Real EstateA recent Enquirer article highlighted Specific Performance as a remedy in real estate contracts. Specific Performance, as opposed to money damages, means that the judge will order the parties to a
contract to complete the contract. This is a rarely used remedy. In the case covered by the Enquirer, the seller is seeking an order from the Judge to force the buyers to go through with the sale and purchase his property.

Finney Law Firm recently represented buyers in seeking specific performance after the woman they contracted to purchase a home from informed the buyers that the she would not go through with the sale.

Our clients were beside themselves. They had hunted throughout the area for the perfect home and finally found it, negotiated and executed a contract for the home, and sold their home in reliance on that contract. Their dreams of settling into their new home were dashed in an instant.

The seller had gotten cold feet and found an attorney who suggested that there never was a valid contract because she hadn’t returned the accepted contract until a few hours after the time for acceptance set forth in the contract.

After reviewing the case law we determined that the contract was a valid notwithstanding the seller’s argument.

Explaining the costs and risks of litigation, we worked with our clients to weigh their options. They could walk away from the purchase and begin the house-hunt anew; they could offer more money in the hopes of warming the seller’s cold feet; or they could bring suit for specific performance on the contract. As with almost every case, litigation was offered as a last resort.

Ultimately, believing that the seller would not negotiate and they could not find a comparable home, our clients decided to sue to enforce the contract.

It took thirteen months to get to summary judgment, but eventually we prevailed and Judge Nadel ordered specific performance of the contract (for the first time in his judicial career).

After Judge Nadel ordered specific performance we were able to negotiate a settlement payment for damages and attorney fees and finally close on the sale. We’ve never seen two people happier to sign mortgage documents.

Let us know how we can make a difference for you and your real estate needs.

It’s old news, as the law was enacted in 2000, but we are asked this from time to time: Are electronic signatures just as enforceable as physical or “inked” signatures?

Yes.  The Electronic Signatures in Global and National Commerce Act (ESIGN) passed in 2000 specifically proves that a contract or signature “may not be denied legal effect, validity, or enforceability solely because it is in electronic form.”

SignatureMany of those engaging in commerce of all sorts are commonly using electronic signatures today, including on real estate contracts and other documents.  Documents that require an “acknowledgement” or “notary seal” still must be signed in-person, but otherwise, the act makes the e-signature just as effective.

Because of proof of signature, there may still be instances in which we want personal signatures, but for many of not most commercial arrangements, e-signatures suffice.

 

In 2008 two firefighters perished while answering an emergency call to a house fire in Colerain Township.

Investigators determined the source of the fire was a fan used in a basement orchid cultivation room. In another part of the basement was a marijuana cultivation room. The family of one of the firefighters brought a wrongful death suit against the homeowner alleging that the orchids were being used as a subterfuge to camouflage the illegal marijuana operation. The suit also included claims against the manufacturers of the radio and other equipment used by the firefighters.

In Ohio, property owners are generally immune from liability for such suits. The “Firefighter’s Rule” is a judicial rule that provides a general immunity to property owners from liability to injuries or death to firefighters incurred in the call of duty.

Imagine if a property owner was afraid to call 911 to report a fire for fear of being sued if the firefighters were injured. As a society, we want to encourage people to report fires and utilize our emergency services to combat fire. Indeed, we spend a great deal of money to provide those services and make sure that firefighters are prepared to fight fires. We teach our children to dial 911.

Firefighting is a dangerous job; that danger is accounted for via financial compensation and benefits, as well as life insurance for the firefighter’s family.

The Firefighter’s Rule provides four exceptions to the broad immunity for property owners: (1) where the injury resulted from the owner’s willful or wanton misconduct or affirmative negligent act; (2) where the injury is a result of a hidden trap on the premises; (3) where the injury resulted from the owner’s violation of a duty imposed by law enacted for the benefit of firefighters; or (4) where the owner knew of the firefighter’s presence on the premises but failed to warn the firefighter of a known, hidden danger on the premises. Hack v. Gillespie, 74 Ohio St.3d 362, 365, 658 N.E.2d 1046, 1049 (Ohio, 1996) quoting Scheurer v. Trustees of Open Bible Church (1963), 175 Ohio St. 163, 23 O.O.2d 453, 192 N.E.2d 38.

In this case, the firefighter’s family alleged that the marijuana growing constituted willful or wanton misconduct, but failed to establish (a) that cultivating marijuana is per se willful or wanton conduct or (b) that the marijuana cultivation caused the firefighter’s death.

In reviewing the facts of the case and the above exceptions to the Firefighter’s Rule, the trial court found that none of the exceptions applied and granted summary judgment to the homeowners.

While the trial court’s decision may seem like harsh justice, the Firefighter’s Rule represents a public policy choice that recognizes that Firefighters have dangerous jobs, and as such, the cost of that risk is spread across the entire community and in effect “prepaid” in the form of salaries and benefits, rather than assessed against individual property owners via lawsuits after the fact.

The case is currently before the Hamilton County Court of Appeals, Case No. C 1400274.

 

 

In construction projects, the question often arises as to when subcontractors are due payment from the general contractor. A disruption in the flow of payment from the owner to the general contractor, and then to the subcontractors is often the cause of litigation in construction disputes. In entering into a contract to provide services to a general contractor, the subcontractor must be aware of the payment clause in its agreement in order to appropriately assess its risk in proceeding with supplying its services for the project.

Signing ContractSubcontractor agreements often contain either a “pay-if-paid” clause or a “pay-when-paid” clause. A “pay-when-paid” clause requires the general contractor to pay the subcontractor regardless of whether the general contractor receives payment from the owner. Conversely, a “pay-if-paid” clause requires the general contractor to pay the subcontractor only if the owner pays the general contractor.

The Ohio Supreme Court recently clarified the distinction between these payment clauses in Transtar Elec, Inc. v. AEM Elec. Servs. Corp., Slip Opinion No. 2014-Ohio-3095. In Transtar, the subcontractor filed suit seeking payment of over $44,000 that was never paid by the general contractor or the owner. The general contractor only paid a portion of the work completed by the subcontractor because the general contractor had not received full payment from the owner.

The subcontract at issue contained the following language:

The Contractor shall pay to the Subcontractor the amount due under subparagraph (a) above only upon the satisfaction of all four of the following conditions: (i) the Subcontractor has completed all of the Work covered by the payment in a timely and workmanlike manner, …(ii) the Owner has approved the Work, …(iii) the Subcontractor proves to the Contractor’s sole satisfaction that the Project is free and clear from all liens….and (iv) the Contractor has received payment from the Owner for the Work performed by Subcontractor. RECEIPT OF PAYMENT BY CONTRACTOR FROM OWNER FOR WORK PERFORMED BY SUBCONTRACTOR IS A CONDITION PRECEDENT TO PAYMENT BY CONTRACTOR TO SUBCONTRACTOR FOR THAT WORK.

The general contractor relied on the provision that payment from the owner was a “condition precedent” to payment by the contractor, to support its decision not to pay the subcontractor for all of its work. The subcontractor argued that the payment clause was actually a “pay-when-paid” provision, which required the general contractor to pay regardless of whether it received full payment from the owner.

The Sixth District sided with the subcontractor, finding that the payment provision did not contain adequate language to create a “pay-if-paid” clause. The Sixth District reasoned that in order to shift the risk of owner nonpayment to the subcontractor, the payment provision must clearly and unambiguously demonstrate the parties’ intent to do so.

The general contractor appealed the decision to the Ohio Supreme Court, which reversed the Sixth District’s decision. The Ohio Supreme Court found that by using the language “condition precedent” in the payment clause, the parties intended that the risk of the owner’s nonpayment shift to the subcontractor rather than remain with the general contractor. In other words, by making payment from the owner to the general contractor a “condition precedent” to payment from the general contractor to the subcontractor, the parties had agreed to a “pay-if-paid” clause. As a result, the subcontractor could not force the general contractor to pay the balance due under the contract.

The Transtar decision highlights the importance of fully understanding the terms of a construction contract in order to properly plan for the risks that may confront a general contractor or a subcontractor in undertaking a construction project. A party to a construction contract must be able to identify whether the contract contains a “pay-if-paid” clause, or a “pay-when-paid” clause, and must fully understand how each clause shifts the risk of nonpayment.

In addition to understanding the payment terms in its contract, subcontractors should also remember to preserve their mechanic’s lien rights to further protect their ability to receive payment for their work. Under Ohio Revised Code 41113.62(E), a subcontractor does not waive its mechanic’s lien rights by entering into a “pay-if-paid” contract. Thus, when choosing to provide services subject to a “pay-if-paid” clause, a subcontractor should comply with Ohio’s Mechanics Lien law in order to provide the best possible chance of receiving full payment for its services.

The Finney Law Firm has represented owners, general contractors, and subcontractors in construction projects. Our attorneys are experienced in negotiating contracts and in litigating construction disputes. Please contact us if we can assist you with your legal needs.

 

It’s fun to turn a losing case into a winner.

The Ohio Real Estate Recovery Fund (O.R.C. Section 4735.12) has the potential of taking a case that can’t be “won,” because the client can’t collect against the defendant, into a “winner” by accessing this special professional indemnity pool.

A plaintiff client who has a claim against an Ohio real estate agent who is insolvent — uncollectable — would typically just “walk away.”  “You can’t get blood from a turnip,” they say.  “Throwing good money after bad.”

But these are not necessarily losing claims.

In the limited instance in which the claim is (i) against an Ohio real estate salesperson or broker, (ii) “on the grounds of conduct that is in violation of” the real estate brokerage laws of the state, and (iii) for an act that “is associated with” Ohio real estate brokerage activities, a plaintiff can recover from the state of Ohio up to $40,000 per licensee (not per claim) any unpaid judgment “that represents the actual and direct loss sustained by the applicant.”

The statute is highly technical to invoke, and the Ohio Division of Real Estate that administers the fund and the Ohio Attorney General’s Office that defends against claims from the fund guard the funds zealously, meaning you have to carefully jump through a lot of hoops to access these funds.

Attorneys in our firm have successfully made a claim for funds from the Ohio real estate recovery fund.

There are separate and similar recovery funds for losses arising from the misdeeds of:

  • Ohio appraisers in the scope of their licensed activities (O.R.C. Section 4763.16).  Claims from that fund are limited to $10,000 per judgment.
  • Ohio auctioneers in the scope of their licensed activities (O.R.C. Section 4707.25).  Claims from that fund are limited to $50,000 per judgment.

Allow us to “make a difference” for you by pursuing claims against a statutory recovery fund of Ohio licensees.

Frequently our firm is asked to represent parties against whom claims have been made, either defendants in a law suit or recipients of a demand for payment pre-litigation.

It’s easy to just dive in and either respond to a demand letter or to defend such a suit, but that impulsive response can unnecessarily cost the client money.

One question that should be addressed early in the engagement is: Are their insurers or indemnitors who might cover the cost of the claim and/or the cost of the defense of the claim?

Almost all individuals and businesses maintain insurance policies of some sort such as property and casualty insurance (property and auto) or public liability insurance.  Some individuals and businesses will also have a variety of specialty insurance policies such as professional liability (i.e., malpractice) insurance, title insurance and fiduciary coverage.  These all are contractual arrangements whereby the risk for many typical occurrences in personal and business life that give rise to claims and suits are shifted to an insurance company — both the underlying claim and the attorneys fees associated with defending the claim.

In addition, the client may have a variety of contractual relationships that transfer the risk to a third party (not an insurance company).  Commercial leases, for example, many times contain risk-shifting provisions for various occurrences (both shifting risk from landlord to tenant and from tenant to landlord).  Employers frequently cover claims against their employees.

In addition to contractual relationships that give rise to indemnity claims, the positioning or actions of parties can cause risk-shifting as well.  For example, if someone borrows your car and wrecks it, injuring others, or if someone trespasses on your property and causes damage to property or injury to person, those third parties can be responsible to the client and the claimant for the costs of the claim and its defense.

An aggressive and creative attorney will — near the outset of the relationship — thoroughly explore insurance and indemnity issues so as to minimize or eliminate costs to the client — costs of both the attorneys fees to defend the claim as well as the costs of the substantive claim itself.

The idea is not for the attorney to make money — but rather to maximize the value to the client by retaining our firm.  If we can shift the risk near the beginning of the relationship to an insurer or indemnity, we have provided that value.  We have “made a difference” for our client!

Read here one example where we made a difference for a client whose prior counsel had failed to advise him of insurance and indemnity issues in a defamation claim.

Litigation is expensive; however, the cost of failing to retain experienced counsel may be devastating to your case. The 8th District Court of Appeals in Cuyahoga County recently issued a decision that provides a cautionary tale for litigants who proceed with inexperienced counsel or decide to represent their own interests.

In Provident Funding Associates, LP v. Turner, 2014-Ohio-2529, homeowners appealed the trial court’s decision of foreclosure in favor of the bank. While the appeal was pending the foreclosed property was sold at a sheriff’s sale, and the court entered a decree of confirmation of the sale. The homeowners then filed a timely notice of appeal of the court’s judgment confirming the sale.

Although the homeowners had two valid appeals pending before the appellate court, they never filed a separate motion to stay the foreclosure proceedings, nor did they file a motion to stay the distribution of the proceeds from the sheriff’s sale. Before their appeal was heard, the property was sold and the proceeds of the sale were disbursed pursuant to court order.

When the appellate court reviewed the homeowners’ appeal, it determined that the case was “moot.” In other words, the appellate court determined that there was no remedy it could provide to the homeowners regardless of whether their appeal had merit, because the property was already sold to a third party and the sale proceeds were disbursed. As a result, the appellate court dismissed the appeal.

At first blush this seems like a harsh result. The homeowners timely appealed the trial court decisions and were set to present arguments to an appellate court in an effort to reverse the decree of foreclosure. Despite complying with the requirements for appealing a decision to the district court, however, the homeowners failed to preserve their potential remedies by failing to file separate motions to stay the foreclosure proceedings and to stay the distribution of the sale proceeds. By failing to file these simple motions, the homeowners rendered their appeal “moot” meaning there was no basis for the appellate court to review the merits of the appeal, regardless of whether the homeowners’ claims were valid.

The world of litigation is complex and detailed. If the homeowners had retained qualified counsel they would have at least had their day in court before the 8th District. The attorneys at the Finney Law Firm are experienced litigators who will guide you through the difficult litigation process. Please do not hesitate to contact our firm if you are in need of legal representation.

When a client is being sued, it is important to fully explore all defenses available to them, but many times litigants and their counsel fail to come to the table with clean hands.  And in the right circumstances, that’s when you can turn the tables on your opponent.

Indeed, the law requires that certain counterclaims claims are compulsory, and the failure to bring them in the context of the litigation presented could be a bar to recovery in the future.

When exploring commercial disputes, the tools available to litigants are:

  1. Meritorious counterclaims;
  2. Actions for frivolous conduct against the party and his attorney under O.R.C. §2323.51, a statute designed to protect against being false dragged into court; and
  3. Actions for frivolous conduct against the party and his attorney under Civil Rule 11.

These tools are all too frequently used imprudently, which can either unnecessarily increase the length and expense of litigation or even expose the client to claims of frivolous conduct, but when carefully considered can change the calculus of litigation in favor of the client.


Please contact us to learn how we can help you with your litigation challenges, either defending against a business or personal claim, or prosecuting a meritorious claim you hold.


Read below four related topics:

Navigating turbulent waters: Very early settlement discussions

Navigating turbulent waters: The litigation end game

Navigating turbulent waters: Economics of litigating low-dollar claims

Navigating turbulent waters: It’s not all black and white for Judges

In litigation, the reality of many business disputes is that neither party is 100% in the right, or 100% in the wrong, and, more importantly, even for the cases we believe passionately in, Judges tend to view them in more tempered terms than clients and their paid advocates.

Typically when Finney Law Firm attorneys meet with a client for the first time about their business or personal dispute, they are passionate about their position in the litigation.  They believe they have been wronged and want compensation for their losses, or that they have been unfairly sued, and want a vigorous defense of a disputed if not entirely frivolous claim against them.

However, as we get into the file more deeply, frequently we find the case is not at all just plain black and white, but rather shades of grey.

This has two consequences, at least: (i) it will take skill and attention to develop and present the case to convince the court that our client’s position is correct (read: more costly), and (ii) the odds of winning the case come down, if even slightly, as a result of the ambiguities present.

Clients and attorneys easily can fall into the trap of failing to see the weaknesses in their own case, and to assess them appropriately.

What we experience is that Judges and juries tend to see things less one-sided than we and our clients do initially   As a result, from the commencement of litigation to the day we are heading into trial, we attempt to paint for the client a realistic picture of their prospects for success.


Please contact us to learn how we can help you with your litigation challenges, either defending against a business or personal claim, or prosecuting a meritorious claim you hold.


Read below four related topics:

Navigating turbulent waters: Very early settlement discussions

Navigating turbulent waters: The litigation end game

Navigating turbulent waters: Economics of litigating low-dollar claims

Navigating turbulent waters: Turning the tables on the opposing party

For individual and small business clients of the Finney Law Firm, brace yourselves.

Anything other than the simplest litigation involving disputes of under $50,000 are difficult to resolve in a fashion advantageous to the client.  Even cases under $100,000 can be tough to resolve economically.  This is because the cost and aggravation of litigation, along with the time and unpredictability, make the cost-benefit of the proceeding difficult, if not upside down.

The exception to this  general rule is litigation in which punitive damages or “fee shifting” are involved.  Punitive damages are for the purpose of punishing the other party.  In Ohio in certain circumstances, punitive damages are limited by statute.  But in any event that means a multiplier above and beyond the actual damages can potentially be obtained in such cases.  Fee shifting means that when you win, the other side pays your legal fees.

But these remedies are limited to only certain types of litigation in Ohio, for example (i) cases involving intentional torts such as fraud, (ii) certain statutory actions where the legislature has specifically provided for these types of remedies, and (iii) cases in which a commercial contract calls for “fee shifting.”

Further, we find that Judges, especially state court Judges, are loathe to award punitive damages and attorneys fees to a prevailing party except in the clearest of circumstances.  Thus, litigants (except in public interest cases) should be exceedingly cautious in assuming that “the other guy” is going to be forced to pay your legal fees when you win.  The :”American Rule” on fees is that each party pays their own litigation expenses, and that’s almost always how it pans out.

What all this means is that for smaller disputes, the cost of litigation can well exceed the recovery, and clients should be cautious about proceeding even the first step down that path.  The reason is that litigation, once commenced, frequently becomes a slippery slope that is easy to enter but hard to exit.

When the Finney Law Firm is engaged for resolution of small disputes, we attempt to explain the risks and anticipated costs up front to empower the client to decide on the best path for himself. We also explore ways to provide value to the client in small cases, including a very early settlement, preemptive resolution, fee shifting and punitive damages, and even turning the table on opponents.


Please contact us to learn how we can help you with your litigation challenges, either defending against a business or personal claim, or prosecuting a meritorious claim you hold.


Read below four related topics:

Navigating turbulent waters: Very early settlement discussions

Navigating turbulent waters: The litigation end game

Navigating turbulent waters: It’s not all black and white for judges

Navigating turbulent waters: Turning the tables on the opposing party