 5,000 loans in the pool, Clayton, a consultant that reviews mortgage loans, identified 120 “defective�? loans for which borrowers’ incomes and employment were incorrect or where the borrower’s intention to live in the home was incorrect. WMC offered to buy back 14 loans, according to the lawsuit.
Some of the loans have defaulted, and a trustee’s report on the pool of loans packaged and underwritten by UBS, the Swiss investment bank, shows that losses on some defaulted mortgages are as high as 100 percent. As of November, about 27 percent of the loans in the pool were either delinquent 60 days or more, in foreclosure or had resulted in a repossessed home.
PMI is on the hook for losses on defaulted loans, lost interest and principal payments to investors who own a $29.6 million slice of bonds backed by the mortgages. A senior vice president at PMI, Glenn Corso, said he was unsure how much the company had paid out so far.
A spokesman for G.E., Robert Rendine, declined to comment, citing the pending litigation.
Securities lawyers say cases involving mortgage-backed securities, which were generally sold privately to sophisticated institutional investors, are far more complicated than those involving stocks, which were sold publicly to everyday investors. Class-action lawsuits, a favorite tool of plaintiffs’ attorneys, will be employed less than they were after the plunge in technology stocks a few years ago because mortgage securities tend to vary in composition and disclosure.
“This is going to be much more complicated to prove, and it’s going to be case by case as opposed to class-actions,�? said David J. Grais, who is a partner at the Grais & Ellsworth law firm in New York and an author of a recent paper on the legal liabilities of credit ratings firms. “This resembles the S&L crisis in the ’80s much more than it does the tech bubble in the ’90s.�?
Class-action filings spiked earlier this decade, jumping to 497 in 2001, from 215 the year before, according to Cornerstone Research, which compiles the figures in cooperation with the Stanford Law School. As those suits were resolved, new filings fell to a low of 118 in 2006. But as of mid-December, filings had jumped to 169, with about 32 of the cases related to the mortgage crisis.
Through the end of 2006, settlements in technology- and telecommunications-related class-action suits brought by shareholders totaled $15.4 billion, with more than a third of that coming from one company, WorldCom, according to Cornerstone. Settlements in Enron-related cases have totaled about $7.2 billion so far; the figure does not include Securities and Exchange Commission fines and settlements.
Bringing securities fraud cases has been made harder by recent Supreme Court decisions that favored Wall Street, companies and professionals like accountants. The court ruled earlier this month that two technology vendors could not be held liable for taking part in a scheme designed by a cable company to inflate its revenue. Last summer, in a ruling favoring the company, Tellabs, the court said that securities cases could be dismissed if investors did not show “cogent and compelling�? evidence of intent to defraud.
Some plaintiffs are using other legal avenues like the pension law, the Employment Retirement Income Security Act. Under that law, managers who handle pension funds must act in the fiduciary interest of their clients. State Street Global Advisors, which manages pension money, has set aside $618 million to settle claims that the firm invested in risky mortgage-related securities.
Some legal experts say that the recent Supreme Court decisions, which are largely based on cases bought by shareholders, may not have much bearing on the more complex cases that stem from securitization of mortgages.
“There will be a whole new set of claims that deal with the unique nature of the securitization market,�? Mr. Tambe of Jones Day said. “There will have to be new decisions that deal with those claims and a learning process for the bar and judiciary in those cases.�?
When legal ethics rules clash with morality. Virginia took ten years to get this one right.
“Clancy and I, when we were alone together, would reminisce about this and more or less renew our vows of silence,�? Mr. Smith told a judge last month. “We felt that there was nothing that could be done.�?
But the situation changed last year, when Mr. Smith took one more run at the state bar’s ethics counsel. “I was upset by the conduct of the prosecutor,�? Mr. Smith wrote in an anguished letter, “and the situation has bothered me ever since.�?
“As he began to describe the positions of the individuals and the firing of the shots,�? Mr. Smith said last month, referring to his client, a prosecutor “reached over and stopped the tape recorder.�? According to Mr. Smith’s testimony and a memorandum he prepared soon after the debriefing, the prosecutor, Cathy E. Krinick, said, “Les, do you see we have a problem here?�?
The problem was that Mr. Jones’s account did not match the physical evidence. “This isn’t going to do us any good,�? Ms. Krinick said, according to Mr. Smith.
For 15 minutes, Mr. Smith said, prosecutors coaxed and coached Mr. Jones to produce testimony against Mr. Atkins that did match the evidence. They flipped over a table and pretended it was a truck. “We used a chair, or something like that, to simulate the open door,�? Mr. Smith testified, “because only one of the doors on the truck would open.�?
In a court filing last year, Ms. Addison, who also attended the debriefing, called Mr. Smith’s account “false and libelous�? and said her office “adamantly denies�? it. But there are only about an hour and three-quarters of material on the audiotape, even though a detective announced that it started rolling at 4:16 p.m. and stopped at 6:16 p.m.
Mr. Smith has a modest legal practice, working alone. “I do criminal work, civil work, real estate,�? he testified last month.
He said he understood the reasoning behind the state bar’s initial advice. “It certainly practically would have put in jeopardy all the things that had been done or that we had done for our client,�? he testified last month.
Mr. Smith wrote to the bar again in March, this time emphasizing that his client’s case was over. A lawyer there would not give him an answer in writing, Mr. Smith said, but told him over the phone that he could “come forward and make known what had gone on at the meeting.�? Mr. Smith did not name the lawyer.
Ronald D. Rotunda, who teaches legal ethics at George Mason University, said the rules in Virginia were murky about what lawyers in Mr. Smith’s position could do. But if the bar’s initial advice was correct, Professor Rotunda added, “there is something wrong about the law, particularly if you are talking about execution or years in prison.�?
Richard G. Parker, a lawyer at O’Melveny & Myers in Washington who represented Mr. Atkins along with Joseph A. Migliozzi Jr., praised Mr. Smith. “He had no dog in this fight,�? Mr. Parker said. “Les Smith brooded on this and came out and said something to do the right thing.�?
In a brief interview, Mr. Smith said he did not think he should speak about his experiences because “there may be another forum for me to testify in.�? He added, a little cryptically, “I did what I have done.�?
At a hearing last month, Mr. Smith was asked whether “the concerns you’ve been thinking about for 10 years have been addressed in your own mind?�?
“Yes,�? he said, “in that whatever went on is going to be exposed and someone will have made a decision about what went on. But I was also prepared to keep quiet had the bar come back with an opposite answer in March.�?
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