EXAMPLES OF MY LEGAL WRITING
by James M. Micheletti, A.A.S., B.A., M.B.A
Tuesday, January 29, 2013
Legal Writing
TO MY ATTORNEY CLIENTS: The below are examples of my legal research.
Jim Micheletti
1. The person or entity has to swear and attest that it no longer has the original note;
2. The person or entity has to prove that it was properly in possession of the note and was entitled to enforce it WHEN it lost possession of the note;
3. The person or entity has to prove it didn’t “lose” possession simply because it transferred the note to someone else (i.e., it’s not really lost); and
What factors can help stylize a set of jury instructions in a corporate veil piercing case satisfactory to the judge and each side?
Jury Instructions in an alter-ego case can be formulated:
· using the factors listed by a Utah Appeals Court, a more accurate list of jury instructions can be made and agreed upon by both sides and the judge.
Jim Micheletti
Samson McGinnis brings six causes of action based on an $817,500 mortgage he obtained on his residential property,alleging that Mortgage Electronic Registration Systems (MERS) does not have authority to foreclose on a Deed of Trust for hisproperty and that he was not provided with proper disclosures under the Truth in Lending Act (TILA) at the time he closed onthe loan. He also seeks to amend his complaint to add several more claims based on the same conduct alleged in the originalcomplaint. Defendants GMAC Mortgage Corporation (GMAC) and MERS move to dismiss Mr. McGinnis' complaint, arguingthat Mr. McGinnis has not stated a claim. They also argue that the court should not authorize Mr. McGinnis to file his amendedcomplaint because it would be futile.The court GRANTS Defendants' motion to dismiss and DENIES Plaintiff's motion to amend his complaint because suchamendment would be futile.
The Paralegal Guy
698 N. 835 W.
Orem, UT 84057
Telephone: 801-226-6060
TO: Eric Lind, Esq.
RE: Can a “produce the note” defense bar a foreclosure?
DATE: June 24, 2011
RE: Defenses Available to a Bank Customer in a Foreclosure Setting
ASSIGNMENT
You asked me to explore the defenses available to a bank customer in a foreclosure setting if:
1) the bank DOES NOT produce the ORIGINAL promissory note for the debt; and,
2) the bank DOES NOT produce any other documents which prove that the bank has the current right to collect on the note and foreclose (usually by assignment).
If the bank cannot produce these documents, can the defendant defeat the foreclosure?
ANSWER
A qualified yes. We ask: In what type of foreclosure? In Utah will the bank in the above assignment foreclose judicially or non-judicially? In judicial proceedings, the lender needs to produce the paperwork indicating the property ownership. In non-judicial foreclosures in Utah, the trustee is not required to produce the paperwork but can simply sell. If the trustee’s claims are not believable, the borrower may individually initiate a lawsuit against him or her. The defendant can defeat the lender given certain conditions.
DISCUSSION
Instead of proceeding with a non-judicial foreclosure, the lender sends a Notice to Foreclose to the homeowner. What can the homeowner do? Because the homeowner is unsure as to whether the lender still possesses the original debt instrument, upon which the lender claims the right to foreclose and the homeowner wants proof of such authority, the homeowner can decide that the the court should intervene and prevent the foreclosure from taking place unless and until such proof is presented. The homeowner can stop the non-judicial foreclosure and initiate a lawsuit against the lender.
If not, Utah law on non-judicial foreclosure states that the “power of sale” provision can be conducted at the trustee’s wishes without stating clearly what he or she can or will do. He does not have to advise the homeowner. In Utah Code:
The trustee who is qualified under Subsection 57-1-21(1)(a)(i) or (iv) is given the power of sale by which the trustee may exercise and cause the trust property to be sold in the manner provided in Sections 57-1-24 and 57-1-27, after a breach of an obligation for which the trust property is conveyed as security; or, at the option of the beneficiary, a trust deed may be foreclosed in the manner provided by law for the foreclosure of mortgages on real property. The power of sale may be exercised by the trustee without express provision for it in the trust deed (My emphasis). See Utah Code Ann. § 57-1-21, 22.
A "power of sale" clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee.
Assuming that the defendant and bank went to court on the foreclosure, the foreclosure would be barred if the ownership papers cannot be produced—depending on certain conditions and applicable Utah rules. For example, a now nationally famous foreclosure case occurred in Draper, Utah August 30, 2010 resulting in an award of a title free of liens. This court decision stunned financial investors, real estate brokers, mortgage companies and other jurisdictions nationwide as evident in a national wave of blogs and posts too numerous to mention here. Walter Keane, a Utah attorney, filed what is called a “quiet title action”, a lawsuit in which the owner seeks clear title to a property free of liens by lenders or others. The lenders could not provide the proof of ownership of the land in a legal title or deed of trust and that clinched the matter (my emphasis). Harvey v. Garbett Mortgage, Case No. 100907587, 3rd Dist., Utah (2011).
What happens if MERS gets involved in a foreclosure? What defense bars the foreclosure action? In McGinnis v GMAC, MERS, Mr. McGinnis bases his fraud claim and part of his claims for quiet title and injunctive relief on his contention that MERS lacked the authority to foreclose. MERS is an electronic registry that tracks the servicing rights and ownership of mortgage loans. The Deed of Trust signed by Mr. McGinnis states, “MERS is a separate corporation that is acting solely as a nominee for Lender and Lender's successors and assigns. MERS is the beneficiary under this Security Instrument.” To this statement, Mr. McGinnis declares that apart from these words in the Deed of Trust, MERS does not have standing to appoint a trustee because it does not have ownership of the promissory note associated with the Deed of Trust. However, the court in McGinnis said:
. . . language in a Deed of Trust gives MERS the authority to foreclose in behalf of the lender and that MERS need not possess the note in order to appoint a trustee in behalf of the lender who does hold the note.
McGinnis v. GMAC Mortgage Corporation, MERS, 2010 WL 3418204, U.S. Dist, Utah Central Division, No. 2:10-cv-00301-TC. Aug. 27, 2010, CLICK ON
Burnett v. Mortgage Elec. Registration Sys., Inc., 1:09–cv–69, 2009 U.S. Dist. LEXIS 100409 *10–11 (D. Utah October 27, 2009). CLICK ON http://law.justia.com/cases/federal/district-courts/utah/utdce/2:2010cv01047/77630/26
Under the state’s quiet title laws, a trustee named in a trust deed has a legal duty in Utah to the entity that holds the promissory note and for fair dealing with the homeowner. Utah Code §§ 75-7-813, 814. But in the Draper townhouse case, First American Title filed a response to the quiet title action saying that it had no idea who had the right to collect payments on the promissory note, nor did it admit to knowing any other basic information about the property. Garbett Mortgage also told the court it no longer held an interest in the property. Integrated Title never filed a response to the lawsuit but did withdraw as a trustee with the Salt Lake County Recorder’s Office. In the four months that the process took, the owner was able to gain title and deny the owners of his loan the ability to foreclose on the property for nonpayment. Id.
To further answer the assignment question: What is the probability of success in getting a foreclosure dismissed in Utah courts? In a Salt Lake Tribune newspaper article dated March 22, 2011 on Utah foreclosures, it quoted Utah Attorney Abraham Bates:
U.S. District courts in Utah likely have been hostile toward such suits because unlike state judges, federal jurists come largely from firms that service corporate clients and are not disposed to treat consumer complaints favorably. But he said federal judges also have heavy caseloads and look to get rid of cases quickly. Foreclosure lawsuits have “created a massive workload for judges,” said Bates, and in dismissing them the jurists tend to lump all foreclosure complaints together with earlier ones that he said were “poorly pled.”
The article states further:
Now, at least three cases from Utah have been appealed to the 10th Circuit Court of Appeals in Denver, whose rulings could clarify whether the legal issues are serious and need more judicial consideration. Rulings in favor of the homeowners could throw up roadblocks to the foreclosures in Utah, where 10,000 such processes were pending at the end of 2010, and also could affect property registration records.
Bates said that U.S. District Judge Tena Campbell dismissed a lawsuit claiming MERS did not have the legal right to initiate foreclosure proceedings. He with other attorneys is appealing Judge Campell’s ruling as it relates to Utah law to the Utah Supreme Court. A decision will help sort out the issues with MERS over whether it actually can initiate foreclosures even if it does not have any financial interest in the promissory note, Bates said.
Tom Harvey, “Shoulders Cold When Foreclosure Cases Hit the Courts,” Salt Lake Tribune, March 22, 2011.
Even with “produce the note” defense, a lender (such as a bank) can still enforce a promissory note without having the original, but only under certain limited circumstances. UCC § 3-309. Enforcement of lost, destroyed, or stolen instrument (the code states in full below):
(i) the person was in possession of the instrument and entitled to enforce it when loss of possession occurred,
(ii) the loss of possession was not the result of a transfer by the person or a lawful seizure, and
(iii) the person cannot reasonably obtain possession of the instrument because the instrument was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process.
(b) A person seeking enforcement of an instrument under subsection (a) must prove the terms of the instrument and the person's right to enforce the instrument. If that proof is made, Section 3-308 applies to the case as if the person seeking enforcement had produced the instrument. The court may not enter judgment in favor of the person seeking enforcement unless it finds that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument. Adequate protection may be provided by any reasonable means.
In sum:
1. The person or entity has to swear and attest that it no longer has the original note;
2. The person or entity has to prove that it was properly in possession of the note and was entitled to enforce it WHEN it lost possession of the note;
3. The person or entity has to prove it didn’t “lose” possession simply because it transferred the note to someone else (i.e., it’s not really lost); and
4. The person or entity has to prove that it cannot produce the original note because the instrument was destroyed or its whereabouts cannot be determined or it was stolen by someone who had no right to it.
Nevertheless, Utah courts have recognized MERS' power to act as the beneficiary of the Trust Deed as Lender's nominee according to the specific language in the deed allowing MERS to conduct itself so. See Burnett v. Mortgage Electronic Registration Systems, Inc., No. 1:09cv0069-DAK, 2009 WL 3582294 (D. Utah October 27, 2009)(holding that MERS is able to take any actions required of the lender, including the ability to pursue foreclosure proceedings and appoint a successor trustee); Foster v. BAC Home Loan Servicing, No. 2:10cv247-TS, 2010 WL 3791976 (D.Utah Sept. 22, 2010); Rodeback v. Utah Financial, No. 1:09cv134-TC, 2010 WL 2757243 (D.Utah July 13, 2010); Southam v. Lehman Brothers Bank FSB et al., No. 2:10cv45-TS, 2010 WL 3258320 (D.Utah Aug. 17, 2010). Hit control click on a cite to be directed towards it.
Nevertheless, Utah courts have recognized MERS' power to act as the beneficiary of the Trust Deed as Lender's nominee according to the specific language in the deed allowing MERS to conduct itself so. See Burnett v. Mortgage Electronic Registration Systems, Inc., No. 1:09cv0069-DAK, 2009 WL 3582294 (D. Utah October 27, 2009)(holding that MERS is able to take any actions required of the lender, including the ability to pursue foreclosure proceedings and appoint a successor trustee); Foster v. BAC Home Loan Servicing, No. 2:10cv247-TS, 2010 WL 3791976 (D.Utah Sept. 22, 2010); Rodeback v. Utah Financial, No. 1:09cv134-TC, 2010 WL 2757243 (D.Utah July 13, 2010); Southam v. Lehman Brothers Bank FSB et al., No. 2:10cv45-TS, 2010 WL 3258320 (D.Utah Aug. 17, 2010). Hit control click on a cite to be directed towards it.
In a judicial foreclosure proceeding, a homeowner wants to assure and can challenge a trustee’s authority to initiate foreclosure proceedings. Due to recent abuse by other financial institutions attempting to foreclose illegally in Utah, Attorney General Mark L. Shurtleff and Assistant Attorney General, Jerrold S. Jensen, submitted a brief of Amicus Curiae in support of the appellant and reversal in the case of Cox v Recontrust Company, et al. The brief concludes that:
The grant of an explicit power by Congress to national banks to exercise
fiduciary powers is also accompanied by an explicit statement that those powers are subject to State law. 12 U.S.C. § 92a(a) and (b). As a result, this Court should hold that § 92a of the National Bank Act does not preempt Utah's law governing trustee qualifications, Utah Code §§ 57-1-21 and 57-1-23, and that ReconTrust is not a qualified trustee for purposes of conducting trustee foreclosures in Utah.
Cox v Recontrust, Bank of America, MERS et al, Brief of Amicus Curiae, On Appeal from an Interlocutory Order , U.S. Dist. Ct., Dist. Utah, No. 2:10-CV-00492-CW-SA (Waddoups, J.)(unpublished). Thus, Utah law restricts reckless foreclosures by allowing them to be conducted per state law and under state law to only qualified trustees.
The homeowner’s bank may have MERS attached to the document but MERS still has to prove it actually owns your loan. As stated above, with “produce the note,” borrowers may demand the party who is seeking to foreclose that he or she produce the original promissory note. If it is not found and the party cannot prove why it was lost or destroyed, a judge can prevent the foreclosure. In dealing with MERS, one should ask: Does MERS have the original mortgage note in its possession? Is MERS entitled to enforce the note as “nominee” of the actual mortgage company? In a brave lifting of a legal fist, MERS was blasted as a sham in this Nevada case, http://www.myprivateaudio.com/2-07-bk-16226 Mitchell Docket.PDF, arguing many of the same points in determining whether MERS had standing to sue the homeowner. In another huge case, http://twainsthoughts.com /2011/05/24/of-justice-lost-mers-vs-enzo-cabrera-et al, MERS was slammed as a sham and a farce. Control click on each site to access the case. MERS’ intrusion into a foreclosure matter needs to be responded to with caution as they have a nationwide reputation of potential fraud and arguing legal terms challenging whether they have legal authority or not to foreclose.
CONCLUSIONS AND RECOMMENDATIONS
In a non-judicial proceeding, the trustee does not have to produce the note of ownership. In a judicial foreclosure proceeding, a homeowner’s bank/other lender has to produce the documents of ownership or, given certain conditions and limitations, a court can rule – such as in a quiet title action -- that the homeowner is free from foreclosure because ownership cannot be proved. Utah Attorney Walter Keane’s legal work on his nationally recognized case is below copied where a Draper, Utah homeowner got his mortgage wiped clean of debt. MERS authority to foreclose must have specific language in the deed to that effect. Utah law provides certain conditions for a lender to prove that its company is the holder of a trust deed and note, if the original signed forms are not immediately available. A trust deed must be recorded in the Recorder’s Office, according to Utah law, or it is rendered void, and that assists the defense in preventing a foreclosure. While MERS may seem a monster to battle legally if it asserts legal authority to foreclose, many cases nationwide have been ruled favoring the homeowner. Some Utah cases are planned for appeal to the Utah Supreme Court and to the 10th Circuit Court in Denver, Colorado. It is recommended that the homeowner consult with our office for a thorough reading of the trust deed and note and identify the other parties in the action, with especially cautious attention to MERS, if it is involved in the foreclosure action. If MERS is not involved, it seems merely a matter of calling upon the lender (or some further individual or firm who purchased the deed and note) to present his or her proof of ownership. If Attorney Walter Keane has published the procedures for a quiet title action, it may be helpful to obtain a copy or at least sit in on one of his lectures on the subject to be further educated in the specifics of a quiet title action.
BROADVIEW UNIVERSITY
Student: Jim Micheletti
DISCUSSION QUESTION
ASSIGNMENT
I have been asked to determine if a charge of battery and intentional infliction of emotional distress will stand against Mike Stone, a fighter, and the Ultimate Fighting League for an incident where our client, Tommy Pistol, was severely bitten in the nose and cheek causing significant damage to our client’s face.
ISSUE
Does our client have legal standing to sue Mike Stone and the organization, Ultimate Fighting League, hereinafter “UFL”) for battery and infliction of emotional distress as a result of biting during a competition?
ANSWER
Yes, our client has legal standing to sue given U.C.A. §76-9-705.
ANALYSIS
Tommy Pistol is a mixed-martial arts (MMA) fighter. Tommy agrees to fight Mike Stone, the defending champion, in a championship fight. The fight is sponsored by the Ultimate Fighting League (UFL), a mixed-martial arts organization. Tommy also signs a waiver with an exculpatory release with the UFL. The UFL rules prohibit biting, head-butting, groin strikes, and fish-hooking. During the fight, Mike bites Tommy’s nose and cheek which causes significant damage to Tommy’s face.
In Utah Code Annotated, § 76-9-705. Participation in an ultimate fighting match: (1) For purposes of this section, "ultimate fighting match" means a live match in which: (a) an admission fee is charged; (b) match rules permit professional contestants to use a combination of boxing, kicking, wrestling, hitting, punching, or other combative, contact techniques; and (c) match rules do not: (i) incorporate a formalized system of combative techniques against which a contestant's performance is judged to determine the prevailing contestant; (ii) divide a match into two or more equal and specified time periods for a match total of no more than 50 minutes; or (iii) prohibit contestants from: (A) using anything that is not part of the human body, except for boxing gloves, to intentionally inflict serious bodily injury upon an opponent through direct contact or the expulsion of a projectile; (B) striking a person who demonstrates an inability to protect himself from the advances of an opponent; (C) biting; or (D) direct, intentional, and forceful strikes to the eyes, groin area, Adam's apple area of the neck, and temple area of the head. (2) Any person who publicizes, promotes, conducts, or engages in an ultimate fighting match is guilty of a class A misdemeanor.
State law always supersedes the rules of an organization within the state if there is conflict because an organization cannot operate outside the purview of clearly stated state code. However, there seems to be a disparity between what the waiver says and what the UFL rules say, according to the other party in this case. Nevertheless, even if the waiver excludes one party from legal action by the other and holds UFL harmless, state law nevertheless trumps; the code forbids biting in this type of sport and the contract and any waiver agreement becomes invalidated.
Battery is both a tort and a crime. Its essential element, harmful or offensive contact, is the same in both areas of the law. Usually battery is prosecuted as a crime only in cases involving serious harm to the victim. We cannot imagine right now what the intent of the fighter was in biting our client. One would reasonably think that a fighter is aware or should be aware that in the scuffle of combat he is “biting” a person. Considering the seriousness of the injury, we conclude that the act was done with malicious intent to seriously injure. An accidental bite mark is one thing but to bite a person’s nose causing major disfigurement is quite another. When a battery is committed with intent to do serious harm or murder, or when it is done with a dangerous weapon, it is described as aggravated. It is punishable as a felony in all states.
Emotional distress elements exist here as explained in the LAW LIBRARY.com website. The explanation states as follows:
(1) the defendant must act intentionally or recklessly;
(2) the defendant's conduct must be extreme and outrageous; and
(3) the conduct must be the cause
(4) of severe emotional distress.
Although case law does not provide us with a precise definition of "extreme and outrageous," the test adopted by Missouri courts for actionable conduct is that the conduct must be "so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community." Restatement (Second) of Torts section 46 cmt. d (1965). "It is for the court to determine, in the first instance, whether the defendant's conduct may reasonably be regarded as so extreme and outrageous as to permit recovery...." Restatement (Second) of Torts section 46 cmt. h (1965). The court must determine whether an average member of the community upon learning of the facts alleged by plaintiff would exclaim "outrageous!" Viehweg, 732 S.W.2d at 213.
Some Missouri courts have extrapolated the standard for the negligent infliction of emotional distress to intentional infliction of emotional distress cases and required under Bass v. Nooney Co., 646 S.W.2d 765, 772-773 (Mo. banc 1983) that the emotional distress be medically diagnosable and medically significant. Hyatt, 943 S.W.2d at 297; see also Young, 664 S.W.2d at 265.
POSSIBLE DEFENSES
What defense(s) would Mike and the UFL likely assert? While they might claim contractual privilege in that our client consented to a fight, our client clearly did not consent to being bitten. In fact, we have the client’s original contract with the UFL rules stated in large enough print on the contract.
Nevertheless, Utah State Code as earlier quoted would trump any and all defenses to the contrary. The fighter himself becomes the principal negligent party to the action and the fight organization becomes responsible for the actions of its employees under the respondent superior doctrine.
We do not know at present if the waiver the fighters sign exclude the company from liability for any illegal fighting actions on behalf of its fighters, but even if it did exclude itself, this would be still contrary to law under respondent superior.
CONCLUSION
Our client, Tommy Pistol, would clearly have a guaranteed case of outrageous aggravated battery and emotional distress in tort and the company would be liable for the actions of its employees.
LEGAL MEMORANDUM
TO: Sam Myles, Esq.
FROM: Jim Micheletti, Legal Assistant
RE: Our client; Street Light Accident
DATE: April 26, 2010
ASSIGNMENT
I have been asked to analyze whether our client has legal standing to sue the University for negligence in the maintenance of their street light electrical wiring since our client was injured from electrical shock and from falling.
ISSUE
Can our client bring a negligence suit against the University for his accident?
BRIEF ANSWER
No, he cannot bring suit against the University for medical bills, pain and suffering because of his accident at a lamp post.
THE FACTS
Our client, John Anderson, and a senior at the university noticed a broken light on the street lamp at the university one night. He climbed to remove the bulb. As the maintenance office was near, and open, he wanted to get the light changed. He admits he was bored, had little to do and thought he would climb the post. He did. He said that he turned the bulb normally to unscrew it, just as anyone would normally treat a light bulb. He heard a pop, felt a wave of shock through his body, and involuntarily let go of the street lamp handle and fell. Some passersby came to his assistance. He was taken to the hospital by campus EMT personnel. He had broken his arm in the fall. He said that he feels the street lamp shock would have happened to a maintenance worker as well as to him and therefore does not diminish responsibility because he was not expected to climb the street lamp pole. He said that the fact that he climbed it should have no relevance to the need to maintain relative safety and security to students and staff.
ANALYSIS
In Grizzell v. Foxx, 48 Tenn. App. 462, 467, 348 S.W.2d 815, 817 (1960) (citing Goodman v. Corn Exchange Nat'l Bank & Trust, 331 Pa. 587, 200 A. 642, 643 (1938)) snow and ice are considered the normal occurrences of life. However, under Utah Code Annotated, Premises Liability law holds the person or people in possession of land responsible for any accidents or injuries that may occur to others while on the premises apart from the natural occurrences such as snow and ice. Generally, we find that the property owner has to have exercised all reasonable diligent efforts to keep the premises safe and secure.
To summarize the applicable Utah law, our client, a senior at the University, is considered “invited” onto the property. Nevertheless, property owners have a uniform, normal and reasonable standard of care put upon them to maintain their land clean and safe for visitors of any kind. Property owners are responsible for what they know or should have known regarding the maintenance needs of their property. When a landlord has been warned and does not repair the property, an action can ensue against the landlord. As a typical maintenance staff on the university grounds would necessarily include electricians who should monitor electrical circuits and wiring, a faulty circuit and wiring can be caught ahead of time to reduce electrocution accidents.
To be held liable for injuries or damage the landlord has to have been negligent in some way, even liable for dangers he or she has no actual knowledge of. For example, if the wiring of a house is very old and the owner doesn’t have it checked, he or she might be held liable to someone who is injured by a shock or a fire. If the owner doesn’t have a chimney cleaned for many years and the tenant is damaged or injured by a flue fire, the landlord will probably be liable, even if he or she didn’t actually know the chimney was clogged. A reasonable person would check old wiring and clean a chimney. However, in the present case, it is reasonable to assume that on-staff maintenance personnel would of necessity monitor the night lighting of the campus walkways and find one of the lamp posts darkened. A maintenance worker would most likely guard against being shocked in the same circumstance. Our client claims no electrical knowledge comparable to an electrician.
Is the university responsible as a custodian over the senior student’s behavior? In Beach v. University of Utah, 726 P.2d 413, Utah, 1986 the courts determined that colleges and universities are educational institutions rather than custodial ones and as such, have no role as custodian over adult students nor do they have duty to prevent students from illegally consuming alcohol. Along with alcohol, the university is not legally considered a custodian over a student’s behavior outside the educational purpose except to provide a reasonably safe environment. Thus, the university cannot be expected to monitor every student’s activity—even those done in ”fun”— en loco parentis. Is it reasonable to expect a university to anticipate every student activity, even “silly” ones, unexpected and unanticipated? We say that in this case, the university could not have had an expectation that students may decide, on a whim, to climb a lamp post on university property. This climbing is not a normal anticipated student behavior.
Assuming that the same could have happened to an authorized university electrician in the same instance, is it fair, though, to assume the same outcome? We would hope that an electrician is more suitably adapted to his profession to exercise reasonable care to avoid electrocution. It is unreasonable to compare the non-electrician perception of a student with a professional licensed electrician’s view of the same bulb and wiring circumstances. Because it was dark out, the student could not clearly see if there were any dangerously hanging wires or assemblage. In addition, electrical technicians are governed by National Electrical Building Codes in their job description.
While the university may be thought to be liable in negligence for electrical failures and problems in wiring, does this issue trump the original purpose of a university and make it the “custodian” over student behavior outside the classroom and other educational functions? To answer this question, we looked at Corpus Juris Secundum Database updated June 2009, Colleges and Universities, by Eric C. Surette, J.D. He says that in general, § 5. Liabilities: While colleges and universities are not expected to assume a role anything akin to a general insurer, they are expected to use reasonable care to prevent injury to their students. He writes:
A college or university may be held responsible in damages for injuries to its students or others since a university has a common-law duty not to cause physical injury by negligent conduct. However, claims against state universities may be barred by the doctrine of sovereign immunity. Colleges and universities are educational institutions rather than custodial ones and are not expected to assume a role of a general insurer. A university's status imposes no special duty upon it to protect its students from their own volitional acts and a negligence claim against a university must fail if based on circumstances for which the ordinary laws of negligence impose no duty of care upon the defendant university for the benefit of the plaintiff student.
He continues:
[a] state university has the duty to inspect premises such as dormitories in its possession and under its control and will be charged with constructive knowledge of those latent defects which would have been revealed by reasonable inspection, if made.
A duty founded on premises liability exists between a student and a college or other educational institution because a student attending an educational institution has the legal status of a business invitee. Accordingly, a college may be held liable (as a landowner-invitee duty) to its students in various scenarios:
· foreseeable acts of violence on its campus, and the harm that naturally flows there from,
· (tort liability) an assignment to an off-campus internship site which the college knew to be unreasonably dangerous, but gave no warning, or inadequate warning, to the student and the student was subsequently injured while participating in the mandatory internship,
· an environment in which the student can pursue his or her education free from sexual harassment by faculty members, and
· the licensee status of a campus visitor.
However, absent foreseeability, a university does not owe a special duty to protect a spectator at a university event from an unanticipated and unexpected attack (my emphasis). To our present case, we conclude that unlike the possible scenarios as listed, university responsibility does not lie since its legally constituted purpose is not to act as custodian of student activity and cannot be expected to reasonably foresee the uncustomary usage of a lamp post.
CONCLUSION
Notwithstanding the electrical condition of the lamp post, the issue of university custodial duty over students seems not to extend to night time “fun” activities, i.e. climbing a lamp post to change the bulb. While the electrical problem might be interesting to determine, the courts have nevertheless determined that a “university” is not set up for custody over the behavior of students beyond a common and ordinary expectation of care. Since it is not anticipated that a student would climb a lamp post to change a light bulb, nor could the university foresee such an event happening and take necessary precautions, liability does not rest with the university.
Jim Micheletti
The Paralegal Guy
698 N. 835 W.
Orem, UT 84057
Telephone: 801-226-6060
TO: Eric Lind, Esq.
DATE: August 30, 2011
RE: Recommendations to stylize jury instructions pertinent to an alter-ego corporate case.
Update on factors to consider in piercing a corporate veil
QUESTION
ANSWER
· where it is first determined that a corporation can be pierced,
· an alter-ego is established, and then· using the factors listed by a Utah Appeals Court, a more accurate list of jury instructions can be made and agreed upon by both sides and the judge.
DISCUSSION
First, one needs to apply a two-part test developed by the Utah Supreme Court which will assist to determine when to ignore or disregard a corporation. "[I]n order to disregard the corporate entity, there must be a concurrence of two circumstances: (1) there must be such unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist, viz., the corporation is, in fact, the alter ego of one or a few individuals; and (2) the observance of the corporate form would sanction a fraud, promote injustice, or an inequitable result would follow." Envirotech Corp. v. Callahan, 872 P.2d 487, 499 (Utah App. 1994). However to pursue a legal action, one should check if the owners have signed a personal guarantee, or unless the creditor can pierce the corporate veil.
Factors Utah Courts Consider in Piercing the Corporate Veil
Utah courts consider several factors in determining whether to pierce the veil is justified. In Paria Group v. Westchester Investment, Filed February 10, 2000 in the Utah Court Of Appeals, the court said:
In order to justify piercing the corporate veil, the trial court had to find that:
(1) there [was] such a unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist, viz., the corporation is, in fact, the alter ego of one or a few individuals; and
(2) the observance of the corporate form would sanction a fraud, promote injustice, or an inequitable result would follow.
Salt Lake City Corp. v. James Constructors, Inc., 761 P.2d 42, 46-47 (Utah Ct. App. 1988) (quoting Norman v. Murray First Thrift & Loan Co., 596 P.2d 1028, 1030 (Utah 1979)).
The appeals court further said that in justifying whether to pierce the corporate veil, the following factors may be considered:
(1) undercapitalization of a one-man corporation;
(2) failure to observe corporate formalities;
(3) non-payment of dividends;
(4) siphoning of corporate funds by the dominant stockholder;
(5) non-functioning of other officers or directors;
(6) absence of corporate records;
(7) the use of the corporation as a facade for operations of the dominant stockholder or stockholders; and
(8) the use of the corporation entity in promoting injustice or fraud.
Colman, 743 P.2d at 786 (citations and footnotes omitted).
In addition, the appeals court noted:
(1) there [was] such a unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist, viz., the corporation is, in fact, the alter ego of one or a few individuals; and,
(2) the observance of the corporate form would sanction a fraud, promote injustice, or an inequitable result would follow.
Salt Lake City Corp. v. James Constructors, Inc., 761 P.2d 42, 46-47 (Utah Ct. App. 1988) (quoting Norman v. Murray First Thrift & Loan Co., 596 P.2d 1028, 1030 (Utah 1979)).
This Utah Appellate Court further stated: "For purposes of appellate review, the trial court's decision to pierce the corporate veil will be upheld if there is substantial evidence in favor of the judgment." Colman v. Colman, 743 P.2d 782, 787 (Utah Ct. App. 1987) (citing Standage v. Standage, 711 P.2d 612, 614-16 (Ariz. Ct. App. 1985)); see also Hansen v. Green River Group, 748 P.2d 1102, 1106 (Utah Ct. App. 1988) (upholding trial court's alter ego finding where "supported by substantial record evidence") (citing State v. Walker, 743 P.2d 191, 193 (Utah 1987)). Furthermore, the court permitted "due regard . . . to the opportunity of the trial court to judge the credibility of the witnesses." Utah R. Civ. P. 52(a).
CONCLUSION
Utah judges agree to use “Model Utah Jury Instructions, Second Edition,” booklet in instructing a jury on the elements of the law pertinent to the case at hand. While the booklet categorizes a set of general instructions according to the case type, using the already-set list of factors listed above, a jury can determine whether piercing the corporate veil is justified. An attorney would investigate if these factors exist in whole or in part and argue in order to pierce the corporate veil.
