Banks can make themselves liable simply by foreclosing on you. (My Actual Case Results)

So I made a little law today. In MidCountry Bank v. Todd Bork et al, a Burnette County case, I represent the defendants, whose Wisconsin property is facing foreclosure as part of a larger lawsuit mostly centered on property in Minnesota.

The case roughly shapes up (in our view) this way: A while back, Todd Bork was taken for a ride by his banker, literally: the banker came to his house and suggested that the two take a drive. On that drive [I should note that many of these facts are set forth in affidavit from, but there has as yet been no trial or finding as to their accuracy], the banker suggested that Bork visit a property, and Bork agreed. After touring the property, the banker then suggested that Bork buy that property.

From there, as alleged in our counterclaims, Bork relied on the banker's advice (he'd known the banker for 30 years); at the time, Bork was suffering from some disabilities that he said affected his judgment, and the banker knew about them.

So Bork bought the property, only to learn that it required several hundred thousand in additional investments to fix up. The banker told Bork he could afford to do the transaction anyway, and then structured the loan so that not only was Bork buying the property and fixing it up but also he was paying off a couple hundred thousand on a different line of credit he'd had with the Bank -- essentially securing that line of credit with additional property.

The note was a "negative equity" loan-- the balance kept rising while Bork made minimum payments. After Bork could no longer make payments, he was foreclosed on in Minnesota and Wisconsin, the property which is the subject of these claims being located in Wisconsin.

Bork counterclaimed for breach of fiduciary duty, and the Bank, while denying the allegations (which have yet to be tried in any court) moved to dismiss on statute of limitations' grounds.

The Court made not one, but two novel rulings. First, we moved to deny the motion to dismiss on timeliness grounds. The Bank's replies to counterclaims had not said anything about a statute of limitations defense, and the motion was first raised about a month before the first trial date, many months into the case.

The Court decided that that Bank could not preserve the statute of limitations claim through that catch-all language so many seemingly-smart-but-not-really-that-smart lawyers throw into things; the Bank had said it reserved all other defenses or some such, a way of trying to say "We're claiming this even if we're not claiming it," and that didn't work: the Court (correctly) ruled that the bank couldn't reserve defenses.

But, the Court said, the statute in question (802.06) allows the statute of limitations' defense to be raised by motion, which was what the Bank did. I pointed out that a motion must, as I read the statute, precede the reply, but the Court disagreed, and so the Bank won its procedural argument: it could move to dismiss on statute of limitations grounds a year and a half or so into the case.

The Court then denied the motion to dismiss on substantive grounds, agreeing with me that the breach of fiduciary duty cause of action did not accrue until the Bank actually foreclosed on the property, and so the action was timely because the statute of limitations didn't start to run until the Bank filed this action.

In so ruling, the judge relied on an unpublished decision I provided, Wittenberg Ford-Mercury, Inc. v. Rosenow, Wis. Ct. App. 2009 AP 2931, a case in which an aut0-dealership purchase gone wrong led to breach of fiduciary duty claims that accrued, the Wittenberg court said, when it became clear that the purchase was not going to go through.

There's no clear case law on when a breach of fiduciary duty claim accrues for statute of limitations' purposes, but with a 2-year statute of limitations, it's important to start delineating those boundaries, and now Mid-Country vs. Bork has helped clarify that a little: A cause of action for breach of fiduciary duty under these circumstances accrues when the Bank takes legal action to enforce its claims.

To put it another way: Had the Bank not taken legal action but instead modified the loan, it would never have faced counterclaims in not one, but two states. I wonder if the Bank's lawyers bothered advising Mid-Country of that strategy: modify the loan, get payments coming in, and you'll avoid a counterclaim that will ultimately reduce our billable hours, your legal fees, and everyone's troubles?

Somehow, I suspect they did not.

UPDATE on that Super Bowl lawsuit.

To recap: at last year's Super Bowl, when the team of the century one-hit wonders Green Bay Packers beat the aging Steelers, 475 people couldn't be seated, and ultimately were offered settlements by the NFL of either three times face value of the ticket (or $2,400) plus a ticket to this year's game; or one game ticket to any future Super Bowl plus airfare and four nights' hotel stay; or $5,000, or a check for the total documented expenses the fan had paid.

Four options offered, but many fans took the fifth route of suing, and one year later, those fans are claiming victory after a federal judge has let (some) of their case go on.

The suit, officially titled Simms v. Jones, the Jones being Jerry Jones, Cowboys' owner, was briefly mentioned in December, when the presiding judge was reported to have "allowed" the Super Bowl lawsuit to proceed, a headline and story that is only very technically accurate, which is what happens when sports "reporters" try to talk about things that actually matter/require knowledge.

What really happened in late November 2011 was that the Court dismissed the breach of contract claim against the Cowboys and Jerry Jones (with leave to replead), and allowed the breach of contract claim against the NFL to proceed; as to that latter, the Court noted that the limitation of remedies on the tickets, under Texas law, did not require the Court to dismiss the claim:

At this stage in the litigation, the breach of contract claim against the NFL cannot be determined as a matter of law. There is no proof in the record that the offers of compensation were in fact sent to the individual Plaintiffs or to other class members. Furthermore, the issue of what recoverable damages the Plaintiffs actually suffered cannot be determined based upon the pleadings alone. If Plaintiffs prevail on their contract claim, they will be entitled to damages that the law allows, unlimited by the statement of remedy on the ticket. Defendants’ Motion to Dismiss the breach of contract claim against the NFL is therefore DENIED.

That, in turn, was "reported" as meaning that "the plaintiffs could be eligible for compensation far beyond that which the NFL offered in the wake of the debacle", which is only partially accurate, too. The judge actually simply ruled, as the quote notes, that the plaintiff were entitled to whatever remedies the law allowed.

The Court went on to note that simply purchasing a ticket created no duty of good faith or fair dealing on the part of the NFL under Texas law, and dismissed fraud claims. As to the latter, the plaintiffs had permission to replead them.

In short: the Court limited the case back in November, 2011, to a breach of contract against the NFL, dismissing the bigger claims and letting the Cowboy defendants out, so the case continued on a very limited basis.

The case was then refiled, again against the Cowboy defendants, this time alleging that Jones' Cowboys got up to 5% of the game tickets, which they sold, and this time alleging that the fraud was by omission -- that the NFL guidelines required that the ticket seller disclose obstructed views and so the failure to disclose that was a fraud by omission -- and also fraud-by-concealment. The complaint continued the case for punitive damages and attorney's fees.

So if you are one of the people who joined the class-action suit, you have not yet been paid or compensated in any way, and most of your claims have been dismissed once already.

On the other hand, 246 of last year's "jilted" fans have taken the NFL up on their offer to attend this year's Super Bowl, according to The Consumerist, which seems low but I tend to agree with the Indystar.com opinion that most fans are probably waiting for a better location for a Super Bowl.

Hey, turns out circuit courts are totally able to judge attorney's fees awards on their own! (Consumer Law Matters)

Who'd have ever guessed that circuit court judges (and appellate judges) might not be hypnotized by the crafty plaintiffs' bar into rubberstamping whatever fee award the crafty plaintiffs' bar lawyers might demand with no justification whatsoever?

Certainly not the Wisconsin legislature, which was more than willing to be bought for a mere $10,000, in exchange for which the (current) Wisconsin government attempted to limit the discretion courts use in awarding consumer lawyers their fees. Wisconsin lawmakers in passing that law were clearly acting in the best interests of corporations who feared the obvious power that plaintiffs' lawyers have over judges; why, plaintiffs lawyers could practically write their own check, the fear went, so we have to limit what those judges will do when put under the seductive spell of consumer litigators!

{Where is that sarcasm emoticon when I need it?}

Anyway, sarcasm aside, a little while back, Wisconsin imposed a presumptive limit that fees should be three times what a party is awarded in actual damages, but it turns out that maybe it was unnecessary to rein in the judiciary because judges actually exercise their discretion when asked to award fees in those cases, as shown by the hot-off-the-presses, pre-limit case of Zimmerman v. Chrysler Group, a "lemon law" fee-shifting case where the parties agreed on a settlement but couldn't come to terms over the amount of fees to be awarded the plaintiffs' lawyers, so the two sides agreed to try the issue of fees before Judge Ramirez in Waukesha County, and the billing statements were put in, and some of the lawyers for each testified, and the Court:

entered a final Order on November 18, 2010, which reflected the court’s oral decision and ordered Chrysler to pay the Zimmermans a total of $23,888.50, which represented payment of 87% of the fees and costs requested for the underlying claims.

That's from the plaintiffs brief on appeal; despite winning $23,000 in fees, the plaintiffs (the Zimmermans) appealed, because the circuit court awarded them nothing for litigating how much in fees they should earn.

That's what the case was really about, here: Not whether the plaintiff's lawyers should get fees for winning (?) their case via settlement, but whether the plaintiff's lawyers should get fees for litigating the issue of how much they should get in fees.

I make that point because because it points out both the completely unnecessary nature of the presumptive cap on fees and the ridiculousness of saying that it is all one side or the other which is driving up the cost of litigation, and because this case points to an unintended consequence (there are always unintended consequences!) of the law.

To listen to the Bought-And-Paid-For (for just $10,000!) Republican legislature, plaintiff's lawyers are slime who drive up costs for reg'lar folks by outrageous demands for fees incurred in litigating cases allowed by law. To listen to the plaintiff's lawyers, there is no amount of fees too outrageous to qualify as being awarded.

In other words: settle down, everybody, the judges had it well in hand before the law went and got all worked up over this.

So this was a fight about fees incurred fighting to be awarded fees incurred. A fight that need not have happened had one side or the other been willing to let one side or the other entirely dictate what it should be awarded.

Keep that in mind. Because the harm the new law was intended to fight -- plaintiff's lawyers running up fees and then some how hypnotizing judges into just going ahead and awarding those, to the detriment of reg'lar folks ("reg'lar folks" like "massive car dealers who do repairs without authorization") wasn't invoked at all in this case. The fees awarded by Judge Ramirez in fact seem to be lower than the presumptive award that the law would not require.

There's an unintended consequence of that law: It might require higher fees than the defendnats want to pay. Here's why: the records in the case suggest that the Zimmermans were awarded "$10,000 and the value of the motor vehicle." They don't say how much the vehicle was worth, but even if it was worth nothing, the Zimmermans still got $10,000. So under the new law in Wisconsin, the circuit court is required to presume that three times that amount is a reasonable award.

So the circuit court under the new law would be required to presume that $30,000 is a reasonable award - - and the defendants would have had to prove it should be less.

Here, Judge Ramirez in Waukesha County awarded $23,000 or so in fees -- less than three times the presumptive limit imposed by the new law that a disgruntled car dealer bought himself. So under the new law, disgruntled car dealers who don't want to follow the law might find themselves facing a smart guy like me who will say to judges "You have to presume that three times what my client was awarded is reasonable, and award that."

Case in point: this past summer, I got an award of $18,000 in a consumer case. My total fees were $34,000 (about even to what the other side spent.) Under the new law, the presumed reasonable fees would have been $54,000.

Anyway, that's the unintended consequence of the new law: Defendants might end up paying more, not less.

But defendants don't want to pay anything. In the lemon law case here, Zimmerman, the defense, having settled for $10,000+a car, then offered $8,000 for attorney's fees.

Says the plaintiff's appellate brief:

Chrysler offered $8,000 for all fees and costs for litigating the underlying matter. (R. 85: 4). The trial court rejected that suggestion when it awarded $23,888.50, representing 87% of the $27,500 in fees and costs requested by the Zimmermans on the underlying claims and almost three times the amount Chrysler offered.

Now, consider this:

The parties settled, and then only had to discuss what would be fair compensation for the Zimmermans' lawyers (Lemon Law cases allow fee shifting, of course.)

The Zimmermans were seeking $27,500.

Chrysler offered $8,000.

The circuit court decided that $23,888.50 was a fair amount to be awarded -- giving the Zimmermans nearly three times Chrysler's highest settlement offer.

Judge Ramirez sits in Waukesha County, which is not known for being liberal, lefty, or consumer-friendly. (With that, I must add that I've tried cases before Judge Ramirez and found him to be fair to all sides.) Judge Ramirez thought $23,000, or three times what Chrysler wanted to pay, was fair. The Zimmermans' brief notes that he only cut out about 15 hours of time as "duplicative" or "unnecessary," out of 89 hours total, pre-settlement -- so Judge Ramirez, who's seen many a case, felt that 74 hours of time spent working towards a settlement was reasonable.

So in the first instance, Judge Ramirez, who knows the lawyers and knows the case and knows lots of lawyers and has seen lots of cases, thought that 2.3 times the amount awarded (or less) was reasonable. But Judge Ramirez also of necessity thought that Chysler was being unreasonable: He awarded nearly 300% of what Chrysler thought was fair.

With that, though, Judge Ramirez made a mis-step: he didn't award anything for litigating the issue of fees.

That's what led to the Zimmerman's appeal: not just because (as noted by the Zimmermans' brief) the award of $23,000 or so reduced the effective award to just 32% of the total the Zimmermans' lawyers wanted, but because Judge Ramirez, having conceded that $23,000 was reasonable, failed to do anything about the fact that Chrysler had forced this fight over fees.

As the plaintiff's brief noted:

Here is the problem in focus: the attorney time expended to prove up the fees and costs to be awarded the Zimmermans greatly exceeded the time of the original fees and costs claim. It is inequitable for Chrysler to subject counsel for the Zimmermans to a year of litigation over the fees and costs for the underlying claim and then have the trial court award not one cent for the attorneys time in proving up those fees. See City of Riverside v. Rivera, 477 U.S. 561, 581, 106 S.Ct. 2686, 2697, n. 11 (1986), a defendant “cannot litigate tenaciously and then complain about the time necessarily spent by the plaintiff in response” under a feeshifting statute.

I like THAT! I've got to remember that quote.

So that alone is fascinating: Chrysler said "We'll give you $8,000," then lost -- by 300% -- and yet prevailed, in effect, because they were able to force the plaintiff to litigate the issue of fees... for free.

What's fascinating, also, is the look at what passed for litigation by Chrysler over the fees: According to the Zimmermans' brief, Chrysler subpoenaed another Lemon Law attorney as an (uncompensated?) expert, then attempted to impeach him, then put its own assistants and lawyer on the stand -- having the latter refuse to testify what she had been paid. That doesn't seem to be the way to prove whether fees are reasonable or not, but it does seem to be a lengthy, time-consuming way to litigate the issue of fees, which should then allow the plaintiff's lawyers something for their time spent getting paid.

But Judge Ramirez saw things differently than the Zimmermans' lawyer, ruling:

Simply put, I had a credibility problem with requests made by attorneys’ fees by plaintiffs’ counsel especially after resolution of the case. Requests for attorneys’ fees made on or after that date appear not to reflect so much efforts to rigorously represent the Zimmermans as much as efforts to geometrically compound attorneys’ fees.”

(Emphasis added.)

Fair enough: If the plaintiff's response really was akin to "you're going to make us fight to get paid? Fine, we'll amplify our requests and hope that whatever percentage we get covers our true costs," then Judge Ramirez can't be faulted for feeling that way overall, and the Court of Appeals found no real errors with Judge Ramirez's ruling, overall-- rejecting the argument that circuit courts must always award fees for litigating the award of fees:

To the extent Zimmerman suggests that the parties' stipulation created an explicit agreement that required the circuit court to award post-settlement fees, we disagree. The parties' stipulation and the relevant statutes authorize only reasonable fees.It necessarily follows that attorney fees for litigating the amount of attorney fees must also be reasonable. No part of the parties' stipulation in the present case, or the relevant fee-shifting statutes, required the court to award a certain amount of fees for litigating fees. Under appropriate facts, a proper lodestar analysis could result in an award of zero.

That said, though, the Court said the circuit court should have awarded something:

Accordingly, we conclude that the circuit court erroneously exercised its discretion. We reverse and remand for a determination of reasonable attorney fees incurred litigating attorney fees. As the ones seeking to be paid, Zimmerman's attorneys have the burden of demonstrating the reasonableness of their fees. Kolupar, 275 Wis. 2d 1, ¶34. As the circuit court properly observed, reasonableness is often a more difficult conclusion to reach when the amount requested for litigating the fees is disproportionate to the work on the merits of the case. The court noted, "it would not be reasonable for an attorney to charge a client $80,000 in fees to collect $10,000 and the value of the motor vehicle. It is not reasonable, and again, it boggles the mind."

Nevertheless, it was erroneous under the facts of this case for the court to deny any award of attorney fees after resolution of the underlying claim.

So here's where this leaves litigants: Probably nowhere, since the new law went into effect and this case was decided under the old law. The utility of Zimmerman is primarily that circuit courts will be required to award something for litigating the issue of fees, and also that under Zimmerman, a smart lawyer might be able to say "Well, the new law applies only to fees incurred in getting the settlement or award, not to fees incurred in getting the fees," which is a parsing that I bet the legislature didn't think of. The Court of Appeals, remember, said:

The parties' stipulation and the relevant statutes authorize only reasonable fees.It necessarily follows that attorney fees for litigating the amount of attorney fees must also be reasonable.

So, are "fees awarded" under the new law "all fees awarded," or are "fees awarded" under the new law "fees awarded for reaching a settlement or verdict," leaving circuit courts free to award more than three times the compensatory damages for litigation involving an award of fees?

How courts deal with that question is going to cost a lot of people a lot of money, I bet, at least until some new car dealer decides he doesn't want to follow the law and gets the legislature to grant him immunity for illegal practices.

How’s that “health care” “system” working out for you?

This is a Sponsored post written by me on behalf of Walgreens for SocialSpark. All opinions are 100% mine.

Suppose there was a company out there that provided no real services but did manage to grow its profits at two times the rate of other industry companies.  And suppose that company just ended a contract relationship that benefitted many regular (e.g., you) people despite the fact that it achieved no cost savings from ending that contract.

And suppose that by ending that contract, that company ended up making it harder and more costly for you to get your prescription medications?

You’d hate that company, wouldn’t you? I imagine that’s how many people will be feeling about “Express Scripts,” a middleman company that just ended its contracts with Walgreen’s drugstores in the latest round of goings-on between  Walgreens and Express Script. “Express Scripts,” as I understand it, contracted with health insurance plans and then contracted with drugstores, so that when members went to the drug store, they wouldn’t pay the drug store but would pay Express Scripts.  Express Scripts and Walgreen’s were recently negotiating a new contract, and Walgreen’s was offering to keep its rates of payment the same, but Express Scripts wanted them to reduce their rates below industry standard, and Express Scripts wanted to be able to define for itself what was or was not a “generic” vs. “brand name” drug.

The end result: You get hurt, and our military gets hurt. 

Oh, that latter one? Express Scripts has a client “Tricare,” which provides health insurance to military families. Walgreen’s offered to have its prices match or beat the prices of any other drug store, so that military families were guaranteed the lowest prices for prescriptions. Express Scripts said no.

So a company which has seen its profits increase at double the industry rate just decided that’s not enough and ended up making families travel farther to get their prescriptions, or pay more to get them.  Seem fair?

I’m on Walgreen’s side in this one. People shouldn’t have to pay too much for prescriptions, and local drugstores provide familiarity so that the pharmacist can do more than simply dispense drugs anonymously, like Express Scripts wants.  Now customers have to find new places to get their medications, and the people they’re dealing with don’t know them.  

Walgreen’s is helping out.  They’re giving a break on enrollment in their Walgreens Prescription Savings Club, so for January you can join for just $10 (or $5 a person) to get discounts on your prescriptions:

http://www.walgreens.com/pharmacy/psc/psc_overview_page.jsp

And they still have their usual savings on 8,000 different brand-name medications, low prices on generics, and discounts on flu shots, pet scripts, nebulizers and other things. Plus, if you join that club, you’ll get bonuses for using other Walgreen’s services, like photofinishing, so you can continue to save on medications and still do one-stop shopping at your local pharmacy.

It’s time to pick sides in this fight. With all the many troubles in the health care industry, we didn’t need Express Scripts making things worse.  Stick up for Walgreen’s: Like Walgreens on Facebook and follow  Walgreens on Twitter (@Walgreens), and help make things better.