Latest 16 Cases This Week: ML-CFC 2007-6 Puerto Rico v. BPP Retail Properties, LLC (1st Cir.), United States v. Berry (5th Cir.), Straser v. City ...

Which Laws Apply to Broker-Dealers? Federal Laws? State Laws? Both? General Principles Leading to an Answer

TAMAR FRANKEL

BU Law emerita professor Tamar Frankel explains the law of preemption as it pertains to broker-dealers and their investor clients. She predicts, among other things, that either the clients will demand that broker-dealers adhere to a fiduciary duty, or else that states will impose that duty on them.

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ML-CFC 2007-6 Puerto Rico v. BPP Retail Properties, LLC

Court: US Court of Appeals for the First Circuit

Docket: 18-1405

Opinion Date: February 28, 2020

Judge: David J. Barron

Areas of Law: Real Estate & Property Law

The First Circuit vacated the judgment of the district court designating a magistrate judge to "hear and determine" under 28 U.S.C.(b)(1)(A) a motion to appoint a receiver over certain commercial properties that were the subject of a foreclosure action under Puerto Rico law, holding that the motion to appoint a receiver was "dispositive" under Fed. R. Civ. P. 72, despite the district court's apparent contrary determination. On appeal, Appellant argued that the motion to appoint a receiver could not be delegated to a magistrate judge under section 636(b)(1)(A) but, rather, must be made under 28 U.S.C. (b)(1)B). The First Circuit vacated and remanded for further proceedings, holding that the motion to appoint a receiver was "dispositive" under Rule 72, and therefore, this Court does not reach the merits of whether the magistrate judge's decision was correct. Rather, the Court remanded the case for the district court to apply de novo review to the magistrate judge's unauthorized order, in accordance with Rule 72(b) and 28 U.S.C. 636(b)(1).

United States v. Berry

Court: US Court of Appeals for the Fifth Circuit

Docket: 19-20050

Opinion Date: February 28, 2020

Judge: Edith H. Jones

Areas of Law: Criminal Law, Family Law, Real Estate & Property Law

The Fifth Circuit affirmed the district court's final order of garnishment under the Mandatory Victims Restitution Act. Defendant pleaded guilty and was convicted of wire fraud, mail fraud, and falsifying a tax return, all in connection with the ongoing theft of funds from her employers. Defendant was then ordered to pay restitution of more than $2 million. In order to enforce the judgment, five investment retirement accounts (IRAs), held under defendant and her husband's names, were garnished. After defendant agreed to release the funds, the government reapplied to garnish two accounts in the husband's name and the district court granted the writ. The court first rejected defendant's claim under federal law that any non-defendant spouse's IRA an be part of a defendant spouse's property or rights to property under 18 U.S.C. 3613. The court has previously held that notwithstanding its anti-alienation provision, 29 U.S.C. 1056(d)(1), Employee Retirement Income Security Act retirement accounts are subject to MVRA restitution awards. Furthermore, under United States v. Loftis, 607 F.3d 173 (5th Cir. 2010), the court held that defendant's one-half interest in her husband's solely managed IRA is part of all property and rights to property of the spouse fined under section 3613. Under Texas law, the court held that the husband's IRAs are solely managed community property, and that a wife has only a one-half interest in her husband's solely managed community property. Finally, the court held that the Consumer Credit Protection Act was inapplicable in this case. Therefore, the court held that half the funds—around $1 million—may be garnished now.

Straser v. City of Athens

Court: US Court of Appeals for the Sixth Circuit

Docket: 19-5689

Opinion Date: February 28, 2020

Judge: Jeffrey S. Sutton

Areas of Law: Civil Rights, Constitutional Law, Real Estate & Property Law, Zoning, Planning & Land Use

Straser built a carport in 2009, about 17 feet from the road. The zoning ordinance requires carports to be 30 feet from the road. The city notified Straser four times that his carport violated the rule. In 2016, the city cited Straser’s neighbor for violating the setback rule. The neighbor accused the city of targeting him for enforcement based on his race and Muslim religion. In 2017, the city cited Straser for his carport. City Attorney Trew stated that the city would enforce the rule, having “had trouble with a Muslim” who complained about a similar violation. Straser claimed he was fined because he is a Christian and the city did not want to favor him over his Muslim neighbor. The district court granted the defendants summary judgment. The Sixth Circuit affirmed. A government that enforces its laws equally against those of different faiths honors the neutrality imperative of the Fourteenth Amendment. Straser did not identify any cases in which the city refused to enforce the 30-foot rule against non-Christians nor did he show discriminatory purpose and effect. Straser’s own account of the conversation showed that Trew was committed to even-handed enforcement. Straser has no evidence that Trew knew of Straser’s religious beliefs.

West v. Charter Communications, Inc.

Court: US Court of Appeals for the Seventh Circuit

Docket: 19-2442

Opinion Date: March 2, 2020

Judge: Frank Hoover Easterbrook

Areas of Law: Communications Law, Energy, Oil & Gas Law, Internet Law, Real Estate & Property Law, Zoning, Planning & Land Use

In 1938, West’s predecessor granted Louisville Gas & Electric’s predecessor a perpetual easement permitting a 248-foot-tall tower carrying high-voltage electric lines. In 1990, Louisville sought permission to allow Charter Communication install on the towers a fiber-optic cable that carries communications (telephone service, cable TV service, and internet data); West refused. In 2000 Louisville concluded that the existing easement allows the installation of wires that carry photons (fiber-optic cables) along with the wires that carry electrons. West disagreed and filed suit, seeking compensation. The Seventh Circuit affirmed that the use that Louisville and Charter have jointly made of the easement is permissible under Indiana law. The court cited 47 U.S.C. 541(a)(2), part of the Cable Communications Policy Act of 1984, which provides: Any franchise shall be construed to authorize the construction of a cable system over public rights-of-way, and through easements, which is within the area to be served by the cable system and which have been dedicated for compatible uses, except that in using such easements the cable operator shall ensure…. The court examined the language of the easement and stated: “At least the air rights have been “dedicated” to transmission, and a telecom cable is “compatible” with electric transmission. Both photons and electrons are in the electromagnetic spectrum.”

Swinomish Indian Tribal Community v. BNSF Railway Co.

Court: US Court of Appeals for the Ninth Circuit

Docket: 18-35704

Opinion Date: March 4, 2020

Judge: William A. Fletcher

Areas of Law: Native American Law, Real Estate & Property Law

The Ninth Circuit affirmed the district court's interlocutory orders denying BNSF's motion for summary judgment on the Tribe's claim that BNSF violated a right-of-way and easement agreement limiting train traffic across the Tribe's reservation. The panel affirmed the district court's judgment, holding that the Interstate Commerce Commission Termination Act (ICCTA) does not repeal the Indian Right of Way Act and does not defeat the Tribe's right to enforce conditions in a right-of-way easement agreement issued pursuant to the Right of Way Act; the ICCTA does not abrogate the Treaty of Point Elliott and the Tribe's treaty-based federal common law right to exclude and condition a third-party's presence on, and use of, Reservation lands; and the Tribe has the right to pursue injunctive relief to enforce the terms of the Easement Agreement. The panel remanded for further proceedings.

Estate of Richard Rosenthal v. JRHBW Realty, Inc., d/b/a RealtySouth

Court: Supreme Court of Alabama

Docket: 1180718

Opinion Date: February 28, 2020

Judge: Mendheim

Areas of Law: Civil Procedure, Contracts, Real Estate & Property Law

Mark Rosenthal ("Mark"), as personal representative of the estate of Richard Rosenthal, deceased ("Richard"), appealed the grant of summary judgment entered in favor of JRHBW Realty, Inc., d/b/a RealtySouth ("RealtySouth"), and Charles Valekis on Richard's claims alleging breach of contract and negligence/wantonness. In early June 2013, Richard retained RealtySouth through its agent Valekis to assist him in locating a new house to purchase. Valekis told Richard about an unlisted property that Valekis believed would meet Richard's needs. Richard testified that he told Valekis that he would not buy the home without having a structural engineer examine it. Richard testified that, based on Valekis's representation that he had had a structural engineer inspect the home and on Valekis's representation that Garland Caudle, a home inspector (but not a structural engineer) had not found any structural issues, he placed an offer on the home. Richard closed on the home on July 19, 2013, and he moved into the home soon thereafter. After he had lived in the home for several months, Richard concluded that the home was too small and that he needed a larger home. He again engaged the services of Valekis and RealtySouth to sell the home. After the home was placed on the real-estate market, Richard began to notice problems with it. Valekis subsequently informed Richard that numerous potential buyers were concerned with the condition of the home. Ultimately, Richard had the home inspected by a foundation-repair contractor, and that contractor recommended that Richard hire a structural engineer. The structural engineer determined the home was experiencing significant structural distress and estimated that fixing the issues would cost over $100,000. In 2015, Richard sued RealtySouth, Valekis, Caudle, Foundations Unlimited of Alabama, and the Coopers (the previous owners of the house). The Alabama Supreme Court concluded Mark's allegation of a breach of contract by Valekis apart from the agency agreement was without merit. As the circuit court concluded, the agency agreement "contains language that RealtySouth and Valekis did not assume any responsibility to inspect the property or retain building experts to inspect the property," so the Court concluded the agency agreement did not provide a basis for Richard's breach-of-contract claim. Accordingly, the circuit court correctly entered a summary judgment in favor of RealtySouth and Valekis with respect to any alleged breach of contract.

Matson v. S.B.S. Trust Deed Network

Court: California Courts of Appeal

Docket: D074442(Fourth Appellate District)

Opinion Date: March 5, 2020

Judge: Patricia D. Benke

Areas of Law: Civil Procedure, Contracts, Real Estate & Property Law

Plaintiffs Matthew Matson and Matson SDRE Group, LLC purchased a deed of trust at a nonjudicial foreclosure sale. S.B.S. Trust Deed Network (SBS) was the trustee and Bank of Southern California, N.A. (BSC) was the beneficiary of the deed of trust. Matson, relying on a software application called PropertyRadar, believed that the deed of trust was in first position on the property. He purchased the deed of trust for $502,000 at the foreclosure auction, then learned that the lien was in second position, with a much lower fair market value than the price paid. Plaintiffs filed a first amended complaint against defendants for rescission of the sale and declaratory relief, relying on Matson's unilateral mistake of fact and the unconscionable price he paid for the deed of trust. The parties filed cross-motions for summary judgment. The court granted summary judgment for defendants. Plaintiffs appealed, but finding no reversible error, the Court of Appeal affirmed the judgment.

Yamamoto v. Chee

Court: Supreme Court of Hawaii

Docket: SCWC-16-0000260

Opinion Date: March 2, 2020

Judge: Sabrina S. McKenna

Areas of Law: Arbitration & Mediation, Contracts, Real Estate & Property Law

The Supreme Court reversed the judgment of the intermediate court of appeals (ICA) affirming the judgment of the circuit court granting Defendants' motion to compel arbitration of Plaintiff's complaint against a partnership and a partner after concluding that Plaintiff's claims arose out of the agreement founding the partnership, signed by Plaintiff, that contained an arbitration clause, holding that the claims in Plaintiff's complaint were not subject to the arbitration clause in the partnership agreement. Plaintiff, a founding partner of the partnership, brought claims alleging conversion, fraudulent conversion, and punitive damages. The lower courts concluded that Plaintiff's claims arose out of the partnership agreement, and therefore the arbitration clause applied. The Supreme Court reversed, holding that because Defendants failed to initiate arbitration pursuant to Haw. Rev. Stat. 658A-9 before filing a motion to compel arbitration and because the arbitration clause did not encompass Plaintiff's claims for conversion, the ICA erred in affirming the circuit court's order granting Defendants' motion to compel arbitration.

Wuori v. Otis

Court: Maine Supreme Judicial Court

Citation: 2020 ME 27

Opinion Date: March 3, 2020

Judge: Humphrey

Areas of Law: Real Estate & Property Law

The Supreme Judicial Court vacated the judgment of the district court ordering the turnover and sale of Travis Otis's boat satisfy a money judgment against him in favor of Erik Wuori, holding that the court erred in concluding that the boat was not used "primarily for commercial fishing" within the meaning of Me. Rev. Stat. 14, 4422(9) and was therefore not exempt from attachment and execution. The boat at issue was a thirty-six-foot boat that Otis used to catch lobsters for the Maine Department of Marine Resources in order to collect data on juvenile lobsters. The district court concluded that the boat was not exempt from attachment and execution because Otis did not harvest the lobster he caught but, rather, returned them to the ocean. Thus, the court reasoned, Otis did not use the boat "primarily for commercial fishing." The Supreme Judicial Court vacated the judgment, holding that because Defendant's hauling and catching was compensated by the Department, the use of his boat constituted "commercial fishing."

Oliver v. State Farm Fire & Casualty Insurance Co.

Court: Minnesota Supreme Court

Docket: A18-0367

Opinion Date: March 4, 2020

Judge: G. Barry Anderson

Areas of Law: Insurance Law, Real Estate & Property Law

In this dispute over the amount of loss after a fire occurred at the home of Respondents the Supreme Court affirmed the judgment of the court of appeals reversing the judgment of the district court granting Respondents' motion to confirm an appraisal award but denying Respondents' motion for preaward interest as untimely, holding that the district court erred by applying the Minnesota Uniform Arbitration Act, Minn. Stat. 572B.01-.31, to a fire loss appraisal award. Respondents' home was insured against fire loss by Appellant. When Appellant and Respondent were unable to agree on the amount of the loss Respondents requested an appraisal. After an appraisal panel issued an award, which State Farm paid, Respondents sought confirmation of the appraisal and moved the court to grant preaward interest on the appraisal award. The superior court confirmed the appraisal award but denied the motion for preaward interest as untimely. The court of appeals reversed and remanded. The Supreme Court affirmed, holding (1) the Act did not apply to the appraisal process under the Minnesota Standard Fire Insurance Policy, Minn. Stat. 65A.01; and (2) a remand was necessary to allow the district court to determine whether Respondents were owed preaward interest and, if so, the amount of interest owed.

Hoon v. Murphy

Court: Montana Supreme Court

Citation: 2020 MT 50

Opinion Date: March 3, 2020

Judge: Laurie McKinnon

Areas of Law: Environmental Law, Real Estate & Property Law

The Supreme Court affirmed the order of the Water Court closing certification case, holding that the Water Court did not err in its rulings. Specifically, the Supreme Court held that the Water Court did not err (1) in its determination of the water rights claims that had historically used the Gibson-Reinig Ditch and the characteristics of those rights; (2) by creating a junior implied claim to account for the parties' historic use of the capacity of the Gibson-Reinig Ditch; (3) in its determination of the priority date for claim 97014-00; (4) by finding that the unauthorized water use by David and Teri Hoon and Betty and Gary Murphy was irrelevant to the proceedings; and (5) by separately decreeing the interest of Michael and Lisa Bay.

Southwestern Electric Power Co. v. Lynch

Court: Supreme Court of Texas

Docket: 18-0768

Opinion Date: February 28, 2020

Judge: Paul W. Green

Areas of Law: Real Estate & Property Law

The Supreme Court reversed in part the judgment of the court of appeals affirming the trial court's judgment concluding that several general easements that Petitioner, an electric company, acquired in 1949 from the predecessors-in-title to Respondents, landowners, were fixed at a thirty-foot width and rendering judgment for Respondents, holding that the plain language of the easements did not include a fixed width for the easements, nor were the easements required to do so. Petitioner argued in this case that the easements were general easements with no fixed width. Respondents, in turn, argued that the easements should have a fixed, thirty-foot width. The trial court rendered judgment for Respondents. The court of appeals affirmed, concluding that because the original easements did not specify a width, the trial court properly admitted extrinsic evidence of past use to determine how much of Respondents' land was reasonably necessary for Petitioner to utilize pursuant to the easements. The Supreme Court reversed, holding that Respondents' properties were burdened by general easements with no defined width and that the lack of a specified width in an easement does not mandate the admission of extrinsic evidence to prescribe a width.

Utah Department of Transportation v. Target Corp.

Court: Utah Supreme Court

Citation: 2020 UT 10

Opinion Date: February 28, 2020

Judge: Thomas R. Lee

Areas of Law: Real Estate & Property Law

In this action brought by Claimants seeking recovery for physical takings as well as severance damages for their property's decrease in market value after the Utah Department of Transportation (UDOT) condemned portions of their land the Supreme Court affirmed the conclusion of the court of appeals upholding the jury's verdict awarding claimants $2.3 million in severance damages, holding that the jury's award of severance damages was appropriate. The UDOT projects involved the reconstruction of a freeway interchange near Claimants' property. UDOT's condemnation of a portion of the property owned by Claimants interfered with both the property's visibility and its convenient "right-out" exits that provided access to the freeway. The jury awarded $2.3 million in severance damages. The court of appeals affirmed. The Supreme Court affirmed, holding that the severance damages awarded were appropriate because Claimants put on adequate evidence that their damages were caused by UDOT's construction of an improvement in the form of the new interchange.

Hulme v. O'Hare

Court: Wyoming Supreme Court

Citation: 2020 WY 31

Opinion Date: March 3, 2020

Judge: Kate M. Fox

Areas of Law: Real Estate & Property Law

The Supreme Court reversed in part the judgment of the district court granting summary judgment in favor of Plaintiff on his adverse possession claim and in favor of Defendant on Plaintiff's prescriptive easement and implied easement claims, holding that material issues of fact precluded summary judgment in favor of Plaintiff on his adverse possession claim and this error hindered review of the prescriptive easement claim. At issue was the property boundary between two residential lots connected by a shared driveway. Plaintiff claimed that he had adversely possessed a thirty-inch strip of Defendant's driveway, that he had an easement over the entire driveway, and that Defendant had intentionally trespassed on the adversely possessed portion of his property. The district court granted summary judgment for Plaintiff on the adverse possession claim and granted summary judgment for Defendant on the prescriptive easement and implied easement claims. The Supreme Court reversed in part, holding (1) the court erred in granting summary judgment on the adverse possession claim because issues of material fact concerning hostility existed; (2) because the prescriptive easement cannot be resolved independent of the adverse possession claim, review on this claim was precluded; and (3) the district court did not err in granting summary judgment for Defendant on the implied easement claim.

Miller v. State

Court: Wyoming Supreme Court

Citation: 2020 WY 30

Opinion Date: March 3, 2020

Judge: Boomgaarden

Areas of Law: Civil Rights, Constitutional Law, Real Estate & Property Law

The Supreme Court reversed the judgment of the district court forfeiting $470,040 in United States currency seized from Robert Miller to the State under the Wyoming Controlled Substances Act, Wyo. Stat. Ann. 35-7-1001 to -1060, holding that the State unreasonably delayed filing the action. Miller filed a motion to dismiss the case on grounds that the State's 270-day delay in instituting proceedings violated the statutory requirement that the State institute such proceedings "promptly" and his due process rights under the United States Constitution. The district court denied the motion and forfeited the currency to the State. The Supreme Court applied the four-factor balancing test from Barker v. Wingo, 407 U.S. 514 (1972), to assess whether Miller's right to due process had been violated. The Court then reversed and remanded for dismissal with prejudice, holding that the State failed "promptly" to institute the forfeiture proceedings, in violation of section 35-7-1049(c) and Miller's right to due process under the federal Constitution.

9352 Cranesbill Trust v. Wells Fargo Bank, N.A.

Court: Supreme Court of Nevada

Citation: 136 Nev. Adv. Op. No. 8

Opinion Date: March 5, 2020

Judge: Kristina Pickering

Areas of Law: Real Estate & Property Law

In this homeowners' association (HOA) lien foreclosure dispute between the holder of the first deed of trust on the property and the assignee of the buyer at the lien foreclosure sale the Supreme Court held that while a homeowner can cure a superpriority default the district court did not decide whether the homeowner's partial payments in fact cured the superpriority lien default. After receiving a notice of delinquency, the homeowner made partial payments to the HOA but did not specify whether she wanted the HOA to apply to the superpriority or subpriority portion of the lien. The district court concluded that because the homeowner's payments exceeded the defaulted superpriority lien amount the default was cured such that the foreclosure sale did not extinguish the first deed of trust. The Supreme Court affirmed the district court's decision denying summary judgment to the buyer's assignee but vacated its grant of summary judgment to the holder of the first deed of trust, holding that the homeowner has the ability to cure a default as to the superpriority portion of an HOA lien, and allocating partial payments by a homeowner to her HOA depends on the intent and actions of the homeowner and the HOA.