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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 the 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 in 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 certificateholders 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 in International Arbitration

Testimony by videoconference in 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.

Tenth Circuit Upholds Refusal to Stay Court Proceedings due to Arbitration Default

The Tenth Circuit Court of Appeals recently affirmed a district court's decision to lift the stay in federal proceedings due to the arbitrator's decision to terminate proceedings based on a party's failure to pay the arbitration fees. It reached this decision by concluding it had proper jurisdiction to hear the appeal and that the district court had reached the correct decision on the merits - that the employee was in default of his obligation to pay the arbitrator's fees and that the proceedings were properly terminated.

The case, Pre-Paid Legal Servs., Inc. v. Cahill, 786 F.3d 1287, 1288 (10th Cir. 2015), involved a company suing its former employee for tort and contract violations. The case was removed to federal court due to diversity jurisdiction. However, the federal case was stayed under the Federal Arbitration Act (the "FAA") so the parties could pursue arbitration. The former employee did not pay its share of arbitration fees and the arbitrators terminated the proceedings. The employer moved to lift the stay and resume the litigation. The district court granted the motion, and the former employee appealed, arguing that the decision to lift the stay violated section 3 of the FAA. The Tenth Circuit Court of Appeals disagreed with the appellant, and affirmed the district court's decision to lift the stay.

Financial Stress and Divorce

Financial stress is often cited as a leading cause of divorce. Financial stress can have an extreme impact on a relationship. It can eventually wear away at the love and affection that one has for another because of how consuming the issue can be in someone's life - exhausting someone emotionally and depleting their personal resources to continue to work hard at being in a healthy committed relationship. Of course, financial stress is usually not the the only cause for the breakdown in a marital relationship, but it can have an impact on more aspects of a couple's life than just their finances.   

Here are 5 ways in which I have seen financial stress lead to divorce in the cases I've handled over the years. By keeping an eye out for these warning signs during marriage, it could help a couple adequately prepare for and navigate through financially stressful times in their marriage so as to avoid the possibility of divorce. 

Partitioning Real Estate Owned By A Trust

Trustees sometimes face beneficiaries disagreeing about how to maintain real estate owned by a trust, such as a family vacation home.  But does a trustee have standing to bring a partition action to sell Massachusetts real estate?  Likely not.  

Under Massachusetts's partition statute, M.G.L. c. 241, § 1,  "[a]ny person, except a tenant by the entirety, owning a present undivided legal estate in land, not subject to redemption, shall be entitled to have partition in the manner hereinafter provided."  Based on this broad statutory language, "any person" can bring a partition action.  This presumably includes a trustee because he is "the legal title holder of trust property, and is therefore a "person . . . owning a present undivided legal estate in land.  It is the beneficiary who has only an equitable interest."  See Arthur L. Eno, Jr. et al., Partition, 28 Mass. Prac. § 17.23 (4th ed.). Two very old cases held that a trustee can petition for partition, and there have been no cases addressing or explicitly overruling these older cases.  See Phelps v. Townsley, 92 Mass. (10 Allen) 554, 555 (1865) and Winthrop v. Minot, 63 Mass. (9 Cush.) 405 (1852). 

Appeals Court Favors Employee In Overtime Dispute

A recent Appeals Court decision should serve as a warning to employers about the importance of clarity in communications with employees concerning policies on overtime pay and timekeeping. 

In Vitale v. Reit Management & Research, LLC, 2015 WL 4946051 (2015), the Court considered the claims of an employee who alleged that her employer had failed to pay her overtime pay she had earned. The company's employees were paid for 8-hour days which included 1-hour lunch breaks. The employer, therefore, paid overtime to employees who worked more than 45 hours per week, assuming they did not work during their lunch break. If the employees worked during their lunch hour, however, that work counted toward the overtime calculation. The employer utilized an electronic timekeeping system which, when implemented, required the employees to make separate entries to alert the company that they had worked during lunch for the purpose of the overtime calculation (because they were already paid for the lunch hour, they were not entitled to additional compensation for that time unless the overtime policy was triggered). 

Section 35A Imposes No Time Limit on Completion of Foreclosures

The statute providing borrowers with a right to cure mortgage payment defaults before acceleration and foreclosure can occur imposes no deadline on completion of foreclosure proceedings once commenced, according to two very recent Massachusetts decisions.

G.L. c. 244, § 35A ("Section 35A"), as currently enacted, provides that a mortgagor of residential property shall have a 150-day right to cure a payment default before acceleration of his or her loan.  A mortgagor who has cured once, however, is not entitled to a new notice with each successive default.  Instead, "[t]he right to cure a default of a required payment shall be granted once during any 3 year period, regardless of mortgage holder."  See G.L. c. 244, § 35A(b).  Notably, both the version of Section 35A that was effective from May 1, 2008 to August 6, 2010 and the version of the statute that will go into effect on January 1, 2016 require a 90-day right to cure to be granted once during any five year period.  

International Jurisdiction and the FIFA Indictment

Shortly after New York Attorney General Loretta Lynch's 47-count indictment involving FIFA (Fédération Internationale de Football Association) was announced in May, legal insiders and outsiders alike were asking how the U.S. was able to coordinate the arrests of foreign citizens in foreign countries for violating U.S. laws. The question--one of jurisdiction--is likely to be examined closely as the FIFA case plays out in federal district court.  At the center of the indictment is the claim that FIFA was engaged in a "pattern of racketeering activity," which provides the backbone for the charges under the Racketeer Influenced and Corrupt Organizations Act ("RICO").   

The majority of federal laws do not apply to the conduct of other citizens outside of the U.S., however, extraterritorial criminal acts, in this case allegations of bribery, money laundering, and wire fraud, come under U.S. jurisdiction if the acts have an adequate nexus with, or connection to, U.S. soil.

Getting To Arbitration

Massachusetts law recognizes arbitration as "a remedy created by statute which limits its availability to the parties to an arbitration agreement."  Rae F. Gill, P.C. v. DiGiovanni, 34 Mass.App.Ct. 498, 503 (1993).  In other words, a statute - the Massachusetts Arbitration Act (G.L. c. 251) ("MAA") - creates the ability for parties to settle their legal disputes through arbitration, but those parties also must have a prior agreement to do so.  But what happens when one party refuses to arbitrate? 

"Where a party denies the existence of a valid agreement to arbitrate, either because the party denies that it entered into an agreement or because it challenges the validity of such agreement, the MAA's procedures set forth in G.L. c. 251, § 2, govern the adjudication of a motion to compel arbitration."  McInnes v. LPL Fin., LLC, 466 Mass. 256, 261 (2013) (citing Warfield v. Beth Israel Deaconess Med. Ctr., Inc., 454 Mass. 390, 395 (2009) and St. Fleur v. WPI Cable Sys./Mutron, 450 Mass. 345, 352 (2008)).  Those procedures begin with filing an application with the Superior Court for an order compelling arbitration - essentially a complaint for specific performance of the arbitration agreement - setting forth the relevant agreement to arbitrate, which often takes the form of certain dispute resolution provisions in a larger contract between the parties.  If the resisting party denies the existence or validity of the agreement to arbitrate, the Court will "proceed summarily to the determination of the issue so raised and shall, if it finds for the applicant, order arbitration; otherwise, the application shall be denied."  See G.L. c. 251, § 2(a). 

As a Trustee, Can You Partition Real Estate Owned by a Trust?

Trustees sometimes face beneficiaries disagreeing about how to maintain real estate owned by a trust, such as a family vacation home.  But does a trustee have standing to bring a partition action to sell Massachusetts real estate?  Likely not.  

Under Massachusetts's partition statute, M.G.L. c. 241, § 1,  "[a]ny person, except a tenant by the entirety, owning a present undivided legal estate in land, not subject to redemption, shall be entitled to have partition in the manner hereinafter provided."  Based on this broad statutory language, "any person" can bring a partition action.  This presumably includes a trustee because he is "the legal title holder of trust property, and is therefore a "person . . . owning a present undivided legal estate in land.  It is the beneficiary who has only an equitable interest."  See Arthur L. Eno, Jr. et al., Partition, 28 Mass. Prac. § 17.23 (4th ed.).  Two very old cases held that a trustee can petition for partition, and there have been no cases addressing or explicitly overruling these older cases.  See Phelps v. Townsley, 92 Mass. (10 Allen) 554, 555 (1865) and Winthrop v. Minot, 63 Mass. (9 Cush.) 405 (1852). 

Land Court Orders Removal Of Structures Beyond Scope Of Easement

An easement "creates a nonpossessory right to enter and use land in the possession of another and obligates the possessor not to interfere with the uses authorized by the easement." Patterson v. Paul, 448 Mass. 658, 663 (2007).  In other words, a property owner can grant another party the right to use his property in certain ways - such as the right to enter and walk through it - without giving up ownership of the property.  Disputes can arise, however, when either party misunderstands or abuses the rights involved. 

For example, the Land Court recently found for a plaintiff property owner ("Plaintiff") in a dispute with defendant easement holders ("Defendants") over their use of an easement on Cape Cod.  See Mastrobattista v. Scott, No. 14 MISC 485877 (KCL), 2015 WL 4660031 (Mass. Land Ct. Aug. 6, 2015).  Thirty years ago - and over 25 years before Plaintiff acquired his parcel - the prior owner granted an easement to the owners of an adjacent lot, who were constructing a house.  The 25-foot wide easement ran from the road to the side of the lot where a garage was to be built, "for access to gararage [sic] and building facilities... and for passage of vehicles and pedestrians, the parking of vehicles of the grantees and their invitees, maintaining a driveway and parking area and for landscaping."  Id. at **1-2.  When Defendants acquired the property, they converted the garage to part of their interior living space and on the remaining easement area they built, among other things, a "high fence enclosing a much larger area and, inside that area, an expanded (8 x 12) pool surrounded by a large wooden deck with extensive outdoor furniture," largely eliminating the driveway and parking area.  Id.

It's Not Over Till It's Over: Assets Earned After Service Of Divorce Complaint Are Included In The "Marital Estate"

From a legal perspective, getting hitched in Massachusetts is fairly quick and simple, requiring little more than a valid marriage license and a proper officiant.  It is not even necessary to be wed by a clergy member or Justice of the Peace, as anyone over the age of 18 in reasonably good character can receive a one-day designation to solemnize the marriage.  Divorce, on the other hand, is rarely if ever as easy or efficient, and contested proceedings take months and even years to finalize.

A contested divorce case is formally commenced when one party files and serves a complaint for divorce upon the other. The date of service is important for purposes of determining alimony, as under the Alimony Reform Act of 2011, the "length of the marriage" is defined as the number of months from the date of legal marriage to the date of service of a complaint or petition for divorce.  The type of alimony that may be awarded and the amount of time that it will be paid will be governed, in part, by the length of the marriage.

Supreme Judicial Court Rules That Real Estate Salespersons Can Continue To Be Defined As Independent Contractors

The Supreme Judicial Court has recently affirmed in Monell v. Boston Pads, LLC, 471 Mass. 566 (2015) that real estate brokerage companies can continue to classify real estate salespersons as independent contractors and are not subject to the Massachusetts independent contractor statute.  

The Massachusetts real estate licensing laws set forth a statutory scheme which defines real estate brokers as individuals who can represent buyers, sellers, lessors and lessees and perform all relevant tasks up to and including closing of a transaction. M.G.L. c. 112, § 87PP. A real estate salesperson "is an individual who performs any act or engages in any transaction included in the . . . definition of a broker, except the completing of the negotiation of any agreement or transaction which results or is intended to result in the sale, exchange, purchase, renting or leasing of any real estate." Id.  Further, Massachusetts law provides that the licensing examination for a real estate salesperson "shall be based upon the same general subject matter as for a broker's license, but shall be more elementary in nature." M.G.L. c. 112, § 87SS. Salespersons are required to conduct business with or be affiliated with a licensed broker, and the statute expressly provides that a salesperson "may be affiliated with a broker either as an employee or as an independent contractor." M.G.L. c. 112, § 87RR.

Gender-Based Discrimination Claim Remanded For Determination By Jury

Even a seemingly objective performance evaluation process may not insulate an employer from claims by an employee that their termination was discriminatory. In a 2013 unpublished decision, Rochat v. L.E.K. Consulting, LLC, 83 Mass. App. Ct. 1108 (2013), the Appeals Court reviewed a Superior Court decision to dismiss gender discrimination claims made by a terminated employee against her former employer. The terminated employee, a second-year consultant with a previously promising career with the firm, earned a negative performance review from the supervisor of a project she worked on toward the end of her second year. That review led, ultimately, to the termination of her employment. Until the last few months of her employment, the employee had generally positive reviews every six months during her tenure with the company and consistently received praise for her work ethic and enthusiastic attitude. She claimed that the decision to terminate her was the product of gender bias.

The employer moved to dismiss the employee's claim, maintaining it met its burden of demonstrating that it had fired her for legitimate, non-discriminatory reasons. The employer pointed out that the review process that led to the termination was comprehensive and consensus-based and that it raised sufficient concerns about her ability to perform her job professionally to justify termination. Consequently, the burden shifted back to the employee to prove the employer's stated reasons for terminating her were pretexts and the decision to fire her was based upon her gender. On the record before it, the Superior Court concluded the employee would be unable to meet that burden.

First Circuit Examines Compliance Requirements Under Bank Secrecy Act

Federal law - specifically a section of the Bank Secrecy Act (31 U.S.C. § 5318(g)) (the "Act") and related regulations - requires financial institutions both "to report any suspicious transaction relevant to a possible violation of law or regulation" and forbids those institutions, government officials, and others from "notify[ing] any person involved in the transaction that the transaction has been reported."  31 U.S.C. § 5318(g).  

Except as authorized by law, banks and their employees may not disclose a suspicious activity report ("SAR") "or any information that would reveal the existence of a SAR" and further, upon service of a subpoena or other discovery device requesting disclosure of  "a SAR, or any information that would reveal the existence of a SAR, shall decline to produce the SAR or such information, citing this section and [the Act]."  12 C.F.R. § 21.11(k).  "[T]he strong public policy that underlies the SAR system as a whole - namely, the creation of an environment that encourages financial institutions to report suspicious activity without fear of reprisal" justifies such restrictions.  See In re JPMorgan Chase Bank, N.A., No. 14-8015, 2015 WL 4979594 at *4 (1st Cir. Aug. 21, 2015) (quoting Confidentiality of Suspicious Activity Reports, 75 Fed.Reg. 75593, 75595 (Dec. 3, 2010). 

Fifth Circuit Court of Appeals Reaffirms MERS System Under Texas Law

The United States Court of Appeals for the 5th Circuit has held that recording Mortgage Electronic Registration Systems, Inc. ("MERS") as the holder or beneficiary of a mortgage comports with Texas law.  Harris County Texas, et al. v. MERSCORP Inc., et al., No. 14-10392, 2015 WL 3937927 (5th Cir. June 26, 2015).  This adds to the Court's prior holding in Welborn v. Bank of N.Y. Mellon Corp., 557 Fed.Appx. 383 (5th Cir. 2014), treated in this blog on April 11, 2014, that certain government entities could not recover from MERS on the basis of federal RICO statutes.

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 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.

Appeals Court Clarifies Plaintiffs' Pleading Burden In G.L. c. 93A, § 11 "Center Of Gravity" Cases

Mass. Gen. Laws ch. 93A § 11 allows corporate plaintiffs to recover up to treble damages and attorneys fees from defendants who engage in unfair or deceptive trade practices. To invoke this powerful statute, however, the plaintiff must show that "the center of gravity of the circumstances that give rise to the claim is primarily and substantially within the Commonwealth." Kuwaiti Danish Comput. Co. v. Digital Equip. Corp., 438 Mass. 459, 473 (2003). A court will determine whether a plaintiff has done so "after making findings of fact, and after considering those findings in the context of the entire [Chapter 93A] § 11 claim."  Id. 

The Massachusetts Rules of Civil Procedure provide two primary opportunities for a defendant to test the legal sufficiency of a plaintiff's claims, such as one brought under Chapter 93A: (1) a motion to dismiss, which takes the plaintiff's allegations as true and tests whether the plaintiff has stated a legally cognizable claim; and (2) summary judgment, which takes the facts discovered and established during litigation in the light most favorable to the plaintiff and tests whether the case should be dismissed as a matter of law.  

Challenging An Arbitration Award

Alternative dispute resolution is rightly gaining steam as an efficient, fair mechanism for the resolution of complex business disputes.  Many companies are redrafting their standard-form contracts to include mandatory arbitration clauses.  This is particularly true for companies doing business across state or national borders, so that they might avoid being hauled into court in a foreign jurisdiction.  But what if you agree to arbitrate a business dispute and end up losing?  Do you have any recourse?

The answer is yes, but your chances of success are slim.  Unfortunately for the losing party to an arbitration, "[j]udicial review of an arbitration award is among the narrowest known in the law."  Maine Central R.R. Co. v. Brotherhood of Maintenance of Way Employees, 873 F.2d 425, 428 (1st Cir. 1989).

Child Support When Combined Gross Income Exceeds $250,000

In a recent decision, a panel of the Massachusetts Appeals Court considered a Probate and Family Court's modification judgment ordering the payment of additional child support that was calculated based upon the portion of the parties' joint income in excess of $250,000.  Martin v. Martin, 87 Mass. App. Ct. 1119 (2015) (pursuant to Rule 1:28).  

Massachusetts Child Support Guidelines (as amended) provide a formula designed to calculate a payor spouse's child support obligation when the parties' combined, gross available income is $250,000 or less.  When parties' combined gross income exceeds $250,000 (as in Martin), the Child Support Guidelines provide that the Court "should consider the award of support at the $250,000 level as the minimum presumptive order."  Additional child support based on income over $250,000 is within the discretion of the Court.

Swedish Court of Appeals Overturns $173 Million Arbitration Award On Grounds That Arbitral Panel Exceeded Its Authority

One of the advantages of arbitration is the certainty that comes with it. While arbitration awards can be challenged in court, it is extremely difficult to overturn an award. In fact, courts will vacate, or refuse to confirm an arbitration award only if there was a serious conflict of interest or corruption on the part of a neutral arbitrator, or the arbitrators exceeded their powers. This latter ground, the arbitrators exceeding their authority, is most frequently used as a basis for setting aside an arbitral award. A recent decision by the Swedish Court of Appeals setting aside a US $173 million arbitration award provides some guidance on how this standard may be applied.

The underlying dispute resulted from a failed 1992 joint venture between a Russian company, Tyumenneftegaz ("TNGZ"), and the American company First National Petroleum ("FNP"). Rather than obtain a license to develop certain oil and gas deposits in the name and for the benefit of the joint venture company, TNGZ obtained a license in 1993 in the name and for the benefit of itself. In December 2011, FNP filed a claim with the Arbitration Institute of the Stockholm Chamber of Commerce (the "SCC") for damages caused by the partnership breach. The arbitration hearing was conducted in the summer of 2013 and the award in favor of FNP was based on estimates of TNGZ's revenues from oil sales in the local market. 

"Managerial Control" Key To Construction Site Negligence Claim

For a viable negligence claim against a construction project management firm, the plaintiff has the burden of showing that the defendant exercised "managerial control" over the manner in which the work was performed when the plaintiff was injured.  A recent Suffolk Superior Court ruling emphasized that in order for an injured plaintiff-laborer to bring suit against a construction manager, there must be a showing that the management company directed the work, assumed contractual responsibility, or otherwise could be deemed to have been "in control" of the jobsite.  

After a work-related injury, the plaintiff in Rodrigues v. Tribeca Builders Corp., 32 Mass. L. Rptr. 535 (March 6, 2015) sued the construction project's general contractor, subcontractor, and a project management firm hired by the property's landlord to manage the construction.  The Court noted that "[m]atters concerning the means of project construction, and the methods adopted to ensure site worker safety" were vested in the general contractor and subcontractor but, by the terms of the contracts between the parties, no duties of job performance or site safety extended to the management firm. 

CFPB to institute TILA-RESPA Integrated Disclosure Rule on October 3, 2015

The Real Estate Settlement Procedures Act (RESPA) was enacted by Congress in 1974 in order to promote "more effective advance disclosure to home buyers and sellers of settlement costs." 12 U.S.C. § 2601(b)(1). In particular, RESPA requires the issuance of forms to the borrower that "conspicuously and clearly itemize all charges imposed upon the borrower and all charges imposed upon the seller in connection with the settlement." 12 U.S.C. § 2603(a). The related Truth-in-Lending Act (TILA) of 1968 requires that, "in the case of any consumer credit transaction," the lender "shall clearly and conspicuously disclose" to the borrower certain material terms and shall provide notice of right to cancel.  15 U.S.C. § 1635(a).  

For decades, these two laws have operated concurrently.  The Dodd-Frank Wall Street Reform & Consumer Protection Act ("Dodd-Frank") directs the Consumer Financial Protection Bureau ("CFPB") to promulgate rules combining the disclosure requirements of RESPA and TILA.  The combined rule, entitled the "TILA-RESPA Integrated Disclosure Rule" or "TRID" is set to take effect on October 3, 2015.  Under TRID, the currently required initial TILA disclosures and the RESPA Good Faith Estimate must be combined into the new Loan Estimate form, and the currently required final TILA disclosures and the HUD-1 form must be combined into the new Closing Disclosures form. The new forms are meant to give consumers more time to review the particulars of a mortgage transaction prior to closing: the Loan Estimate must be provided to a borrower three days after they apply for a loan and the Closing Disclosure must be provided three days prior to the closing.  The Loan Estimate and Closing Disclosure forms have various new and modified disclosure requirements, which can be found on the CFPB website

Changing the Vocabulary Around Non-Custodial Parenting

In negotiating parenting plans for nearly 20 years, I have gradually eliminated a few different words from my vocabulary.  For example, it's been a long time since I've used the words "visit" or "visitation" to describe what a non-custodial parent does when he or she is with his or her children - regardless of whether it's related to a Wednesday night dinner, a full weekend of overnights from Friday pick-up to Sunday night drop-off, or an extended period of vacation.  

I'm unable to count the number of times I've heard others (even Judges) make the mistake of using the "V" word in the context of arguing for, negotiating, or ordering an age and developmentally appropriate parenting plan on a case-by-case basis.  One major problem with the "V" word is that if a parent is "visiting" a child, a child often feels he or she has the right to refuse such contact (especially if the other parent is encouraging the child to refuse contact).  Likewise, if one parent is merely "visiting" with his or her child, the other parent, who schedules other events during the pre-arranged/cour-ordered time for such a "visit" often feels justified in doing so because, after all, it's merely a "visit" and it can be rescheduled like a play-date or a music lesson.  The court system certainly didn't help the situation by creating and distributing court forms that referred to "visitation" - until now.

The Fate of Fixtures at the End of a Commercial Lease: Who Pays for Removal?

The obligation of a tenant to remove fixtures and the right of the landlord to recover the cost of removal of fixtures and attendant repairs to the property were the subject of a recent decision by Suffolk Superior Court Judge Robert Gordon in The Wilder Companies, Ltd. v. California Pizza Kitchen, Inc., 32 Mass L. Rptr. 505 (2015). 

The landlord at issue sought to recover such costs from its former tenant pursuant to the terms of the lease, alleging that the tenant breached the lease when it vacated the premises at the end of the lease term, leaving behind a substantial volume of trade fixtures. The tenant countered that the landlord was not entitled to recover the removal and repair costs because the landlord had not complied with the terms of the contract that required it to give the tenant 60 days notice that it required the tenant to remove the fixtures.  The parties agreed that there was no extrinsic evidence that was relevant to the dispute and, instead, argued for competing interpretations of the terms of the lease.  Accordingly, the Court considered solely the contract terms in reaching its decision.

Two Appellate Courts Hold That Banks' Duty of Care to Non-Customers Is Extremely Limited

The United States Courts of Appeals for the Sixth and Eleventh Circuits have added to the significant body of law limiting a bank's duty to non-customers harmed or defrauded by one of the bank's actual customers.  The Sixth Circuit reaffirmed that, under Michigan law, a bank only owes a duty of care to its own customers.  The Eleventh Circuit found that, under Florida law, a bank has no fiduciary relationship with its customers and only owes a duty of ordinary care in arms-length transactions with its customers, and that any aiding and abetting liability for acts of a bank's customers is limited to cases where a bank has actual knowledge of the customer's bad actions.

In the Sixth Circuit case, SFS Check, LLC v. First Nat'l Bank of Delaware, 774 F.3d 351 (6th Cir. 2014), SFS Check, LLC ("SFS") provided financial transaction processing and funds transfers to its customers, through an account at Fifth Third Bank.  Fifth Third Bank determined that an SFS account at First National Bank of Delaware ("First National") was processing illegal gambling transactions through SFS's Fifth Third Bank account, notified SFS, and closed the account.  SFS claimed that an unnamed third-party had opened the First National account in SFS's name, and as the named party on the account, First National owed SFS a duty of care.

Family Law Arbitration

I recently returned from the American Academy of Matrimonial Lawyers Arbitration Training Institute as a Certified Family Law Arbitrator.  A few words about family law arbitration: Arbitration falls within the category of alternative dispute resolution ("ADR").  It can be a very helpful tool to resolve family conflict.  Contested litigation is the traditional method to resolve legal disputes arising from family law matters, but contested litigation can be a time consuming and expensive process.  As a result of the frustration and expense that many have experienced from being engaged in contested family law litigation, there has been a push in recent years to resolve family law matters through various ADR procedures, such as mediation, conciliation, and arbitration.  

Like mediation, arbitration is a voluntary process.  Parties to a family law arbitration agree by contract to submit part or all of their dispute to a decision maker - the Arbitrator.  The parties and the Arbitrator are in full control of the specific issues submitted, how, where, and when the arbitration will be conducted, and whether the Arbitrator's decision will be binding and final.  Most arbitrations are less formal and time consuming than courtroom hearings or trials.  They certainly are much more private - conducted in the privacy of the Arbitrator's office or conference room.  

Avoiding Some of the Uncertainty of Non-Compete Agreements: Fiduciary Duties of Minority Shareholders as a Basis For Enforcing Non-Compete Agreements

Evaluating the enforceability of a non-compete agreement under Massachusetts law involves an inherent degree of uncertainty.  This is because courts use subjective standards to determine whether to enforce a non-compete agreement based on whether it is: (1) reasonable in scope, length of time, and geographic area; (2) protective of a legitimate interest of the employer; and (3) supported by adequate consideration.  Thus, enforceability depends on the facts of a particular case.  Employers can increase the likelihood that a non-compete agreement will be enforced as written by tailoring non-compete agreements based on the guidance of past court decisions.  To that end, non-compete agreements should be limited to a duration of no more than 1-2 years. The geographic scope of a non-compete agreement should be limited to the area actually served by the employer or where the employer has specific plans to expand.  Non-compete agreements should also be presented to employees before hiring.  If the employee is already employed, employers should include some form of additional consideration, such as a raise or one time payment, for added certainty that a non-compete agreement will be enforced as written. 

In addition to keeping abreast of recent court decisions, employers must be aware of potential legislative developments in the area of non-compete law.  Last week the Massachusetts Joint Committee on Labor and Workforce Development met to hear testimony on five bills relating to the legality and enforcement of non-compete agreements.  The bills the committee considered ranged from moderate reform to a complete ban on non-compete agreements in Massachusetts similar to California.  So far, Governor Charlie Baker has not taken a position on non-compete agreements but has said through a spokeswoman that he will consider any measure that makes it through the Legislature.

Translating Written Documents in International Arbitration and Litigation

An inherent challenge of cross-national business endeavors is that, once a deal or business relationship is in place, the actual terms of the contract will be carried out in different countries. Despite the fact that the trans-national agreement or contract was written in one language and that the terms of the agreement likely specify that such language is the "controlling" language in the event of a dispute, the execution of the terms of that contract will, in almost all cases, be carried out in different languages.

For example, an American company may have a contract to provide certain gadgets to an Italian company, which will then resell them in Italy. It is likely that the contract was negotiated in English, written in English, and includes a clause stating that, even though there may be translations to the contract, the contract written in English governs. However, once the deal is complete and the American company starts supplying gadgets to the Italian company, the Italian company's re-sale efforts will not be conducted in English. The Italian company is servicing Italian customers on Italian soil. Thus, the transactions will be conducted in Italian and the documentation will reflect that - the invoices, receipts, customer agreements, website, terms of use, and every other conceivable document will be in Italian. 

"A House Divided": Determining the Disposition of the Martial Home Upon Divorce

Abraham Lincoln has famously stated that "a house divided against itself cannot stand"; and the disposition of the marital home is often one of the most contentious issues in a divorce case.  In many cases, the marital home represents the couple's most significant asset (other than retirement assets) and deciding how to distribute the property can be thorny, particularly as the mortgage lender will continue to consider both parties jointly obligated until the property is either sold or refinanced.

While liquid assets such as savings and brokerage accounts can quickly be converted to cash with minimal impact upon the value, equitably dividing real estate poses unique challenges, especially if one spouse desires to remain in the home after the divorce and "buy out" the other spouse's interest in the property. In such circumstances, it is important that the property be accurately valued.

Court Deviates From Durational Limit With Extension Of Alimony Paid To A Disabled Spouse

Since the enactment of the Alimony Reform Act of 2011 (the "Act"), alimony awards once considered ambiguous or lifetime entitlements are now subject to specific, durational time limits based upon the length of the parties' marriage. But, under what circumstances might such durational limits be extended?  In a recent decision, a Probate and Family Court (Hampshire Division) judge has ruled that a former husband's obligation to pay alimony to his disabled former wife shall continue beyond durational limits.  Barcalow v. Barcalow (Lawyers Weekly No. 15-003-12.)

In the Barcalow case, the parties were married for approximately 6 years, 2 months (or 74 months).  By the terms of the Act, if the duration of the marriage is 10 years or less, but more than 5 years, general term alimony shall be no greater than 60 percent of the number of months of the marriage.  G.L. c. 208, § 49(b).  Following passage of the Act and more than 7-years post divorce, Mr. Barcalow filed a Complaint for Modification, seeking to terminate his alimony obligation to his former wife based, in part, upon the fact that his obligation exceeded the Act's durational limit.

Appeals Court Clarifies What Constitutes Exceeding An Arbitrator's Authority, Approves Arbitration of Statutory Claims

The Massachusetts Appeals Court has ruled that an arbitrator exceeds her authority only when "she awards relief beyond the scope of the arbitration agreement, beyond that to which the parties bound themselves, or enters an award prohibited by law." Conway v. CLC Bio, LLC, 2015 WL 9883907, Mass. App. Ct. No. 14-P-350 (June 12, 2015), at 5-6. The Court also reiterated that the Federal Arbitration Act ("FAA") requires enforcement of an agreement to arbitrate statutory claims "absent a question of arbitrability, countervailing Congressional command, or cognizable challenge to the validity of the agreement to arbitrate." Id., at 10. 

The Conway case presented an appeal of a Superior Court order denying the Plaintiff's motion to vacate an arbitration award ("the Award"). Id., at 1. The Award was issued by a single arbitrator on the Plaintiff's claims arising out of the termination of his employment with the Defendant, including claims for breach of contract and violations of the Massachusetts Wage Act. Id., at 3-4. The Plaintiff claimed that the arbitrator had (i) exceeded her authority, and (ii) rendered an award not in accordance with the law. Id., at 4-5.

Challenging A Zoning Decision In Boston

Local zoning decisions can radically change the landscape of neighborhoods, and challenging a local zoning board's decision in the Commonwealth's courts poses several procedural traps for the unwary. This is particularly true for challenging zoning decisions issued by the City of Boston's Zoning Board of Appeal.

Appeals from a Boston Zoning Board of Appeal decision are governed by Section 11 of the Boston zoning enabling act, Chapter 665 of the Acts of 1956 ("An Act Authorizing the City of Boston to Limit Buildings According to their Use or Construction to Specified Districts"). The statute governing zoning appeals in other Massachusetts cities and towns, G.L. c. 40A, § 17, does not apply in Boston. In the words of the Supreme Judicial Court, "Boston has had unique zoning regulations for a long time, due to the city's concentrated population and intense land use by religious, educational, business, and government entities." See Emerson College v. City of Boston, 393 Mass. 303, 306 (1984).

As a Personal Representative, Do You Have to Sell Real Estate?

The largest asset in an estate is often real estate, such as the family home.  Sometimes the decedent owns additional real estate, such as a vacation home or an income-producing rental property.  What happens to such property varies in every situation and poses different risks for the Personal Representative. 

The most straightforward situation is when the decedent leaves real estate through a Will to a devisee, such as a parent leaving the family home to their children.  Upon the parent's death, the real estate transfers to the children to whom it was devised through the Will, subject only to certain allowances, rights of creditors, elective share of a surviving spouse, and administration.  See M.G.L. c. 190B, § 3-101. 

Supreme Judicial Court Clarifies Scope Of Derivative Privilege

Cases often turn on the scope of an exception. Recently the Massachusetts Supreme Judicial Court clarified the "sharply limited" scope of the derivative attorney-client privilege, an exception to the basic rule that disclosure of otherwise privileged communications waives the client's right to prevent disclosure of those communications to third parties, whether in litigation or otherwise - even if that disclosure proves fatal to the client's case. See DaRosa v. City of New Bedford, 471 Mass. 446, 463 (2015). The SJC recognized that exception in a 2009 decision, holding that a third party's involvement in otherwise privileged communications would not waive that privilege where "the [third party's] presence is 'necessary' for the 'effective consultation' between client and attorney" such as where the third party's "role is to clarify or facilitate communications between attorney and client." Comm'r of Rev. v. Comcast Corp., 453 Mass. 293, 307-08 (2009).

In DaRosa, the City of New Bedford cited the derivative attorney-client privilege as grounds (among others) not to produce communications from its environmental consultant, including a report analyzing the City's potential litigation exposure, in litigation concerning contamination at and around a site the city operated until the 1970s.  See DaRosa, 471 Mass. at 462-63. The derivative attorney-client privilege should apply, the City argued, because the consultant "translated" site-related "technical information contained in laboratory data and field observations" for the city solicitor and "such assistance was necessary for the city solicitor to provide legal advice to the city." Id.

As a Personal Representative, Do You Have to Sell Real Estate?

The largest asset in an estate is often real estate, such as the family home.  Sometimes the decedent owns additional real estate, such as a vacation home or an income-producing rental property.  What happens to such property varies in every situation and poses different risks for the Personal Representative. 

The most straightforward situation is when the decedent leaves real estate through a Will to a devisee, such as a parent leaving the family home to their children.  Upon the parent's death, the real estate transfers to the children to whom it was devised through the Will, subject only to certain allowances, rights of creditors, elective share of a surviving spouse, and administration.  See M.G.L. c. 190B, § 3-101.

One Step Closer to Enforcing Foreign Child Support Orders: U.S. Ratification of the Hague Convention on the International Recovery of Child Support is Near

The cross-border enforcement of child support has long bedeviled parents and children who seek a delinquent parent's compliance with a court order. Given the many difficulties inherent to the enforcement of court orders in foreign jurisdictions, as well as the heavy costs associated with those efforts, many parents had a difficult time registering and enforcing child support orders if the debtor was in another country.

Fortunately, several countries, including the U.S. and the various nations of the European Union, have signed and are in the process of ratifying the Hague Convention on the International Recovery of Child Support and Other Forms of Family Maintenance. This is a multinational treaty that sets up a mechanism enabling and facilitating the enforcement of child support orders (and, depending on the country, other family-related support orders) across the borders of the signatory states. Signatories, who are tasked with establishing a "Central Authority," which will take requests - for free - to enforce an order. This way, a party can petition the country where the deadbeat parent resides and ask for the support order to be enforced against them. In order to provide relief, the authorities in that country are then supposed to use whatever means are available for the enforcement of similar domestic support orders. 

Appeals Court Clarifies What Constitutes Exceeding An Arbitrator's Authority, Approves Arbitration of Wage Act Claims

The Massachusetts Appeals Court has ruled that an arbitrator exceeds her authority only when "she awards relief beyond the scope of the arbitration agreement, beyond that to which the parties bound themselves, or enters an award prohibited by law." Conway v. CLC Bio, LLC, 2015 WL 9883907, Mass. App. Ct. No. 14-P-350 (June 12, 2015), at 5-6. The Court also reiterated that the Federal Arbitration Act ("FAA") requires enforcement of an agreement to arbitrate statutory claims "absent a question of arbitrability, countervailing Congressional command, or cognizable challenge to the validity of the agreement to arbitrate." Id., at 10. 

The Conway case presented an appeal of a Superior Court order denying the Plaintiff's motion to vacate an arbitration award ("the Award"). Id., at 1. The Award was issued by a single arbitrator on the Plaintiff's claims arising out of the termination of his employment with the Defendant, including claims for breach of contract and violations of the Massachusetts Wage Act. Id., at 3-4. The Plaintiff claimed that the arbitrator had (i) exceeded her authority, and (ii) rendered an award not in accordance with the law. Id., at 4-5.

Striking a Balance: Judicial Liens Survive Bankruptcy Under Massachusetts Law

In an attempt to strike a balance between a debtor's right to the "fresh start" contemplated in the Bankruptcy Code and a creditor's right to collect on secured debt, the Massachusetts Supreme Judicial Court (the "SJC") has squarely held that a judicial lien survives a bankruptcy discharge unless the Bankruptcy Court has ruled that the lien should be avoided.

In Christakis v. Jeanne D'Arc Credit Union, 471 Mass. 365 (2015), the defendants had each sued the plaintiff to collect on a debt.  The defendants had each received final judgments and writs of execution against the plaintiff, and had each made a levy of execution on the plaintiff's property.  In other words, the creditor defendants had perfected liens against the debtor's property using debt collection processes available under state law before the debtor filed a bankruptcy petition.

One Step Closer to Enforcing Foreign Child Support Orders: U.S. Ratification of the Hague Convention on the International Recovery of Child Support is Near

The cross-border enforcement of child support has long bedeviled parents and children who seek a delinquent parent's compliance with a court order. Given the many difficulties inherent to the enforcement of court orders in foreign jurisdictions, as well as the heavy costs associated with those efforts, many parents had a difficult time registering and enforcing child support orders if the debtor was in another country.

Fortunately, several countries, including the U.S. and the various nations of the European Union, have signed and are in the process of ratifying the Hague Convention on the International Recovery of Child Support and Other Forms of Family Maintenance. This is a multinational treaty that sets up a mechanism enabling and facilitating the enforcement of child support orders (and, depending on the country, other family-related support orders) across the borders of the signatory states. Signatories, who are tasked with establishing a "Central Authority," which will take requests - for free - to enforce an order. This way, a party can petition the country where the deadbeat parent resides and ask for the support order to be enforced against them. In order to provide relief, the authorities in that country are then supposed to use whatever means are available for the enforcement of similar domestic support orders. 

U.S. Supreme Court Rules That Underwater Mortgages Cannot Be "Stripped Off"

While the American economy has shown tentative signs of stabilization and recovery, the nation's courts continue to grapple with legal questions that emanate from the Great Recession and the bursting of the so-called "housing bubble."  In one notable development, the United States Supreme Court has decided an important question regarding the treatment of home mortgages in Chapter 7 bankruptcy cases (i.e., cases in which the bankruptcy trustee gathers and sells the debtor's non-exempt assets and uses the proceeds of such assets to pay creditors in accordance with the Bankruptcy Code.)  

In two substantially similar cases, Bank of America, N.A. v. Caulkett and Bank of America, N.A. v. Toledo-Cardona, the Supreme Court was called upon to decide whether section 506(d) of the Bankruptcy Code permits a Chapter 7 debtor to void a junior mortgage lien in its entirety when the outstanding debt owed to a senior lien holder exceeds the current value of the home in question.  In more colloquial terms, the Supreme Court was asked to determine whether a debtor may "strip off" a junior mortgage lien that is "under water."

Differences Between International Arbitration and Litigation in U.S. Courts

There are fundamental differences between international arbitration and litigation in the U.S. courts that can impact the cost of resolving your dispute, the time to resolution, and each party's respective level of comfort with the process. Below, I set out a few important distinctions between the two processes.   

1) Neutral selection. In arbitration, the parties select the neutral arbitrator(s) who will decide the dispute. (Or, at a minimum, the parties select the method by which an arbitrator is to be chosen.) Depending on the case, parties can seek an arbitrator with substantive knowledge of a particular issue, fluency in a foreign language, availability to hear the case on an expedited basis, and so on. Parties can even interview potential arbitrators, subject to certain restrictions. When litigating in U.S. courts, one rarely has control over which judge is assigned to the case.

2) Neutral compensation. Parties to an arbitration pay their arbitrator(s), whereas American judges' salaries are paid by the government. Arbitrators' hourly fees run the gamut from a few hundred dollars to more than one thousand dollars. Arbitrator fees can be substantial, particularly in cases with multiple arbitrators or where arbitrators are required to travel to several hearings. These costs can be minimized by conducting hearings by teleconference or videoconference and agreeing that the chairperson of a three-person arbitral tribunal will decide certain preliminary matters without consultation with his or her co-arbitrators. 

Mine, Yours or Ours? Ownership of Property During the Marriage and Upon Death or Divorce

Many married couples give little thought to the issue of which party "legally owns" property acquired during the marriage or the impact that legal ownership may have upon the distribution of assets in the event the marriage ends by death or divorce. Some couples assume, albeit incorrectly, that all property is "marital" in the sense that everything owned by either party will pass to the surviving spouse in the event of death.  Other couples assume, also incorrectly, that owning property in one's individual name (rather than jointly) will protect the asset from the other in the event of divorce.  While neither assumption is correct, the irony of the current state of Massachusetts law is that parties are afforded far greater rights in the property and estate of the other if their marriage ends in divorce than they are if their marriage ends in death.

Massachusetts is a common law property state, which means that the legal ownership of property is determined according to how title is held.  For example, if a wife purchases a vehicle in her individual name, it is considered to be owned completely and solely by her.  She is free to use, sell or gift this asset as she wishes during the course of the marriage.  However, a spouse's ownership interest in his or her property in the event of death or divorce is not unrestricted, and will be limited by Massachusetts law governing same. 

Homestead Estates in Massachusetts

Whether a litigant is seeking to enforce a judgment or protect assets from creditors, it is important to be aware of the implications of a homestead estate. Also referred to as homestead protection, a homestead estate safeguards part of a person's or family's primary residence from attachment, seizure, execution on judgment, and levy or sale for the payment of most categories of debt. Massachusetts General Laws Chapter 188 provides for an automatic homestead estate worth $125,000 per residence, and a declared homestead amount of $500,000 per residence. In order to receive the latter, a homeowner must file a declaration of homestead in the Registry of Deeds in the county where the property is located. Elderly (defined as 62 or older) or disabled homeowners of any age are entitled to $500,000 of protection individually if they file a declaration of homestead; in circumstances where two elderly spouses each file such a declaration, the couple could be protected in the amount of $1,000,000. 

Since 2011, the homestead statute has had a broad definition of "home." Previously, the term was not defined by statute, but by the courts.  In addition to the typical single family residence, G.L. c. 188 now includes in its definition of "home" the accessory structures surrounding a house, and the land on which it is located, multi-family properties of 2-4-unit dwellings, manufactured homes, condominiums, and in most cases the sale and insurance proceeds of such properties. Despite the law's updated definition of its key term, courts are still settling disputes about whether or not a dwelling is eligible for homestead protection.  For example, in March, a Massachusetts bankruptcy judge ruled that a single-family dwelling that was being used for both commercial and residential purposes qualified for homestead protection.  In that case, Judge Melvin S. Hoffman noted that the "test for homestead eligibility is not whether the single family dwelling includes any commercial use but whether the commercial use predominates." See In re: Walter D. Catton, Jr., No. 14-41468-MSH (March 5, 2015). 

Domestic Violence Leave in Massachusetts

In August 2014, An Act Relative to Domestic Violence was signed into law and became effective immediately. Section 10 of the Act, codified at G.L. c. 149, §52E, created new protections for an employee who is, or whose covered family member is, a victim of abusive behavior. Abusive behavior includes domestic violence, sexual assault, stalking, and kidnapping. Under the new law, employers with 50 or more employees must provide employees up to 15 days of unpaid leave in any 12-month period if the employee or covered family member of the employee is a victim of abusive behavior.

Key aspects of the law include:

Issues With Interpretation In International Arbitration

A central feature of international arbitration is the presence of counsel, parties, and even arbitrators who hail from several different countries. Frequently, more than one nationality is represented at the arbitral hearing, and with that diversity come a host of issues that are not immediately apparent -- chief among them is the variety of different languages being spoken. Since a hearing will only be conducted in one language, it is often the case that many people in the room will need the services of both translators and interpreters in order to be present and fully understand the proceedings.

Although most cross-border business is conducted in English, this does not necessarily mean that everyone at an arbitral hearing will be fully comfortable with the English language. This is particularly true in a contentious hearing, where the need of counsel, parties, and arbitrators to fully understand and appreciate the nuances of testimony and documentary evidence is paramount. It is critical that everyone in the arbitral hearing be able to follow along and that practitioners take steps to ensure that as little as possible is "lost in translation."

Foreclosure Is Not Debt Collection Under the FDCPA in the 11th Circuit

The United States District Court for the Middle District of Florida has issued an opinion collecting 11th Circuit precedent and reiterating that foreclosure or other enforcement of a security interest, without more, is not "collection of any debt" under the Fair Debt Collection Practices Act, 15 U.S.C. § 1692-1692p ("FDCPA").  While an enforcement of a security interest comingled with an attempt to collect payment on the underlying debt may fall under the FDCPA, mere foreclosure or other security enforcement does not.  Gillis v. Deutsche Bank Trust Company Americas, 2015 WL 1345309 (M.D. Fla., Mar. 23, 2015).

Plaintiff Gillis had executed a promissory note, secured by his home, which was assigned to the bank.  When Gillis defaulted on the note, the bank and its attorneys initiated a foreclosure action in state court.  Gillis sued the bank and its attorneys in a separate action for violating the FDCPA on the basis of alleged misidentification of the bank, filing of false documents, and other actions taken in the underlying foreclosure action.

Adoption Notice to Sperm Donor Not Required

In a case entitled Adoption of a Minor, SJC-11797, slip op. (May 7, 2015), the Massachusetts Supreme Judicial Court decided that lawful parents (a married same-sex couple) of a child conceived through in vitro fertilization are not required to give notice to a known/biological father/sperm donor in conjunction with a joint petition for adoption.

Until same-sex marriage is recognized throughout the country, Massachusetts family law practitioners will often advise their same-sex, married clients to obtain an adoption decree from the Probate and Family Court to establish parentage of a child born as a result of artificial insemination.  But as Massachusetts residents, the parents in this particular case were not required to adopt their son in order to establish parentage: "Any child born as a result of artificial insemination with spousal consent is considered to be the child of the consenting spouse."  Id., at 6, citing Hunter v. Rose, 463 Mass. 488, 493 (2012) and G. L. c. 46, § 4B.  The Court in Adoption of Minor explains that lawful parentage, and its associated rights and responsibilities, is conferred by statute in Massachusetts on the consenting spouse of a married couple whose child is conceived by one woman of the marriage through the use of assisted reproductive technology consented to by both women.  See G. L. c. 46, § 4B.  Because the baby in this case was born to the biological mother, after an in vitro fertilization procedure to which her same-sex spouse consented, both parties are considered the boy's lawful parents under Massachusetts law.

SJC Interprets and Upholds 'Obsolete Mortgage' Statute

Where a mortgage states the term of its underlying debt but includes no separate statement of its own term, the two are one-and-the-same, the Massachusetts Supreme Judicial Court (the "SJC") has decided in an opinion interpreting and upholding the so-called "obsolete mortgage" statute.

In Deutsche Bank National Trust Co. v. Fitchburg Capital, LLC, 471 Mass. 248, 2015 WL 1649160 (2015), the SJC considered G.L. c. 260, § 33, et seq., as amended in 2006 (the "Statute"), which provides that a mortgage where the term or maturity date is stated becomes unenforceable five years after the expiration of the term.  The Statute renders a mortgage without a stated term unenforceable thirty-five (35) years after recording.  Id. at *1.  The Statute allows for extension of the time for enforceability of a mortgage if an extension or a document asserting non-satisfaction of the debt has been recorded within five years' prior to the end of the above-stated limitations period.  Id. at * 2, n.8.

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