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Boston Business Litigation Blog

You May Not Have Until December 31, 2018 to Avoid Losing the Alimony Deduction

One of the new provisions of the new tax reform bill - background here - is that the long-standing tax deduction for alimony will no longer be available for separation agreements and divorces obtained after December 31, 2018.  Specifically, the reform applies to "any divorce or separation instrument . . . executed after December 31, 2018" (emphasis added).  

Bitcoin: What's its Worth in Court?

The price of Bitcoin has recently skyrocketed, rising from $1200 per Bitcoin in the second quarter of 2017 to $ 10,000 per Bitcoin in 2018. However, the law has not kept pace: critical questions remain regarding how Bitcoin should be valued. For example, if Bitcoin is fraudulently transferred, how should damages be calculated? In February 2016, in the first case of its kind, the U.S. Bankruptcy Court for the Northern District of California held that, for the purpose of the fraudulent transfer provisions of the U.S. bankruptcy code, Bitcoins are not the equivalent of United States dollars. However, the court left open whether Bitcoin should be valued as a currency or a commodity.

Bitcoin: What's its Worth in Court?

The price of Bitcoin has recently skyrocketed, rising from $1200 per Bitcoin in the second quarter of 2017 to $ 10,000 per Bitcoin in 2018. However, the law has not kept pace: critical questions remain regarding how Bitcoin should be valued. For example, if Bitcoin is fraudulently transferred, how should damages be calculated? In February 2016, in the first case of its kind, the U.S. Bankruptcy Court for the Northern District of California held that, for the purpose of the fraudulent transfer provisions of the U.S. bankruptcy code, Bitcoins are not the equivalent of United States dollars. However, the court left open whether Bitcoin should be valued as a currency or a commodity.

District of Columbia Court of Appeals Upholds CFPB's Single-Director Power Structure

Authorized by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Consumer Financial Protection Bureau (the "CFPB") is an agency of the United States government that regulates banks, credit unions, debt collectors, and many other sectors of the American financial services industry. 

Fiduciary Litigation Pilot Project Provides Streamlined and Specialized Venue for Probate Litigation

One of the first questions that any attorney and potential litigant must consider when deciding whether to file a lawsuit is where to bring the case. Since November 2017, potential probate litigants in three Massachusetts counties have a new venue to consider, the Fiduciary Litigation Session, or "FLS", at the Norfolk Division of the Probate and Family Court in Canton, Massachusetts. The parameters of the FLS are outlined in Probate and Family Court Standing Order 3-17. Borrowing elements of the successful Business Litigation Session at the Suffolk Superior Court,, the FLS's goal is "to provide a specialized forum for the speedy resolution of contested and complex probate litigation cases and to provide individualized and collaborative case management to reduce the costs associated with fiduciary litigation."

Web-Based Dialing System Does Not Violate TCPA Prohibitions on Use of Automatic Telephone Dialing Systems

The United States District Court for the Northern District of Illinois has found that a debt collector's use of a web-based dialing system to contact an individual's cell phone without permission does not violate the Telephone Consumer Protection Act's ("TCPA"), 47 U.S.C. § 227, prohibition on the use of Automatic Telephone Dialing Systems ("ATDS").  The plaintiff in Arora v. Transworld Systems Inc., 2017 WL 3620742 (N.D. Ill. Aug. 23, 2017) alleged that Transworld System Inc.'s ("Transworld") calls to his cell phone without his consent constituted prohibited use of an ATDS pursuant to the TCPA.

The Pregnant Workers Fairness Act: Recommendations for Employers

On April 1, 2018, the Pregnant Workers Fairness Act (the "Act") takes effect. The Act amends Massachusetts' anti-discrimination law, G.L. c. 151B, which applies to employers with six or more employees, to now include pregnancy and related conditions as protected categories. The Act requires employers to provide "reasonable accommodations" for pregnancy and related conditions, including breastfeeding and the need to express breast milk, so long as the accommodations do not cause the employer "undue hardship."

Tax Reform Bill Eliminates the Alimony Deduction

The new tax reform bill (, which was signed into law on December 22, 2017, eliminates ( the tax deduction for alimony payments for separation agreements and divorces obtained after December 31, 2018.

Medical Marijuana in the Workplace

In a recent landmark decision, Barbuto v. Advantage Sales & Marketing, LLC, the Supreme Judicial Court ruled that an employer that terminated an employee for testing positive for marijuana use (which violated the company's policy) could be found to have discriminated against the employee on the basis of her handicap. At the time she was hired, Barbuto was informed that the company would require her to undergo a drug test. She informed the company that her physician had provided her a written certification that allowed her to use marijuana for medical purposes, due to the fact that she suffered from a debilitating medical condition under Massachusetts law; she also agreed that she would not use marijuana before work. The employer told her that a positive result for marijuana would not disqualify her from the position. Despite having made that assurance, following Barbuto's first day of work Advantage Sales terminated her employment due to the positive drug test, on grounds that the company followed federal law, not state law. The use of marijuana for medicinal purposes, while legal in Massachusetts at the time (the non-medicinal use of marijuana had not yet been legalized), was still a crime pursuant to federal law. Therefore, the use marijuana for medical purposes, even while legal in Massachusetts, could still subject the user to federal criminal prosecution. Barbuto sued Advantage Sales, alleging (among other things) that she had been discriminated against on the basis of her handicap. In Massachusetts, a "handicap" is a physical or mental impairment that substantially limits one or more major life activities of a person (or a record of having such impairment or being regarded as having such impairment). Massachusetts law prohibits employers from terminating or refusing to hire an employee because of their handicap if that employee is capable of performing the essential functions of the position involved with "reasonable accommodation," unless the employer can demonstrate that the accommodation that would need to be made would impose an undue hardship to the employer's business. A reasonable accommodation is an adjustment or modification to a job (or the way it is done or the environment in which it is done) that makes it possible for the handicapped individual to perform the essential functions of the job. An employer who receives a request for a reasonable accommodation from a handicapped person is required by Massachusetts law to engage in an interactive process with the employee to ascertain whether the requested accommodation is reasonable and, if not, whether another accommodation can be made that would be reasonable. The Massachusetts medical marijuana law provides, "Any person meeting the requirements under this law shall not be penalized under Massachusetts law in any manner, or denied any right or privilege, for such actions." Advantage Sales claimed it owed Barbuto no obligation to participate in the interactive process to identify a reasonable accommodation before it terminated her employment because, it alleged, the accommodation she sought violated a federal statute and was, consequently, unreasonable. It also alleged that she was terminated because she failed the drug test in violation of company policy, not because of her handicap. The SJC rejected Advantage Sales' first argument on grounds that the fact that Barbuto's possession of medical marijuana violated federal law does not make it per se unreasonable as an accommodation. It noted that only the employee was at risk of federal criminal prosecution for her possession of the medical marijuana, not the employer. It concluded that to hold otherwise would operate to deny handicapped employees the right to or privilege of a reasonable accommodation under Massachusetts law. It also pointed out that, even if the requested accommodation had been unreasonable, Advantage Sales was still obligated to participate in the interactive process of trying to craft another, equally effective accommodation that was reasonable (which it had not done). The Court rejected Advantage Sales' second argument on grounds that it would permit employers to enact policies that would enable them to do an end-run around handicap discrimination laws (i.e., by adopting company policies that would deny employees reasonable accommodations). The Court reversed the lower court's dismissal of Barbuto's claims of handicap discrimination and sent the case back to the lower court to determine whether her use of medical marijuana would impose an undue hardship on Advantage Sales' business and would, therefore, not be a reasonable accommodation. The Barbuto decision does not mean that employers must permit the use of marijuana even by handicapped employees. The significance of the decision is, instead, that use of medical marijuana might constitute a reasonable accommodation available to a qualified handicapped employee even if the employer has a no-tolerance drug policy or federal law prohibits the possession of marijuana. When the use of medical marijuana is proposed as an accommodation by a qualified handicapped employee, employers must engage in the interactive process to determine whether it is reasonable and, if not, whether another reasonable accommodation exists. 

The Positive-Selfish-Side of Effective Co-Parenting

In contested custody cases where a child rejects contact with a parent, the rejected parent often accuses the aligned parent of engaging in alienating behaviors that are intended to sever the attachment between the child and the rejected parent.

Obtaining Discovery in the U.S. for Use in Foreign Tribunals

Foreign litigants recently successfully sought the assistance of the United States District Court for the District of Massachusetts in obtaining discovery of Massachusetts residents and a Massachusetts company for use in a foreign proceeding.  See In re Penner, No. 17-CV-12136-IT, 2017 WL 5632658 (D. Mass. Nov. 22, 2017).  The foreign litigants in that case relied on a Federal Statute, 28 U.S.C. § 1782, that permits U.S. District Courts to order discovery for use in foreign proceedings under certain circumstances.  Section 1782 provides, in pertinent part, "[t]he district court of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal."  In granting discovery pursuant to Section 1782, the Penner court relied upon the United States Supreme Court's analysis of that statute in Intel Corp. v. Advanced Micro Devices, Inc. 

Can An Exchange Of Text Messages Between Real Estate Brokers Create An Enforceable Contract For The Sale of Land?

Nowadays, it is not uncommon for real estate brokers to communicate with their clients and negotiate deals through text messages. The use of text messages in that context has given rise to a new legal issue: whether an exchange of text messages between brokers can create an enforceable contract for the sale of land.

Mass. Appeals Court Rejects Bank's Attempt to Hold Surviving Spouse Liable for Late Husband's Refinancing Note

The Massachusetts Appeals Court recently denied a mortgagee's attempt to invoke the doctrine of equitable subrogation to hold the surviving spouse of a mortgagor liable for a second mortgage on their residence--owned by the married couple as tenants in the entirety--that had been procured and signed only by the deceased spouse. 

50/50 Parenting: Quantity versus Quality

I recently came across Edward Kruk, PhD's article in Psychology Today entitled "Equal Parenting and the Quality of Parent-Child Attachments." The article summarizes research on parenting plans that I have found useful in support of some clients' requests for equal parenting time (R. Bauserman, "A meta-analysis of parental satisfaction, adjustment and conflict in joint custody and sole custody following divorce," Journal of Divorce and Remarriage [2012]; W.V. Fabricius, "Parenting time, parent conflict, parent-child relationships, and children's physical health," Parenting Plan Evaluations: Applied Research for the Family Court [2011]).

International Arbitration War Wages Over Pineapples

The Court of Appeals for the Eleventh Circuit will be the next body to weigh in on a dispute between Del Monte International GmbH ("Del Monte") and Inversions y Procesadora Tropical INPROTSA, S.A. ("INPROTSA") over an exclusive sales agreement for pineapples. The case has been appealed to the Eleventh Circuit, and the appeal raises issues of the finality of international arbitration awards.

ATM Operators Not Required to Disclose Third Party Fees

The United States District Court for the District of Maryland has confirmed that an ATM operator is not required to disclose the amount of fees charged by a third party, such as the cardholder's financial institution, for the transaction. The plaintiff in Alston v. Wells Fargo Bank, N.A., 2016 U.S. Dist. LEXIS 103026 (D. Md. Aug. 5, 2016) filed a putative class action against Wells Fargo and Capital One arising from charges for his withdrawal from his Capital One account at a Wells Fargo ATM.

Massachusetts Superior Court Decides That Right to Arbitration was Waived Due to Litigation Conduct

In a recent Superior Court decision, a judge held that there is a presumption that courts, not arbitral tribunals, have exclusive jurisdiction over the issue of whether a party has waived a contractual right to arbitration by engaging in substantial litigation before a motion to compel arbitration was filed.

Construction Defects In Condominiums: What Owners And Prospective Buyers Should Know About Common Areas

An often-overlooked downside to the surging real estate market is that the demand for good contractors often exceeds the supply. As a result, the risk of poor quality construction tends to rise as builders rush to complete jobs or use workers that are not up to the task. In the context of condominiums, the risks of construction defects present some unique complications for unit owners when the defect is found in a common area such as a roof, elevator, or staircase.

CFPB Anti-Arbitration Rule Repealed

On Wednesday, November 1, 2017, President Donald Trump signed legislation repealing an anti-arbitration rule that the Consumer Financial Protection Bureau ("CFPB") had promulgated in early July.  Repeal of the CFPB rule was welcomed by representatives of the financial services industry.

Young v. Young: The SJC Places a Time Limitation on the Determination of "Need" in the Alimony Reform Act

In the Alimony Reform Act of 2011, St. 2011, c. 124 ("the Act"), "alimony" is defined as "the payment of support from a spouse, who has the ability to pay, to a spouse in need of support for a reasonable length of time . . . ."  G. L. c. 208, § 48.  However, because neither "ability to pay" nor "need of support" are defined in the Act, Probate and Family Court judges are given the discretion to balance numerous other factors, such as the parties' ages, health, incomes, and economic and non-economic contributions to the marriage, in order to arrive at a fair alimony award.  See G. L. c. 208, § 53 (a).

Creative American Arbitration Association (AAA) Procedure Offers Cost-Savings for Three-Arbitrator Panels

The American Arbitration Association ("AAA") has announced on its website that it is offering a "Streamlined Three-Arbitrator Panel Option" for large, complex cases.  It's a fresh idea that is worthy of parties' consideration in cases where the rules (see Section L-2(a)) or the parties' agreement requires a panel of three arbitrators to hear and decide the case. The Streamlined Three-Arbitrator Panel Option allows a single arbitrator to work with the parties in moving the case through the preliminary and discovery stages. A full panel participates in the evidentiary hearing and in rendering the final award.

Failure to Record Complaint Requires Dismissal Under Statute of Repose

The Massachusetts Land Court has held that a plaintiff's failure to timely file a copy of a complaint challenging a foreclosure with the registry of deeds, as required by Mass. Gen. Laws c. 244, § 15, requires dismissal of a complaint challenging the subject foreclosure.  Kenney, et al. v. Brown, et al., No. 16 MISC 000530 (Mass. Land Court July 27, 2017).

U.S. Supreme Court Limits Scope of FDCPA.

On June 12, 2017, the United States Supreme Court decided a case captioned Henson v. Santander Consumer USA, Inc., No. 16-349.  In an opinion authored by newly-appointed Justice Neil Gorsuch and hailed by the financial services industry, the unanimous Court held that a company may collect debts that it purchased for its own account without implicating the statutory definition of "debt collector" set forth in the federal Fair Debt Collection Practices Act ("FDCPA").

A Notice of Default That Does Not Strictly Comply With Paragraph 22 Of The Mortgage Renders a Foreclosure Sale Void So Long As The Issue Of Noncompliance Was Asserted In Court Before July 17, 2015

The Supreme Judicial Court ("SJC") recently held that its holding in Pinti v. Emigrant Mtge Co., 472 Mass. 226, which was decided on July 17, 2015, "applies in any case where the issue was timely and fairly asserted in the trial court or on appeal before July 17, 2015."  Federal National Mortgage Association v. Marroquin, 477 Mass. 82, 74 N.E.3d 592 (May 11, 2017).

Derivative suits on behalf of LLCs: No futility exception? Not so fast.

Must all derivative suits in Massachusetts be preceded by a written demand that a company take action?  No. Members (shareholders) of a limited liability company seeking to bring suit derivatively on behalf of the LLC can do so without written demand.  

Signing Certified Mail Receipt Satisfies Requirement to Acknowledge Receipt of Borrower's Request for Information

The United States Court of Appeals for the Eleventh Circuit has held, in a matter of first impression, that signing a borrower's certified-mail return receipt can serve as a loan servicer's acknowledgment of receipt of a borrower's written request for information. Meeks v. Ocwen Loan Servicing LLC, No. 16-15536, 2017 WL 782285, at *1 (11th Cir. Mar. 1, 2017).

Haunted House Hunting and the Duty to Disclose

In a competitive real estate market like Greater Boston's, more homebuyers are agreeing to what previously would have been seen as a draconian contract term: purchasing a home without first conducting an inspection. But today, in a hot seller's market, it may be a buyer's best hope to landing the winning bid. The perils of buying a home before learning about things like the property's structural soundness would spook most anyone, not just the most risk adverse.  But what about the intangibles that even a traditional inspection wouldn't reveal? One Massachusetts statute defines the obligations of a seller of real property that is potentially "psychologically impacted." Specifically, G.L. ch. 93, § 114, carves out "alleged parapsychological or supernatural phenomenon" as a non-material fact, that is, information that does not need to be disclosed by a seller during a real estate transaction.  

Superior Court Denies College's Attempt to Hold Auditor Liable for Failure to Detect Employee's Fraud

In an important recent decision in the Business Litigation Session of the Massachusetts Superior Court, Judge Kenneth W. Salinger rejected Merrimack College's attempt to hold its auditor KPMG, LLP liable for its failure to discover an employee's fraud.  

A Parenting Coordinator Can Help Prevent Hostile and Dictatorial Toned Emails Counter-Productive to Effective Co-Parenting

In Leon v. Cormier the MA Appeals Court upheld a contempt judgment against a mother who violated a parenting coordinator's order related to the mother's e-mail communications with the father. Specifically, the parenting coordinator ("PC") ordered that "as a rule, emails between [the parties] should . . . occur during . . . designated Tuesday email time. The ONLY exceptions are in the case of significant emergency or a necessary change in logistics that must be established for something that is to occur prior to the next Tuesday email time."

How Do Criminal Charges Issue?

When an individual is charged with a crime over which the District Court has jurisdiction (all misdemeanors, felonies punishable of a sentence of up to five years and certain other felonies), a criminal complaint issues against them. A criminal complaint is the document that identifies the crime that is alleged to have been committed. Before a criminal complaint can issue, there must be a finding by a magistrate that there is probable cause for the complaint to issue. A magistrate is a District Court official who is authorized by law to authorize the issuance of criminal complaints and issue process (such as an arrest warrant or summons). Probable cause is a very low standard; it simply means that reasonably trustworthy information exists that is sufficient to warrant a prudent person to believe that a crime has been committed and the accused is the perpetrator.

Massachusetts Prenuptial Agreement Signed One Day Prior to Wedding Upheld: Size and Formality of Wedding and Prior Divorce Matters

The Massachusetts Appeals Court has issued a Rule 1:28 Memorandum and Order in a divorce case entitled Roof v. Abelowitz upholding the validity and enforceability of a prenuptial agreement that the wife signed only one day prior to the wedding.  The court considered two particularly interesting factors in finding that the wife's waiver of rights under the prenuptial agreement was valid.  In this case, the size and formality of the wedding and the prior married and divorced status of the wife carried weight.

Are The Costs Of Mediation Recoverable In Fee-Shifting Cases?

Cost can be a deterrent when parties are considering whether to mediate a complex business dispute. Mediation is an excellent opportunity to settle a case in advance of costly trial preparation, but mediation requires parties to pay for both a mediator and their attorneys' time to prepare for and attend the mediation. Are those costs recoverable if mediation is unsuccessful and findings at trial require the losing party to pay the winning party's attorneys' fees and costs? According to recent federal case law in the District of Massachusetts, the answer to that question depends on the basis of the fee-shifting award.

Probate and Family Court Standing Order 1-17 Sets Rules for Parent Coordinators

A parent coordinator can be a blessing in high-conflict divorce or support cases involving parenting and custody of a child or children. Occasionally, parents, for one reason or another, are unable to communicate effectively about parenting time, extracurricular activities, or expectations of each other or the children. At other times, parents simply may not see eye-to-eye about what is in the best interests of the children. These disagreements, or differences as to how to communicate, can have serious repercussions on the stability of the children and make it difficult, if not impossible, to co-parent. A skilled parent coordinator can be a very valuable resource in addressing these issues and helping to resolve conflicts.

District of Columbia Court of Appeals will Rehear PHH v. CFPB

Authorized by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Consumer Financial Protection Bureau (the "CFPB") is an agency of the United States government that regulates banks, credit unions, debt collectors, and many other sectors of the American financial services industry.

Failure to Comply With Post-Foreclosure Notice Provisions Does Not Void Foreclosure

The Massachusetts Supreme Judicial Court ("SJC") has held that a bank's failure to comply with post-foreclosure notice provisions in Mass. G.L. c. 244, § 15A ("Section 15A"), does not render a foreclosure void.  Turra v. Deutsche Bank Trust Company Americas, 476 Mass. 1020 (2017).  The SJC's decision clarifies its prior rulings that appeared to state that any failure to comply with a provision appearing in Mass. G.L. c. 244, §§ 11-17C, rendered a foreclosure void.

The Ninth Circuit Holds that the Enforcement of a Security Interest is Not Always "Debt Collection" Subject to the Fair Debt Collection Practices Act

The United States Court of Appeals for the Ninth Circuit recently held that a lender's agent is not a "debt collector" within the meaning of the Fair Debt Collection Practices Act ("FDCPA") when it sends certain notices to the borrower in connection with a non-judicial foreclosure. Ho v. ReconTrust Co., NA, 840 F.3d 618, 621 (9th Cir. 2016).

What a Financial Statement Is and Why You Need One

Many clients describe the Rule 401 financial statement as "a giant pain," "putting square pegs into round holes," or "the most annoying thing I've ever done in my life." While filling out a financial statement can often be fairly simple, sometimes it can take days or even weeks of work. Filing a financial statement may actually happen many times over the course of a proceeding, and the parties may even choose informally to exchange financial statements on a voluntary basis. Why is it then, that almost every party to a domestic relations matter has to fill out a financial statement?

Ninth Circuit Holds Opt-In Foreclosure Notice Statute Violates Due Process

The United States Court of Appeals for the Ninth Circuit has joined the Fifth Circuit in finding that a statutory scheme in which mortgage lenders were required to affirmatively opt-in to receive notice of foreclosures by homeowners' associations violates the lenders' due-process rights under the 14th Amendment. Bourne Valley Court Trust v. Wells Fargo Bank, N.A., No. 15-15233, 2016 WL 4254983 (9th Cir. Aug. 12, 2016).

D.C. Circuit Rules Structure of Consumer Financial Protection Bureau Unconstitutional

In a highly anticipated decision and the first judicial review of a Consumer Financial Protection Bureau ("CFPB" or the "Bureau") administrative enforcement action, the United States Court of Appeals for the District of Columbia Circuit ruled in October 2016 that the CFPB's single Director structure violated separation of powers principles and was unconstitutional. PHH Corp. v. Consumer Fin. Prot. Bureau, 839 F.3d 1 (D.C. Cir. 2016). 

Whistleblower Act: Allegations of Retaliation Fail Where the Conduct for Which the Retaliation is Alleged Was Committed by Co-Workers, Not Employer

The Whistle Blower Act, Mass. General Laws Ch. 149 § 185(b), provides that a public employer may not retaliate against a public employee who has (1) "blown the whistle" or, in other words, disclosed an activity, policy or practice of the employer that the employee believes is a violation of a law, rule, or regulation and a risk to public health, safety or the environment; (2) provided information to a public body conducting an investigation into such activity; or (3) objected to or refused to participate in such activity. Retaliation under the Act includes any adverse employment action, such as demoting, suspending or firing the employee who makes the disclosure or objects to the activity.

Lesson in Co-parenting from the Presidential Debate

A final question to the candidates during a recent presidential debate reminded me of a topic that often comes up in the context of co-parenting work in high-conflict cases, interviews by custody evaluators, questioning at depositions in custody disputes, documents submitted to a judge, and oral arguments at custody hearings or trials.

Ninth Circuit Joins the Dissenter, Holds that Employers Can Not Prohibit Concerted Actions

The Supreme Court may soon be taking on an issue that has divided several of the federal circuit courts. The circuits disagree on a fundamental question that relates to arbitration and labor law - whether an agreement to arbitrate is valid when an employee waives the right to bring claims against an employer as part of a class or collective. In other words, can an employee be barred from being part of a class action lawsuit where there is an agreement to arbitrate and a waiver of the right to pursue collective claims?

D.C. Circuit Sends Claims Against Airbnb for Discrimination to Arbitration Proceedings

Recently, the #Airbnbwhileblack hashtag started floating around social media as a way to bring awareness to several reported instances of African Americans having issues with booking accommodations through Airbnb, a service that allows peer-to-peer short-term rentals of houses and apartments. Indeed, research has found that African-American users of Airbnb frequently encounter racial discrimination as they try to find a place to stay.

Potential Regulation of Overdraft Services on Checking Accounts Still Under Consideration by the Consumer Financial Protection Bureau

By: Nathalie K. Salomon

The Consumer Financial Protection Bureau (CFPB) is considering potential regulations related to overdraft services on checking accounts.  An overdraft occurs when a consumer withdraws more money than he has in his account.  When a bank covers the transaction, it charges an overcharge fee in return.

Massachusetts Appeals Court Reaffirms MERS' Role As Mortgagee

The Massachusetts Appeals Court, in a Rule 1:28 decision, has once again reaffirmed its holdings in Sullivan v. Kondaur Capital Corp., 85 Mass.App.Ct. 202 (2014) and Shea v. Federal Natl' Mort. Assn., et al., 87 Mass.App.Ct. 901 (2015), that the Mortgage Electronic Registration Systems, Inc. ("MERS") system of mortgage assignments comports with Massachusetts law.  The Appeals Court further reaffirmed that MERS' status as mortgagee, even "solely as nominee for [lender] and [lender]'s successors and assigns," grants to MERS all the rights and powers of a mortgagee, including the right to foreclose and exercise the power of sale in the mortgage.  Epps v. Bank of America, N.A., et al., 15-P-1095, 2016 Mass. App. Unpub. LEXIS 974 (Oct. 11, 2016).

Appeals Court Holds That Condominium Owners Can Waive Constitutional Rights In Bylaws

The Massachusetts Appeals Court considered whether a provision in condominium by-laws unfairly prevented individual unit owners from seeking the intervention of the court where the unit owners alleged that the condominium's trustees had breached their fiduciary duties and mismanaged the condominium's affairs. In Bettencourt v. Trustees of Sassaquin Village Condominium Trust, the owners of three units in a twelve-unit condominium sued the three trustees who had hired a contractor to pave the condominium's parking lot without first putting the matter to a vote of all of the unit owners. The paving work resulted in $950 special assessments against each unit owner. The trustees alleged that the plaintiffs' claims were barred by the condominium by-laws, which contained a provision (referred to as a "consent requirement") that required unit owners to obtain the assent of at least 80% of the unit owners before filing suit against the trustees. The plaintiff unit owners had not obtained that assent before filing suit in this case.

International Recovery of Child Support

On August 30, 2016, President Obama signed the instrument of ratification for the Hague Convention on International Recovery of Child Support and Other Forms of Family Maintenance. A White House press release of the same date describes the Convention's "numerous groundbreaking provisions that, for the first time on a global scale, will establish uniform, simple, fast, and inexpensive procedures for the processing of international child support cases, which benefits children and those responsible for their care."  

Driving Away From the Courts: Uber Drivers Must Arbitrate

In a recent decision, the Ninth Circuit Court of Appeals in San Francisco, ruled that private arbitration agreements between Uber and two former drivers in California and Massachusetts were valid and enforceable. The former drivers, who were seeking protections for themselves and on behalf of a proposed class of drivers from Uber's policies via a lawsuit in the federal courts, are now forced to return to arbitration, where they must seek individual redress. This strikes a heavy blow against Uber drivers in similar circumstances, who seek to be classified as employees rather than as independent contractors.

Ninth Circuit Denies Class Action For Allegedly Fraudulent Mortgage Modification Delays and Subsequent Foreclosures

The United States Court of Appeals for the Ninth Circuit has refused to reinstate a putative class-action suit accusing numerous banks and other mortgage servicers of fraudulently enticing mortgagors into applying for mortgage loan modifications to continue collecting servicing fees prior to foreclosure.  The Ninth Circuit panel agreed with the United States District Court for the Central District of California and the defendants that the servicers were not at fault for the foreclosures where the borrowers failed to pay their mortgages.  Casault v. OneWest Bank, et al., 2016 WL 4137656 (9th Cir. Aug. 4, 2016).

How To Obtain Record Title To a Parcel of Land When a Recorded Plan Shows That You Own It but a Prior Recorded Plan Says Otherwise

By: Nathalie K. Salomon

To determine who owns a parcel of land, it is necessary to conduct a title examination at the registry of deeds of the county where the land lies.  A title examination involves two aspects: (1) a determination of the chain of title to identify the successive deeds, from the current owner of the property back to the original owner, and (2) a review of the descriptions of the property contained in each deed.  There are many ways of describing a property.  It can be described by reference to monuments or courses and distances.  Examples of monuments are identifiable roads (such as "the road leading from Webster to Thompson"), barns, railroads, stakes and stones.

Federal Circuit Rules that Patent Suits Can Continue to Be Filed in Any District Where Defendant is Subject to Personal Jurisdiction

In a highly anticipated decision, the Federal Circuit recently issued an opinion denying a request made by TC Heartland LLC ("Heartland") for new restrictions on where patent suits can be filed.  In Re TC Heartland LLC, No. 2016-105, slip. op. (Fed. Cir. April 29, 2016).  

A Primer On The Defend Trade Secrets Act

A trade secret in the United States, once protected under state common law and state statute, is now officially a matter of national importance.  President Barack Obama signed into federal law on May 11, 2016 the bi-partisan Defend Trade Secrets Act (DTSA), which creates, among other things, a federal cause of action for theft or misappropriation of trade secrets used in, or intended for use in, interstate or foreign commerce. See Pub. L. 114-153, 130 Stat. 376 (2016); see also 18 U.S.C. § 1836(c) ("The district courts of the United States shall have original jurisdiction of civil actions brought under this section."). "Trade secrets are the commercially valuable designs, processes, techniques, and other forms of information kept confidential by companies because, by virtue of their secrecy, they give companies an edge in a competitive marketplace."  H.R. Rep. No. 114-529, at 2 (2016).  Significantly, the DTSA provides ample remedies. It expressly permits relief for aggrieved trade secret owners in the form of compensatory and punitive damages, injunctive relief, and attorney's fees (in egregious cases). Furthermore, under both extreme and exigent circumstances, a plaintiff may, upon a sufficient factual showing, obtain an order seizing goods in commerce to protect against the unlawful dissemination of the trade secret, sales made in furtherance of the misappropriation, and the destruction of evidence.

DFPB Proposes Rule That Would Restore Consumer Right To Sue Banks

In AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011), the United States Supreme Court ruled that the Federal Arbitration Act preempts state laws that prohibit consumer contracts from disallowing class-wide arbitration.  On May 5, 2016, however, the Federal Consumer Financial Protection Bureau (CFPB) proposed a new rule that would restore consumer's rights to bring class action lawsuits against banks and other certain financial firms.

Massachusetts Supreme Judicial Court Rejects Challenge To Attorney's Authority To Conduct Foreclosure Activities For Client Without Written Authorization

The Massachusetts Supreme Judicial Court (the "SJC) has rejected a challenge to the authority of an attorney to conduct foreclosure activities on behalf of clients without specific written authorization to perform those activities.  See Federal National Mortgage Association v. Rego, et al., No. SJC-11927, 2015 WL 10895667 (Mass. May 24, 2016).  At a foreclosure sale conducted by GMAC Mortgage, LLC, Federal National Mortgage Association ("Fannie Mae") purchased the home formerly owned by Edward and Emanuela Rego.  When Fannie Mae filed a complaint for summary process in the Housing Court seeking possession of the home, the Regos argued that the foreclosure sale was void because the attorneys for GMAC lacked authority to undertake foreclosure activities on GMAC's behalf because their actions had not been authorized by a prior writing pursuant to Mass. Gen. L. c. 244, § 14 ("Section 14").

Appeals Court Dismisses HAMP-Based Negligence Claim

In a post-foreclosure lawsuit, Santos v. U.S. Bank National Association, et al., 2016 WL 3636049 (Mass.App.Ct. 2016), a borrower ("Santos") alleged inter alia that a foreclosing mortgagee ("U.S. Bank") and its loan servicer negligently handled his applications for a HAMP loan modification.  Santos argued that the defendants "negligently failed to adhere to the HAMP guidelines in processing his loan modification applications." 

HAMP was implemented in response to the 2008 financial and housing crisis.  Congress enacted the Emergency Economic Stabilization Act of 2008, which led to the Making Home Affordable Program introduced by the Secretary of Treasury ("Treasury"), from which HAMP is derived.  HAMP was designed to provide some relief to homeowners facing foreclosure by encouraging loan servicers to offer loan modification agreements that reduce mortgage payments.  For each permanent loan modification completed, the loan servicer receives incentive payments (consisting of $1,000 per modification and other incentives).  If a loan is not owned or guaranteed by the Federal National Mortgage Association ("Fannie Mae), then a loan servicer may elect to participate in HAMP by executing a Servicer Participation Agreement ("SPA") with Fannie Mae, in its capacity as financial agent for the United States.  The Treasury and Fannie Mae issued HAMP guidelines but the enforcement of HAMP is the responsibility of Federal Home Loan Mortgage Corporation ("Freddie Mac").  

In 2009, U.S. Bank executed an SPA with Fannie Mae.  Prior to the foreclosure of his home, Santos applied multiple times for a loan modification under HAMP.  Santos participated in a three-month temporary plan as part of the HAMP application process.  His applications for a permanent loan modification agreement under HAMP, however, were ultimately denied by U.S. Bank and its loan servicer.  Thereafter, the foreclosure sale took place.  While a post-foreclosure summary process (i.e., eviction) action against Santos initiated by U.S. Bank was pending, Santos filed a separate suit against U.S. Bank and the loan servicer.

Santos argued that U.S. Bank and its loan servicer were negligent in handling his loan applications under HAMP.  The Appeals Court rejected Santos' argument.  In doing so, the Appeals Court relied on the well-established principle in the First Circuit that HAMP does not create a duty of care owed by a mortgagee to a borrower, which essentially represents the general consensus among courts across the country that "there is no private right of action under HAMP and that borrowers are not intended third-party beneficiaries of SPAs or similar contract between lending banks and Fannie Mae." 

Since HAMP is a federal program, the Appeals Court recognized that issues related to the interpretation of the HAMP contract, such as a private right of action or intended beneficiary status, are largely controlled by federal law.   The concept of duty of care - the Appeals Court explained - is determined by applying state common law principles.

  Adopting the reasoning and analysis of the majority of courts across the country, the Appeals Court concluded that "under Massachusetts law, HAMP does not impose a duty of care owed by lenders banks and servicers to borrowers."  Consequently, the Appeals Court ruled that Santos' negligence claim fails as a matter of law.

This case should put an end to the borrowers' efforts in Massachusetts to assert, against lending banks, negligence claims based on the HAMP guidelines.

We invite you to learn more about Fitch Law Partners LLP's banking law practice on our website.

Supreme Judicial Court Reconsiders What It Means to Be a Legal Parent in Massachusetts

Last month, the Commonwealth's highest appellate court considered how legal parenthood is defined in the context of children born to a same-sex couple as a result of artificial insemination.  The case, Partanen v. Gallagher, is currently under advisement by the Supreme Judicial Court.  The Court's opinion could result in new parameters for what it means to be a parent in Massachusetts.  At issue is the scope of the legal rights that an unmarried woman, who was previously in a relationship with the child's biological mother when the child was conceived using artificial insemination, enjoys after the relationship ends.

Employers May Not Prohibit Class Actions, Holds The 7th Circuit

The 7th Circuit Court of Appeals recently created a schism between the Circuits that may lead to the Supreme Court's intervention on an important issue: whether an employer may bar employees from bringing class action claims by requiring claims to be arbitrated. The 7th Circuit, in deciding that employers cannot do so, has diverged from the 5th Circuit, leaving a circuit split that the Supreme Court will now likely be compelled to resolve.

CFPB Proposes Rule That Would Restore Consumer Right To Sue Banks

In AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011), the United States Supreme Court ruled that the Federal Arbitration Act preempts state laws that prohibit consumer contracts from disallowing class-wide arbitration.  On May 5, 2016, however, the Federal Consumer Financial Protection Bureau (CFPB) proposed a new rule that would restore consumer's rights to bring class action lawsuits against banks and other certain financial firms.  

Division of Banks Issues Warning About ATM 'Skimming'

The Massachusetts Division of Banks (the "Division") has issued a letter to Non-Bank ATM Registrants in the Commonwealth to warn them about a "concerning increase" in ATM skimming fraud.  The Division's March 16, 2016 letter is published on its website.

Land Court Holds Unsigned Memorandum of Understanding Not Sufficient To Bind Parties to Real Estate Conveyance

In a recent Land Court case, the Court held that an unsigned Memorandum of Understanding regarding an ownership interest in a home on Nantucket was not binding upon the parties.  In Slover v. Carpenter, Walter Boyd Jr. and his sister Josephine Carpenter owned a house on Nantucket as tenants-in-common.  No. 14 MISC 487353 KFS, 2016 WL 54899, at *1 (Mass. Land Ct. Jan. 4, 2016).  Ms. Carpenter's daughter Katherine Slover and her husband claimed that Ms. Carpenter had repeatedly promised orally and in writing to transfer her one-half interest in the property to them.  Id.  Ms. Slover and her husband had been long-time tenants of the property under a ten-year lease signed by Mr. Boyd and Ms. Carpenter, but had held over at the expiration of the lease and continued to occupy the property.  Id.  Mr. Boyd notified Ms. Slover and her husband that the lease would not be renewed, and that the property would revert to the common family usage.  Id. at *3. 

For Better (But Not For Worse): Premarital Agreements May Offer Protection From Marital Debt

Prior to walking down the aisle in 2014, celebrity power-couple Kanye West and Kim Kardashian entered into a prenuptial agreement, a fact that was far from surprising given that Forbes pegged the parties' respective net worths at $100 million and $40 million dollars, approximately. While prenuptial agreements for the ultra-rich are nothing new or noteworthy, it was West's alleged financial woes, not his fortune, that recently made waves across the internet. The hip-hop mogul took to Twitter last month to bemoan that he was $53 million in "personal debt". 

West's bizarre outbursts left many scratching their heads as to how the numbers added up, particularly in light of the fact that the artist earned more than $22 million last year and his wife a cool $55 million. Sources close to West quickly clarified that the $53 million dollar sum was not, in fact, "debt" in the traditional sense, but the total amount of personal funds that the artist had invested into his own companies.

Arbitration: The Symbiosis of Statute and Contract

Arbitration continues to gain popularity as a dispute resolution method, primarily due to the time and cost savings it offers to parties. While Massachusetts recognizes arbitration as "a creature of contract," the Massachusetts Arbitration Act (G.L. c. 251) (the "MAA") provides the legal framework (1) to compel parties to adhere to agreements to arbitrate; (2) to enforce arbitration awards through the courts; (3) to define the powers of arbitrators; and (4) to vacate arbitration awards under certain circumstances.  

In a recent decision, the Supreme Judicial Court addressed the interplay between the power of parties to agree to arbitrate a dispute and the statutory framework that limits their contractual ability to determine how that dispute will be resolved. "Although arbitration is a matter of contract," parties may not, for example, contractually "modify the scope of judicial review" of an arbitrator's award "that is set out in... the MAA." Katz, Nannis & Solomon, P.C. v. Levine, 473 Mass. 784, 789 (2016). Restricting the grounds for judicial review of arbitration awards through the MAA - as opposed to letting parties modify or create their own - "preserves arbitration as an expeditious and reliable alternative to litigation for commercial purposes." See id. at 794-95.  

China v. the Philippines: Can Countries Ignore International Arbitration?

As President Obama meets with Asian leaders this week, his conversations with Chinese president Xi Jinping will surely touch on what has become a contentious topic with deep implications in the international community - namely, the rise of Chinese expansionism into the South China Sea. This, in turn, will reverberate on the international order and ability of countries to hold each other accountable under international treaties.

China has expanded its military footprint in the South China Sea, pushing troops and installations further and further away from its mainland. By picking up an island here and an island there, China gives itself greater control over important shipping lanes, However, as more and more countries along the South China Sea are decrying, these incursions can be construed as breaches of their territory and sovereignty. 

Honey, You May Have To Testify: The Limits of the Spousal Disqualification In Civil Litigation (the Cosby edition)

The question of whether a spouse may be called as a witness in a civil case recently came up in the civil litigation surrounding the sexual assault allegations against comedian Bill Cosby. People often reflexively (and mistakenly) think that the issue is governed by the spousal privilege. In fact, in Massachusetts the spousal privilege is only applicable in criminal cases where one spouse is the defendant. M.G.L. c. 233 sec. 20, cl. 1. In those circumstances, the spousal privilege can be invoked by a witness to avoid being compelled to testify against his or her spouse. Com. v. Szerlong, 457 Mass. 858, 865 (2010). The testifying spouse can also choose to waive the privilege if the spouse wants to testify. Because the spousal privilege is applicable only in criminal proceedings, it is essentially irrelevant in civil litigation.

Unlike the spousal privilege, the spousal disqualification in Massachusetts is applicable in both criminal and civil matters. Subject to certain exceptions, the spousal disqualification provides that "neither husband nor wife shall testify as to private conversations with the other." M.G.L. c. 233 sec. 20, cl. 2. Unlike the spousal privilege, the marital disqualification renders testimony concerning the private conversations between spouses inadmissible regardless of whether the spouse wants to testify. There are several reasons for the rule, including the notion that such testimony would be inherently unreliable due to bias, the goal of preserving marital peace, and the desire to preserve the privacy of marital conversations. Despite these straightforward reasons for the spousal disqualification, its application may often seem counterintuitive. For example, the spousal disqualification does not apply to private conversations that occurred between a couple before they were married. Additionally, the spousal disqualification applies only to conversations and does not apply to written communications. Com. v. Szczuka, 391 Mass. 666, 678 n.14, 464 N.E.2d 38, 46 n.14 (1984). Thus, attorneys and parties must be aware that emails and text messages between spouses are not protected from disclosure by the spousal disqualification.

The Benefits of Practicing in the Massachusetts Land Court

A silver lining to finding oneself involved in a property dispute is the opportunity to resolve the issue in one of the Commonwealth's specialized courts, the Massachusetts Land Court. The types of legal disputes that Land Court judges decide vary in type and scope, but they all touch upon real property. The Land Court's docket contains cases involving foreclosures, challenges to subdivision plans, and boundary disputes, among others. Pursuant to General Laws Chapter 185, the Land Court has exclusive jurisdiction over some issues and concurrent jurisdiction over others. 

Alimony: Understanding What Qualifies As Alimony, And "Alimony Recapture" Rules

Alimony is the payment of money (i.e., cash) made to, or on behalf of, a former spouse provided that:

a. such payment is made pursuant to a written divorce or separation instrument; 

b. the divorce or separation instrument does not designate the payment as one that is not includable in the gross income of the recipient and not allowable as a deduction for the payer;

c. the payer and recipient are not members of the same household at the time the payment is made; and

d. there is no liability to make any such payment after the death of the recipient.  

See 26 U.S.C., §71(b).

Connecticut Supreme Court Upholds Mortgage Recording Fees for MERS

The Connecticut Supreme Court has upheld state legislation imposing an aggregate fee increase of approximately $5 million for mortgages recorded in Connecticut registries by Mortgage Electronic Registration Systems, Inc. ("MERS"). See MERSCORP Holdings Inc., et al. v. Malloy, No. SC19376, 2016 WL 510244 (Conn. Feb. 8, 2016). As noted previously in this blog on April 11, 2014, and August 7, 2015, certain government entities in Texas and Louisiana failed in their attempts to recoup fees from MERS by alleging violations of federal RICO statutes or by asserting claims for unjust enrichment. Connecticut chose instead to legislatively impose significantly higher recording fees for MERS than for other mortgage companies.

MERS is an organization that allows for the transfer of mortgages among its member banks without the need for a new recording in the applicable registry of deeds for each transfer. MERS typically appoints employees of its member banks as officers or secretaries of MERS, who then have the power to assign mortgages to other members, or from other members to themselves.  Throughout any transfer, MERS remains the mortgagee of record for the benefit of the member bank currently holding the note that the given mortgage secures.

Mandatory Self-Disclosures in Family Court: What Do the Finances Look Like?

In any divorce, the division of assets and support calculation (if any) will be one of the main, if not the main, focal points of the divorce process. In order to accomplish this task, both parties and their counsel should have a thorough understanding of the parties' financial circumstances - income, expenses, assets, and liabilities, among other things. Such concerns are often the target of discovery - parties are entitled to receive relevant information from the other side in order to make an informed decision. Such processes can sometimes be time-consuming and expensive, particularly in cases involving more complex financial arrangements.

However, at the outset of the case, it is helpful for both parties and their counsel to receive very basic financial information in short order. This allows parties and their counsel to at least have a sketch of the parties' financial circumstances, even if the full picture will not be complete until later in the process. With this information, the parties can start to formulate scenarios of how the parties will look financially after (and even during) the divorce.

U.S. District Court Dismisses Claims Arising From Check Fraud Scheme

In Armenian Missionary Association of America, Inc. v. TD Bank, N.A., et al, 87 UCC Rep. Serv. 2d 766 (D.N.J. 2015), the United States District Court for the District of New Jersey dismissed check fraud claims brought against TD Bank N.A. ("TD"). Plaintiff Armenian Missionary Association of America, Inc. ("AMAA" or "Plaintiff"), a non-profit organization that relies on donations to provide aid and assistance to Armenians throughout the world, sued TD after it discovered a series of alleged thefts by its former employee, Tigran Melkonyan, of over $800,000.00.

Melkonyan was employed by AMMA from August, 1999 until his resignation in April, 2014. His job duties centered on AMMA's child sponsorship and child education programs, but on certain occasions he was asked to go to the bank to deposit donation checks when the person typically responsible for depositing such checks was unavailable.   

Of Jurors and Jury Instructions

I attended a recent Federal Bar Association breakfast that was hosted by a thoughtful member of the federal bench in Massachusetts. He raised an important question about juror comprehension: Should each juror have a personal copy of the Court's jury instructions and read along with the judge throughout the charge?  

This was not an idle or purely academic question. The judge had researched the question with one of his law clerks, and, with their fruits and his own experience on the bench, the answer in his view is yes. This question is not one about which trial lawyers ordinarily take a position during trial; attorneys generally defer to the trial judge's practice and procedure. But contemporary research suggests that this should change.

Massachusetts Supreme Judicial Court Answers Important Workers' Compensation Benefits Question

In a ruling that brings certainty to employers and employees, this month the Massachusetts Supreme Judicial Court issued two opinions concerning workers' compensation benefits, specifically, the scope of an insurer's lien. Generally, under G.L. c. 152, the workers' compensation statute, most private employers in Massachusetts are mandated to purchase workers' compensation insurance or qualify as self-insured. The law enables employees to receive benefits after on-the-job injuries, but prohibits them from suing their employers. Under Chapter 152, injured employees can recover payment for damages such as medical expenses, rehabilitation costs, and lost wages. However, they cannot recover compensation for pain and suffering.

While employers participating in the workers' compensation program are essentially granted immunity from suit by injured employees, the statue does not grant third parties similar protection. The result is that a worker may recover under the workers' compensation program from his or her employer's insurer and still sue third parties for damages. The scope of potential recovery from such third party suits is not governed by the workers' compensation statute, and employees may recover damages for pain and suffering. However, to avoid a potential "double recovery," G.L. c. 152, § 15 entitles an employer's insurer to a lien on any third party recovery in the amount paid by the insurer to the employee. An employee is entitled to keep any amount of recovery that exceeds what the insurer paid in workers' compensation benefits.

Navigating Massachusetts' New Parental Leave Law

In April 2015, Massachusetts' Parental Leave Act went into effect. G.L. c. 149, §105D, previously known as the Maternity Leave Act became the Parental Leave Act, applicable to both men and women. The law continues to apply only to employers with six or more employees. It provides for 8 weeks of unpaid leave for the birth of a child, adoption of a child or placement of a child pursuant to a court order, although if both parents work for the same employer, they can only take a combined total of 8 weeks of leave.  

The leave can be paid or unpaid at the discretion of the employer. However, the law expressly provides that an employee who is on leave for the adoption of a child cannot be treated any differently than an employee who is on leave for the birth of a child.

Outrageous - But Is It Actionable?

With the advent - and ubiquity - of the internet and social media has come an exponential increase in the potential for the publication of negative statements about individuals, corporations, or other entities. While such statements may hurt feelings, thanks to the First Amendment they may not provide the basis for legal action in Massachusetts unless they meet the standard for defamation, which encompasses libel (written words) and slander (spoken words). See Ravnikar v. Bogojavlensky, 438 Mass. 627, 629-30 (2003). To succeed, a defamation plaintiff must prove the following: (1) the defendant made a statement "of and concerning" the plaintiff, to a third party; (2) the statement could damage the plaintiff's reputation in the community; (3) the defendant was at fault in making the statement, whether negligently where the subject is a private individual or with actual malice in the case of a public official or public figure; and (4) the statement caused the plaintiff economic harm or otherwise fits four specific criteria to be actionable without proof of economic loss. Scholz v. Delp, 473 Mass. 242, 249 (2015). Regarding (3), above, the First Amendment grants greater protection to statements made about public figures or about matters of public concern, making defamation claims in those contexts significantly more difficult to prove. 

The Massachusetts Lis Pendens Statute: Tactical Considerations

The ink has long since dried on the purchase and sale agreement for that seaside inn you have always dreamed of owning, but the seller has backed out at the last minute without explanation and failed to attend the closing. You suspect that another buyer has offered a higher price and the seller will try to close on that better deal post haste. You've done your due diligence - you know the inn is profitable and is exactly what you have been looking for. You want this property, and you want it for the price you have agreed to pay. How can you protect yourself from losing this special opportunity to the third party buyer waiting in the wings - whose identity you don't know?

The obvious answer is to bring a lawsuit against the seller for specific performance and immediately seek to record a memorandum of lis pendens - a tactic that is effective to preserve a thwarted buyer's rights against unknown third parties, but is not without risk.

TILA Notice of Note Transfer Provision Not Retroactive, and Does Not Trigger Right to Rescission

Two recent decisions have clarified the scope and effect Section 131(g)(1) of the Truth-in-Lending Act's ("TILA"), which requires that a borrower be notified within 30-days of the sale, transfer, or assignment of a mortgage loan to a new owner.  15 U.S.C. § 1641(g)(1).  Section 131(g) states that "not later than 30 days after the date on which a mortgage loan is sold or otherwise transferred or assigned to a third party, the creditor that is the new owner or assignee of the debt shall notify the borrower in writing of such transfer," and include information regarding the new creditor.  The section was added to the law to provide notice of a change in ownership of the mortgage debt or note, in addition to the previously required notice of a change in the servicer of the loan.

In an issue of first impression for the circuit, the U.S. Court of Appeals for the Ninth Circuit has held that the provisions of Section 131(g)(1), effective May 20, 2009, are not retroactive. In response to a claim that a 2006 transfer of a loan without notice violated TILA, the Ninth Circuit reasoned that to impose a retroactive application of the notice requirement would impair the rights that the banks possessed when they acted, as well as impose liability and new duties on the banks for transactions already completed.  Talaie v. Wells Fargo Bank, N.A., No. 13-56312, 2015 WL 8606014 (9th Cir., Dec. 14, 2015).  Given the concerns expressed by the Supreme Court regarding retroactive application of statues in Landgraf v. USI Film Prods., 511 U.S. 244 (1994), the Ninth Circuit declined to impose the notice requirement retroactively.

Enforcing A Child Support Order: Help from the Massachusetts Department of Revenue

Recognizing a child's need/right to receive financial support from both parents - even when those parents are apart - the DOR employs various methods to assist families in enforcing court-ordered child support obligations.

For example, upon receipt of a Court's child support order with an income withholding provision, DOR will issue an "Income Withholding Order," which notifies the employer of the obligor (the person ordered to pay child support) to withhold child support from the obligor's paycheck and forward it directly to DOR.  DOR records payments that it receives from an obligor's employer and forwards those payments on to the child support recipient (the person ordered to receive the child support / usually the primary custodial parent).  In order to maintain proper recording, DOR instructs parents who are receiving child support in this manner not to accept payments directly from the payor/obligor. 

Restricted Stock Units:  Income for Child Support Purposes

In a recent appeal arising from a post-divorce modification action, Hoegen v. Hoegen (14-P-1491), the Massachusetts Appeals Court decided that income realized from vested restricted stock units (RSUs) must be included in the calculation of child support.

In doing so, the Appeals Court reversed the decision of the trial court judge, who found that "the mother did not prove that the father's income from [RSU] should be included in calculating child support as there was no evidence that said [RSU] income was not derived from the stock plan listed as an asset on the father's financial statement at the time of the divorce and in which any interest of the mother in said stock plan was waived by the mother in the parties' separation agreement."  

Is What I Tell My Lawyer Confidential? The Attorney-Client Privilege.

Communications between a client and a lawyer for the purpose of seeking or providing legal advice are generally confidential and neither the client nor the lawyer can be compelled to disclose them. The protection that applies to such communications is called the "attorney-client privilege." The rationale behind the attorney-client privilege is to ensure that clients are able to tell their lawyers all of the facts relevant to the advice the client seeks, no matter how embarrassing or damaging those facts might be, to ensure that the client is able to obtain the best possible legal advice and to enable the lawyer to provide advice that is tailored to the client's specific situation.

The privilege "attaches" to communications by a client (or potential client) to a lawyer for the purpose of seeking legal advice and to legal advice provided by the lawyer to the client. It is critical that the communication with the lawyer be for the purpose of obtaining legal advice. If the communication was made for the purpose of obtaining business or other advice, it may not be protected by the privilege.

Eighth Circuit Holds No Recovery for Converted Checks in the Absence of Actual Loss

In a recent Minnesota case, the Eighth Circuit Court of Appeals held that where a bank accepted and paid two checks despite missing endorsements, the jilted payee had no viable claim because it ultimately suffered no loss.

Northeast Bank v. The Hanover Ins. Group, 796 F.3d 929 (8th Cir. 2015) involved:  (i) the purchaser of a financially struggling hotel and water park, Grand Rios Investments, LLC ("Grand Rios"); (ii) Grand Rios's creditor, Northeast Bank ("Northeast"); (iii) Grand Rios's insurer, Hanover Insurance Group ("Hanover"); and (iv) Alex N. Sill Company ("Sill"), the firm hired by Grand Rios to negotiate claims submitted to Hanover arising from winter snow damage.  See Northeast, 796 F.3d at 930.

Massachusetts SJC Issues Important Decision Curtailing The Availability Of Attorney's Fees In Arbitration

In Beacon Towers Condominium Trust v. Alex, 473 Mass. 472 (2016) ("Beacon Towers"), the Massachusetts Supreme Judicial Court decided that an arbitral tribunal had overstepped the bounds of its authority when it awarded attorney's fees pursuant to the Commonwealth's frivolous claims statute. The SJC ultimately vacated the arbitral tribunal's fee award, despite noting that arbitration awards enjoy an exceptionally narrow scope of judicial review.

The SJC transferred Beacon Towers from the Appeals Court on its own motion - suggesting that the Commonwealth's highest court had a particular interest in clarifying existing law on this issue. Section 10 of the Massachusetts Uniform Arbitration Act states that attorney's fees may not be awarded in arbitration unless otherwise provided in the parties' arbitration agreement. Thus, the rule in the Commonwealth has been that arbitrators could not award attorney's fees except in two specific circumstances: (1) where a statute requires the imposition of fees on the losing party (Massachusetts' consumer protection statute, Chapter 93A, immediately comes to mind), and (2) where, pursuant to its authority to oversee discovery, a tribunal imposes monetary sanctions for discovery violations. The second exception was established in a 2006 SJC case entitled Superadio Limited Partnership v. Winstar Radio Prods., LLC, 446 Mass. 330 (2006) ("Superadio").

Massachusetts Superior Court Holds That Plaintiffs Can Sue Distinct Corporations Under Single Integrated Employer Theory

In the recent case of Fitzgerald v. The Chateau Restaurant Corp., No. 14-01990-J, 2016 WL 344155 (Mass. Sup. Ct. Jan. 4, 2016), a former manager at The Chateau Burlington and The Chateau Andover restaurants filed a putative class action against parent company The Chateau Restaurant Corporation, Inc. and several related corporations which owned individual Chateau restaurants in the Massachusetts Italian restaurant chain. In his complaint, the Plaintiff alleged that he was routinely denied the opportunity to take his off-site meal break--because of a company policy that if only one manager was on site, that manager could not leave the restaurant--yet he still had his pay automatically deducted to account for such a thirty-minute meal break. Id. at *1-2. Fitzgerald filed a putative class action on behalf of himself and other similarly situated hourly managers at any Chateau restaurant location during the six-year period preceding the commencement of the action, alleging violation of the Massachusetts Wage Act, violation of the Massachusetts Overtime Act, breach of contract and unjust enrichment. Id.

Defendants moved to dismiss all of the claims, arguing that the Plaintiff failed to establish the existence of an employment relationship between the members of the putative class and the Defendants because separate Defendant corporations operated the individual restaurants. Id. at *2. The Plaintiff countered that the complaint adequately asserted an employment relationship through a single integrated employer or joint employment theory.  Id.  

Mediation Strategy: The First Plenary Session

I recently participated in a panel discussion for a mediation course at a local law school. A well-known full time mediator and a U.S. federal magistrate judge who regularly conducts mediations in the federal court were with me. A highly engaged class of law students asked us to address a range of practical questions on the mediation process. 

Here I'll discuss one of the most fascinating topics we covered: As counsel, what is your strategy for the first plenary session? Mediators use this first meeting of the day for a variety of purposes, including for instance, to give counsel and the party representatives the opportunity to introduce themselves, to explain the options for joint and private meetings with the mediator throughout the day, to get agreement on the ground rules (e.g., confidentiality), to see if the parties share a common understanding of the history of settlement negotiations (if any) -- and to give the parties the chance to explain their respective positions on the disputed matter.

What is the difference between a jury trial and a bench trial in Massachusetts?

Articles XII and XV of the Massachusetts Constitution guarantee the right to a trial by jury, but the choice of whether to exercise that right is a strategic decision that often depends upon the facts and circumstances of a case.  A case where the judge serves as fact-finder is referred to as a bench trial or a jury-waived trial.  When choosing between a jury trial and a bench trial, lawyers and their clients must first evaluate factors like the strength and complexity of the legal claims and defenses, the makeup of the parties, and the location of the trial. The identity of the trial judge may also be a consideration for a party deciding whether to proceed with a jury trial or a bench trial.   

In Massachusetts, a jury trial in the district court is comprised of six people. With the addition of alternate jurors who listen to the evidence but do not ultimately weigh in on the verdict, seven or eight people may be selected to serve on a district court jury. A superior court jury is made up of twelve individuals who decide the case, but with alternates the total number of jurors may be as many as sixteen. Certain types of cases do not provide the right to a trial by jury, like criminal cases where the maximum penalty does not include jail time but only a (usually small) fine, or certain civil cases such as divorce, child custody cases, or matters heard in the Land Court.

Mass. Gen. Laws c. 93A, Section 9 versus Section 11

Massachusetts General Laws Chapter 93A, § 2 ("Chapter 93A") states:  "Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful."  From that simple statement, numerous acts and practices can serve as the basis for a suit alleging a violation of c. 93A.  Under the definitions of Chapter 93A, any person involved in trade or commerce, including corporate persons, can sue and be sued for violating the statute.

Chapter 93A contains two different regimes for relief, depending on whether a claimant is a consumer, in which case suit is brought under Section 9, or an entity engaged in trade or commerce, in which case the plaintiff proceeds under Section 11 (a business-to-business claim).  Both sections permit recovery of actual damages incurred, multiple recovery for knowing or willful violations of the statute, and the award of attorneys' fees to a prevailing claimant.  The two regimes, however, have different requirements for successfully asserting, pursuing, and winning a claim.

Alternative Dispute Resolution In Massachusetts: What Is Conciliation?

Supreme Judicial Court Rule 1:18 encompasses the Uniform Rules on Dispute Resolution ("Rules"). The Rules govern court-connected dispute resolution services provided in civil and criminal cases in the Commonwealth's trial courts. One of the express purposes of the Rules is to "foster innovation" in the delivery of court-connected dispute resolution services. Conciliation is an alternative dispute resolution process offered in many of the Commonwealth's Probate & Family Courts, and in some District and Superior Courts.

Mediation and conciliation are similar processes, and as a result, they are often confused with each other. Rule 2 defines "conciliation" as "a process in which a neutral assists parties to settle a case by clarifying the issues and assessing the strengths and weaknesses of each side of the case, and, if the case is not settled, explores the steps which remain to prepare the case for trial." By contrast, "mediation" is defined as "a voluntary, confidential process in which a neutral is invited or accepted by disputing parties to assist them in identifying and discussing issues of mutual concern, exploring various solutions, and developing a settlement mutually acceptable to the disputing parties." 

Appeals Court Holds That Easements Provide Access To Landlocked Parcels

The Court of Appeals recently issued an interesting decision, Kitras v. Town of Aquinnah, 87 Mass. App. Ct. 10 (2015), concerning easements and accessibility rights to parcels of land owned in the late 1800s by members of the Wampanoag Tribe of Gay Head in Martha's Vineyard. The parcels in question had been part of a larger tract of land owned by the Tribe in common ownership. In the 1870s, members of the Tribe petitioned the Court to partition, or divide, the land into individual parcels which were then given to individual Tribe members to be held in severalty. Many of the parcels that resulted from that division were landlocked. At the time the land was partitioned, provisions were not made for easements that would provide a right of access to those landlocked parcels. Over a century later, the owners of the landlocked parcels brought an action asking the Court to declare that the parcels of land had access easements across neighboring lots.

The Appeals Court concluded that easements providing access to those parcels existed for multiple reasons. To begin with, it rested its decision on the fact that, at the time the land was partitioned, it was the custom and practice of the Tribe to permit access to all members of the Tribe to all parts of the property in question. That practice was expected to, and did, continue after the land was partitioned. Consequently, the Court held, it would not be expected that the deeds that resulted from the division of the land would reflect easements - because none were necessary as a result of this practice. Instead, the Court found, this practice created "a "carry-through" of the preexisting right of common access of the Tribe members to their lands now held in severalty."

Division Of Banks Told That Hearings Are Not Optional

A Superior Court judge recently expressed little patience with the Massachusetts Division of Banks's (the "Division's") failure to hold a hearing prior to issuing cease and desist letters, calling it "disturbing" that two statutes requiring hearings "were completely ignored by an absolutist and overbearing executive department."

In Cashcall, Inc. v. Massachusetts Division of Banks, 2015 WL 517531 (Superior Court, September 1, 2015), the Plaintiffs challenged the Division's letters, which stated that the Plaintiffs had: (i) engaged in a small loan business without a license (see G.L. c. 140, §§ 96, 110); (ii) acted as a debt servicer without registering to do so (see G.L. c. 93, §§ 24-24G); and (iii) violated the criminal usury statute (see G.L. c. 271, § 49).  The letters directed the Plaintiffs to stop collecting on loans to Massachusetts residents, refrain from transferring the loans, refund all interest charges and fees from the loans received during the last four years, and submit a list of borrowers to whom reimbursement was owed.  See id.

Judge Vacates Major League Baseball Arbitral Award

As this blog has chronicled in the past, it is extremely difficult for an arbitral award to be vacated. The Federal Arbitration Act and many state arbitral acts provide very limited grounds for vacatur, as courts are reluctant to second-guess an arbitrator's decision. Indeed, courts have even refused to vacate awards when the arbitrator erred in his application of the law. Even a "grave error" made by the arbitrator is insufficient to vacate an award, as it is not amongst the grounds for vacating a decision.

According to Section 10 of the FAA, an award may be vacated:

Appeals Court Articulates Standard For Barring Contact Between Children And Third Parties In Divorce Cases

The Massachusetts Appeals Court recently issued a decision in a divorce case called Jankovich v. Jankovich.  It was a Rule 1:28 decision, which is primarily directed to the parties and, therefore, may not fully address the facts of the case or the appellate panel's decisional rationale.  Rule 1:28 decisions are not circulated to the entire Appeals Court, and, therefore, represent only the views of the panel that decided the case.  Also, such a decision may be cited for its persuasive value but, because of the limitations noted above, not as binding precedent.  Still, this particular case addresses the issue of children's access to third parties, which we as family lawyers often encounter in contested divorce cases.  

 The Jankovich appeal was brought by the defendant, Marija V. Jankovich (mother), from a judgment of divorce nisi. The sole issue raised on appeal is the trial judge's failure to order that, in the event a judgment of divorce enters, the plaintiff, Andrew R. Jankovich (father), would be prohibited from permitting the children to be in the company of a former au pair who is involved in a relationship with the father.

Pennsylvania Federal Court Rejects Plaintiff's Attempt to Invoke Discovery Rule To Toll Statute of Limitations in UCC Check Fraud Case

Section 4-401 of the Uniform Commercial Code provides that a bank may charge the account of a customer if it is presented with a "properly payable" check or other item "authorized by the customer," and "in accordance with any agreement between the customer and the bank." Section 4-401 also provides the basis for forged check liability in the case in which a plaintiff alleges that a bank is liable for charging her for a check that was not properly payable to a third party. UCC Section 4-111 provides that "an obligation, duty, or right" stemming from Article 4 must be commenced within three years from the time the cause of action accrues.

In a recent case in the U.S. District Court for the Eastern District of Pennsylvania, the personal representative of a deceased woman's estate brought a suit against the decedent's bank, Wells Fargo, which had honored forged checks of more than $388,000 drawn on her account in the four years prior to her death. Faber v. Wells Fargo Bank, No. 15-00191, 2015 WL 1636967 (E.D. Pa. Apr. 13, 2015). The decedent had suffered from Alzheimer's dementia in the four years preceding her death in April 2012 when the forged checks were drawn on her account, and the personal representative of the estate sued Wells Fargo under both the Pennsylvania version of UCC Section 4-401 and Pennsylvania's consumer protection statute. Id. 

"Parental Privilege" Recognized As An Affirmative Defense In Child Spanking Case

In a decision handed down on June 25, 2015, the Massachusetts Supreme Judicial Court recognized a "parental privilege" to use reasonable physical force to discipline a minor child as an affirmative defense in a criminal action.  (See Com. v. Dorvil, 472 Mass. 1 (2015)).  

In Com. v. Dorvil, the defendant father, who admitted he had given his then 2-year old daughter a "pat on the butt", had been convicted in the lower court of assault and battery.  Defendant's conviction was upheld on appeal but subsequently reversed upon further appellate review of the MA Supreme Judicial Court. 

The Specialized Role of the Business Litigation Session

Suffolk Superior Court in Boston is home to an innovative session called the Business Litigation Session, commonly abbreviated as "BLS".  Brought about by the advocacy of administrative judges, civil litigators, and leaders in the business community, the BLS has served as a statewide forum for the resolution of complex commercial disputes since 2000.  

Over the last fifteen years, the BLS has gained a reputation as an efficient forum to litigate complicated business issues such as intellectual property disputes, shareholder derivative claims, suits involving banks, financial advisers, and brokerage firms, claims for breach of fiduciary duty, insurance disputes, antitrust claims, and professional malpractice suits.  Although typically referred to as "the" BLS session, there are actually two sessions that make up the BLS, and each one is staffed with two experienced Superior Court judges, as well as an assigned clerk and staff attorney.

International Bar Association Annual Conference in Vienna 2015

The International Bar Association is the world's foremost organization of lawyers, bar associations, law firms and law societies. Its membership includes more than 55,000 lawyers from over 160 countries, in addition to nearly 200 bar associations and legal societies.

The IBA is holding its annual conference this year in Vienna during the week of October 4. It expects to attract 6000 delegates from around the globe. The gathering provides the opportunity to discuss and hear from thought leaders on current topics in most legal practice areas and more generally on professional ethics, the future of the legal profession and -- on the 500 Anniversary of the Magna Carta -- the rule of law and human rights.

Things to Look for in a Home Improvement Contractor

Most people don't realize that there are a series of important facts they should know about their building contractor before hiring them to build or renovate their home.  First, make sure that the contractor you are dealing with is registered with the state as Home Improvement Contractor ("HIC") and has a Construction Supervisor's License ("CSL").  Contractors who have registered as an HIC are required to pay a fee to a Guaranty Fund held by the Office of Consumer Affairs that may be available to partially reimburse the homeowner if the contractor does not perform or performs negligently.  A Construction Supervisor's License can only be obtained after the contractor has passed a test showing that he or she has knowledge of the building code, which will be important when the work is reviewed by a building inspector.  More detailed information regarding HICs and CSLs can be found on the website for Massachusetts Office of Consumer Affairs and Business Regulation.  This website also details the complaint process homeowners can use when something goes wrong.  

Another important thing to check is whether the contractor has adequate insurance.  Ask contractors providing you bids to show you proof of insurance that is current and that has adequate coverage limits for the type of project you are doing.  Contractors should carry, at a minimum, property damage and personal liability insurance.

MERS Requires No Authorization to Assign Mortgage

A Judge of the Massachusetts Superior Court, relying on earlier Massachusetts Appeals Court cases, has held that Mortgage Electronic Registration Systems, Inc. ("MERS") does not need authorization from the holder of the promissory note secured by a mortgage before assigning the mortgage to another entity.  O'Neil et al. v. The Bank of New York Mellon, 33 Mass. L. Rptr. 1, 8 (Mass. Super. July 20, 2015).

In O'Neil, Plaintiffs refinanced their mortgage in 2007, executing a promissory note in favor of Countrywide Home Loans, Inc. d/b/a America's Wholesale Lender ("AWL").  The corresponding mortgage in favor of MERS, as nominee for AWL and AWL's successors and assigns, granted MERS the power of sale and the right to exercise all interests of the lender, including the right to foreclose and sell the property.  Sometime in 2011, the Plaintiffs defaulted on their loan.  On September 19, 2011, MERS assigned the mortgage to The Bank of New York Mellon ("BNYM") as trustee for certificate holders of a securitized loan trust.  In 2014, BNYM's loan servicer initiated foreclosure proceedings and recorded documents certifying that BNYM was the holder of the mortgage and the owner or authorized agent of the holder of the note.

Offering Testimony By Videoconference international Arbitration

Testimony by videoconference international arbitration offers the disputants both a fair means for assuring that relevant evidence is heard and an effective tool for cost reduction.

It is hardly surprising that lawyers frequently encounter challenges in obtaining the voluntary appearance of a witness, particularly a third party witness, at an arbitral hearing thousands of miles away.  Often times, when the natural inclination of a witness to a commercial dispute may be to avoid involvement, the inconvenience of international travel is an especially hard sell.  Moreover, even with a cooperative witness, scheduling complications and the formidable expenses of international travel may outweigh the perceived benefits of the expected testimony.  In still other cases, a witness may not be able to enter the country where the hearing is being held -- due to visa problems, for example.

"Divorce Selfie" Explosion Bucks Trend of Damaging Use of Social Media in Family Law Cases

With the explosion of social media over the last decade, evidence from Facebook, Twitter, MySpace, and Instagram is now routinely used in divorce cases, shedding light upon critical factors such as a party's spending habits, irresponsible behavior, or failure to make a good faith effort to find a job.  More often than not, an avid social media presence is considered a risk to a divorcing litigant, as anything a party posts online can usually be retrieved and used against him or her in a potentially damaging manner.  As a result, divorce attorneys typically advise their clients to refrain from social media altogether during a contested family law proceeding. 

Moreover, studies in recent years have indicated that social media may not only be harmful to divorcing couples, but happily married ones as well.  In 2010, approximately 81 percent of divorce lawyers asked by the American Academy of Matrimonial Lawyers admitted that social media evidence has played an escalating role in divorce cases since 2005.  A 2015 survey of 2,000 married Britons conducted by the U.K. law firm Slater and Gordon confirmed that social media can be absolutely toxic to marriages; almost one in four married couples argued with their spouses about social media use on a weekly basis and another 17 percent reported engaging in such fights on a daily basis.  Further, one in seven married people reported that they would consider a divorce because of how their spouses were behaving on popular social media sites and apps like Facebook, Snapchat, Skype, What'sApp, and Twitter. 

Massachusetts Appeals Court Holds Operators of Commercial Campground Established Right to Un-Enclosed Land Through Adverse Possession

Under the doctrine of adverse possession, an individual, business, or group of individuals who have continuously used land owned by someone else for twenty years can make a claim that such use entitles the claimant to ownership of the property. To prevail on a claim of adverse possession, a claimant must prove (1) he or she used the disputed property or portion of a property without permission, (2) that the use was actual, (3) open, (4) notorious, (5) exclusive, and (6) adverse for a period of at least twenty years. Lawrence v. Concord, 439 Mass. 416, 421 (2003). 

On September 23, 2015, the Appeals Court held that an adverse claimant's longstanding operation of a commercial campground on un-enclosed wooded land was sufficient to put the record owners of the land on notice that the adverse claimants occupied the property under a claim of right.  In Paine v. Sexton, the Appeals Court affirmed a Land Court ruling that plaintiffs who had long operated a campground on approximately thirty-six acres of predominantly wooded land in Wellfleet could register the land based on their adverse possession of the property. No. 14-P-14, 2015 WL 5567171, at *1 (Mass. App. Ct. Sept. 23, 2015). 

Version 2.0 of Rule 37(e): Rebooting the Framework For Evaluating Sanctions Under the Federal Rules

By its nature, Electronically stored information ("ESI") has a tendency to become voluminous and can had a profound impact on the cost of litigation and the issues and obligations faced by litigants.  Federal Rule of Civil Procedure 37(e) is intended to provide a safe harbor from sanctions for the loss of ESI resulting from "the routine, good-faith operation of an electronic information system."  Since the rule was put in place in 2006, courts have applied very different analytical frameworks and standards when considering requests for sanctions for lost ESI.  Because of the problems created by the inconsistency and uncertainty of the rule's application, including concerns that parties would be held to a standard that required the over-preservation of ESI, the old rule has been scrapped and a revised version of Rule 37(e) goes into effect on December 1, 2015.

The new Rule 37(e) provides as follows:

If electronically stored information that should have been preserved in the anticipation of litigation is lost because a party failed to take reasonable steps to preserve the information, and the information cannot be restored or replaced through additional discovery, the court may: 

(1) Upon a finding of prejudice to another party from loss of the information, order measures no greater than necessary to cure the prejudice;

(2) Only upon a finding that the party acted with the intent to deprive another party of the information's use in the litigation, (A) presume that the lost information was unfavorable to the party; (B) instruct the jury that it may or must presume the information was unfavorable to the party; or (C) dismiss the action or enter a default judgment.

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