Rockwell publishing real estate law chapter 2

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© 2009 Rockwell Institute

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California Real Estate Law

© Copyright 2007 Rockwell Publishing, Inc.

Lesson 2:Resolving Legal Disputes


Introduction

This lesson will discuss:

l alternative dispute resolution

l phases of litigation

l enforcing judgments

l appeal


Alternative Dispute Resolution

Negotiated settlement: parties might compromise

l Parties meet, present initial positions

l Negotiations, rounds of offers and counteroffers

l If parties reach agreement, lawyer drafts settlement agreement

l Quick, final, cheap

Negotiated settlement

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If negotiations ? compromise, then parties may try mediation or arbitration.

Mediation: negotiation with help of neutral third party

l Mediator helps negotiations move along

l Not binding

Mediation



Costs usually split by parties.

l Volunteer mediators = free or cheap

l Complex disputes need specialized mediators that cost more.

Mediation costs



Arbitration: formal hearing of case, lawyers on both sides

l Like a mini-trial w/o jury

l Voluntary or involuntary

l Arbitrators more conservative than juries in awarding damages

Arbitration

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Arbitration

Involuntary arbitration:

l required by statute or court order

l nonbinding, parties can appeal

Involuntary arbitration


Arbitration

Voluntary arbitration:

l agreed upon in contracts

l also called mandatory arbitration

l binding, can’t appeal unless misconduct

Voluntary arbitration


Arbitration

Court overturns binding arbitrations if arbitrator’s decision caused by:

l fraud

l corruption

l other misconduct

Complaining party must show misconduct affected arbitration award.

Arbitrator misconduct

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Summary



lNegotiation

lMediation

lArbitration


Litigation

Different phases of litigation:

l determining jurisdiction

l beginning the lawsuit

l discovery

l motions

l trial

l enforcement

l appeal


Litigation: Pre-trial

Jurisdiction: court’s authority to make legally valid judgments on cases it hears.

To hear a case, a court needs both personal and subject matter jurisdiction.

Jurisdiction

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Personal jurisdiction: court’s right to force defendant into court

Court has personal jurisdiction only if defendant:

l committed some act in the state, or

l has some connection with the state

Personal jurisdiction



Subject matter jurisdiction: court’s right to issue judgment over the type of case

Courts have either:

l general jurisdiction

l limited jurisdiction

Subject matter jurisdiction



General jurisdiction: court can hear all types of cases

l Example: Trial court hears civil and criminal cases

Limited jurisdiction: court can hear only certain type of case

l Example: U.S. Tax Court

General and limited jurisdiction

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Plaintiff’s choice between state or federal courts.

Federal courts à subject matter jurisdiction if:

l U.S. government is a party

l question of federal law

l diversity of citizenship

Federal court jurisdiction



U.S. government is a party

l Example: prosecution of federal crime

Question of federal law

l Example: claim made under U.S. Constitution

Diversity of citizenship

l Example: plaintiffs/defendants from diff. states

Federal court jurisdiction



Small claims court:

l Plaintiff’s claim < $7,500 (unless business)

l No jury

l Simplified procedure

l No lawyers present

l Quicker, cheaper

Small claims court

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l Complaint: document from plaintiff outlining case against defendant

l Filing: plaintiff files complaint with clerk of the court

l Service: plaintiff has copy of complaint served on defendant by nonparty

Complaint, answer, and other similar documents are called pleadings.

Beginning a lawsuit



Defendant must answer plaintiff’s complaint.

l Often a denial of plaintiff’s assertions

l In CA, defendant 30 days to answer

No answer à default judgment for plaintiff

Beginning a lawsuit


Beginning a Lawsuit

Defendant’s answer is sometimes more than denial:

l affirmative defenses: such as lack or jurisdiction, or the statute of limitations

l counterclaims : defendant’s claims against plaintiff

Answer

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Beginning a Lawsuit

Statute of limitations:

l limited time to bring lawsuit

l too much time à hard for witnesses to remember what happened

l delayed discovery rule: statute of limitations starts running after reasonable chance to discover injury

l limit can be set in contract also

Statute of limitations


Beginning a Lawsuit

l Jury demand: both sides have limited time to request jury

l If no jury, then bench trial (judge decides)

Jury demand


Beginning a Lawsuit

Lis pendens:

l plaintiff’s lawyer files notice warning that property involved in lawsuit

l possible judgment may affect new buyer of that property

l red flag scares off buyers

Lis pendens

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Beginning a Lawsuit

Plaintiff asks for remedies in complaint.

Most commonly requested remedy:

l compensatory damages

Remedies


Remedies

Compensatory damages reimburse for actual financial losses from other party’s actions.

Examples:

l lost wages

l damage to property

l medical bills

Compensatory damages


Remedies

Very flagrant or severe acts by defendant àpunitive damages

Punitive damages:

l deter defendant and others from similar acts in the future

l can be up to 10 times amount of compensatory damages

Punitive damages

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Remedies

Specific performance: forces defendant to perform contract

l when damages alone can’t satisfy plaintiff

l only for unique subjects, like real estate

Specific performance



Discovery: learning about opposing party’s case by:

l interrogatories (written questions)

l depositions (oral questions)

l requests for production (document requests)

Discovery


Discovery

Interrogatories: written sets of questions

l parties send to each other

l gain useful information through written answers

l parties answer as narrowly as possible

Interrogatories

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Discovery

Depositions: scheduled meetings for parties to ask questions in person

l under oath

l gauge personalities

l sometimes more info is revealed in person than in written answers

Depositions


Discovery

Requests for production: written request to other side asking for copies of documents relevant to case

Examples:

l medical bills

l pay stubs

Requests for production



Each party required by law to respond to other’s discovery requests.

l Each side has realistic view of likely outcome

l Encourages settlement

Discovery

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A party can make a motion: a formal request for a particular order.

l Both sides present arguments about request

Most common: summary judgment motion

l Asking court to rule on validity of legal issue or claim before trial

Motions



Court won’t grant motion for summary judgment if factual issues exist (unanswered questions about the facts).

l Factual issues require trial (witness testimony)

Summary judgment

Summary



l Jurisdiction

l Complaint

l Answer

l Remedies

l Discovery

l Motion

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Litigation

Trial structure:

l jury selection (if not a bench trial)

l opening statements

l testimony

l closing arguments

l jury instructions

l verdict

Trial


Trial

Judge/lawyers ask potential jurors questions, looking for any bias. Also called voir dire.

l Judge may dismiss jurors (for cause)

l Lawyers may dismiss limited number of jurors without cause (peremptory challenge)

Jury selection


Trial

Opening statement: begins trial, plaintiff’s lawyer describes argument intends to make

Defendant’s lawyer gives separate opening statement against plaintiff’s statement.

Opening statements

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Trial

Witness on each side:

l fact witnesses testify on what they saw, can’t offer opinion

l expert witnesses offer opinion based on education or experience (doctors, engineers, etc.)

Testimony


Trial

A lawyer’s closing argument:

l sums up the evidence

l emphasizes key points for the judge or jury to consider during deliberation

Closing arguments


Trial

After closing arguments, judge instructs jury (if there is one) about law relevant to case, such as degree of proof necessary to reach verdict.

Jury instructions

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Trial

Verdicts differ, depending what kind of case:

l CA civil cases need at least ¾ of jurors to agree

l criminal cases need unanimous verdicts

Hung jury if the jurors can’t agree à forces new trial with different jury

Verdict

Summary


Litigation: Trial

l Jury selection

l Opening statements

l Testimony

l Closing statements

l Jury instructions

l Verdict


Enforcing Judgments

Winning judgment ? automatic money

l Plaintiff has 10 years to collect judgment

Most common enforcement methods:

l judgment liens (foreclosure)

l garnishment (wage withholding)

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Enforcing Judgments

Judgment creditor (plaintiff) can secure award with lien on real property owned by judgment debtor(defendant).

l Judgment creditor can foreclose on property

l Proceeds from sale satisfy judgment

Judgment liens


Enforcing Judgments

Judgment creditor can collect judgment from debtor’s pay.

l Earnings withholding order

l Employer withholds and passes to creditor

l Amount to survive can’t be garnished

Garnishment


Appeal

Unhappy litigant can appeal (within 30 days):

l first, to the appellate court

l next, to the supreme court

Appeals to supreme courts are typically discretionary: court can refuse to hear appeal.

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Appeal

Proper appellate court determined by geography zone.

l Six appellate courts in CA

l CA appellate courts handle appeals from superior courts in same district

l U.S. appellate courts called circuit court of appeals: 11 federal appellate courts

Courts of review


Appeal

Appellant: party filing appeal

Respondent: party arguing against appeal (also called the appellee)

Appellate court reviews written arguments and trial record (transcript of original trial). Lawyers for each side also present oral arguments and answer questions.

Process


Appeal

Most appeals limited to trial court record. No new evidence or legal issues introduced.

Rulings based on:

l questions of fact à usually not overturned

l questions of law à sometimes overturned

Issues on appeal

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Appeal

Questions of law : involves interpreting a statute or case law

l Example: Were the required elements of fraud present?

Questions of fact: no legal analysis involved

l Example: Did the defendant sign the contract?

Issues on appeal


Appeal

Appellate court overturns only if lower court’s ruling based on prejudicial error.

l Prejudicial error: affected trial’s outcome in way that harmed appellant

l Harmless error: error that didn’t affect outcome

Prejudicial vs. harmless


Appeal

If reviewing court finds reversible error, it can:

l issue new ruling/verdict

l remand case back to lower court

l order new trial

Disposition of the appeal

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Summary


Enforcement and Appeal

l Judgment liens

l Garnishment

l Issues on appeal

l Prejudicial vs. harmless error

Legal Aspects of Real Estate Lesson 2 Cumulative Quiz

1. Which of the following is the least expensive method of dispute resolution?

A. Arbitration B. Mediation C. Negotiation D. Trial

2. A dispute resolution method in which a neutral third party facilitates discussion between parties, but does not impose a decision, is:

A. arbitration B. defenestration C. mediation D. negotiation

3. A contract requires the parties to use binding arbitration for any disputes that arise in connection with the contract. This is known as:

A. involuntary arbitration B. mandatory arbitration C. voluntary arbitration D. Both B and C

4. All of the following determine whether a court has jurisdiction, except:

A. the amount of money at issue B. the type of claim at issue C. what state the parties reside in D. whether the parties want the case decided by a judge or jury

5. If a plaintiff brings suit in the federal court system, the case will first be heard in a:

A. Circuit Court B. District Court C. Superior Court D. Supreme Court

6. A federal court always has jurisdiction over a case in all of these instances, except when:

A. the amount in controversy is $7,500 or less B. the federal government is a party C. there is a question of federal law D. there is diversity of citizenship (and at least $75,000 at issue)

© 2009 Rockwell Publishing 1

7. The plaintiff initiates a lawsuit by filing a/an _____, which describes the cause of action and makes a request for relief.

A. answer B. complaint C. deposition D. lis pendens

8. A defendant in California superior court has this many days to file an answer to a complaint:

A. 15 B. 30 C. 60 D. 180

9. A patient finds out three years after having surgery that her complications were caused by the surgeon's error. She would:

A. be barred from filing suit because of the statute of limitations B. need to file suit within four years of finding out about the mistake C. need to file suit within four years of the surgery D. need to file suit within two years of finding out about the mistake

10. A document filed with the recorder's office that provides notice of a pending lawsuit that may affect title to a particular property is a:

A. judgment lien B. lis pendens C. writ of attachment D. writ of execution

11. A plaintiff incurs $10,000 in medical expenses because of the defendant's negligence. At trial, the plaintiff is awarded $10,000. This would be considered:

A. a civil penalty B. compensatory damages C. punitive damages D. specific performance

12. Once the complaint and answer have been filed, the parties will gather information during the _____ phase of the lawsuit.

A. appellate B. discovery C. preliminary D. voir dire


13. A defendant's attorney interviews the plaintiff under oath prior to trial. This is a/an:

A. deposition B. interrogatory C. request for production D. voir dire

14. A defendant moves that the judge rule, pre-trial, on one of the plaintiff's claims for which there is no factual dispute. This is known as a motion for:

A. default judgment B. deficiency judgment C. judgment n.o.v. D. summary judgment

15. Who of the following would be limited to acting as a fact witness, rather than an expert witness, in a lawsuit concerning a real estate transaction?

A. Appraiser B. Managing broker C. Neighbor D. Real estate lawyer

16. In California, which of the following is true?

A. Both civil and criminal verdicts must be unanimous B. Both civil and criminal verdicts require three-fourths of the jurors to agree C. Civil case verdicts must be unanimous; criminal case verdicts require three-fourths of the jurors

to agree D. Civil case verdicts require three-fourths of the jurors to agree; criminal case verdicts must be

unanimous

17. A judgment creditor may do which of the following?

A. File a judgment lien against the debtor's real property B. Garnish the debtor's bank account C. Garnish the debtor's wages D. All of the above

18. At an appellate hearing:

A. a jury is seated B. evidence is heard C. lawyers argue questions of law D. witnesses are called


19. A plaintiff loses a case in U.S. District Court in San Diego. The plaintiff would appeal directly to the:

A. California Court of Appeal for the Fourth District B. California Supreme Court C. U.S. Ninth Circuit Court of Appeals D. U.S. Supreme Court

20. If an appellate court finds prejudicial error, it may do all of the following, except:

A. hear additional evidence prior to issuing a different verdict B. issue a new verdict C. order a new trial D. remand the case to the trial court for additional proceedings


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Rockwell publishing real estate law chapter 2