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Curtis D. Harris, BS, CGREA, REB
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Weekly Opinion Summaries
Real Estate & Property Law
Weekly Summaries Distributed July 31, 2015
Labenz v. Labenz
Real Estate & Property Law
Nebraska Supreme Court
Bergeron v. New York Community Bank
Real Estate & Property Law
New Hampshire Supreme Court
NAMN LLC v. Morello
Real Estate & Property Law
Nebraska Supreme Court
City of Ingleside v. City of Corpus Christi
Real Estate & Property Law
Supreme Court of Texas
McCardell v. HUD
Constitutional Law, Government & Administrative Law, Real Estate & Property Law
U.S. Court of Appeals for the Fifth Circuit
Rogers Cartage Co. v. Monsanto Co.
Environmental Law, Real Estate & Property Law
U.S. Court of Appeals for the Seventh Circuit
Green Valley Inv., LLC v. Winnebago Cnty.
Civil Procedure, Constitutional Law, Real Estate & Property Law, Zoning, Planning & Land Use
U.S. Court of Appeals for the Seventh Circuit
Teton Coop. Reservoir Co. v. Farmer Coop. Canal Co.
Environmental Law, Real Estate & Property Law
Montana Supreme Court
Velez v. Cuyahoga Metro. Hous. Auth.
Landlord - Tenant, Public Benefits, Real Estate & Property Law
U.S. Court of Appeals for the Sixth Circuit
In re Crow Water Compact
Environmental Law, Native American Law, Real Estate & Property Law
Montana Supreme Court
Johnson v. Alexander
Legal Ethics, Professional Malpractice & Ethics, Real Estate & Property Law
South Carolina Supreme Court
Voorhees Cattle Co. v. Dakota Feeding Co.
Contracts, Real Estate & Property Law
South Dakota Supreme Court
Wells Fargo Bank, N.A. v. Fonder
Injury Law, Professional Malpractice & Ethics, Real Estate & Property Law
South Dakota Supreme Court
In re Montierth
Banking, Bankruptcy, Real Estate & Property Law
Supreme Court of Nevada
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Labenz v. Labenz
Court: Nebraska Supreme Court
Citation: 291 Neb. 455
Opinion Date:
July 24, 2015
Areas of Law:
Real Estate & Property Law
After the filing of a partition of real estate action, the parties entered into a joint stipulation agreeing to sell the property at public auction. Following the sale, Plaintiffs sought confirmation of the sale and asked the court to approve the payment of fees and costs. After an evidentiary hearing, the district court awarded Plaintiff’s attorney, under the terms of the stipulation, fees in the amount of $5,224. The Supreme Court affirmed, holding that the district court (1) correctly concluded that attorney fees were not available under statutory law or case law regarding partition; and (2) did not abuse its discretion in interpreting the stipulation to limit fees to those incurred in connection with the responsibilities listed in the stipulation.
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Bergeron v. New York Community Bank
Court: New Hampshire Supreme Court
Docket: 2014-018
Opinion Date:
July 24, 2015
Areas of Law:
Real Estate & Property Law
Plaintiff Jillian Bergeron appeals a Superior Court order lifting a preliminary injunction on the foreclosure sale of her home and dismissing her case. Plaintiff executed a promissory note in favor of Drew Mortgage Associates, Inc. The Mortgage identified Drew Mortgage as the lender, plaintiff as the mortgagor, and Mortgage Electronic Registration Systems, Inc. (MERS) as the mortgagee. MERS later assigned the Mortgage to defendant New York Community Bank. The Note was also apparently transferred a number of times, because an allonge with a number of endorsements appears in the record. Defendant notified plaintiff of the foreclosure sale. On or about April 15, 2013, plaintiff filed a verified petition to enjoin the foreclosure sale and for an ex parte restraining order. She admitted falling behind on her payments, but challenged defendant’s authority to foreclose because “[i]t appears that at the very least, [the defendant] does not own the note.” Following denial of plaintiff’s loan modification application, defendant requested that the court lift the injunction and allow the foreclosure sale to proceed. The court did so, ruling, in relevant part, that defendant “has the authority to foreclose whether it actually holds the note or is merely acting as an agent for the entity which holds the note.” On appeal, plaintiff argued that the trial court erred in: (1) ruling that the entity foreclosing a mortgage need not hold both the mortgage and the note; (2) finding that plaintiff clearly intended that the Note and Mortgage be held by separate entities; and (3) failing to make the necessary finding that defendant was entitled to enforce the Note. These specific arguments, however, were largely subsumed within plaintiff’s more general contention that because “the mortgage and note are not severable,” a mortgagee must be entitled to enforce the promissory note in order to conduct a foreclosure sale pursuant to RSA chapter 479. The Supreme Court affirmed. Because the Mortgage evidenced an agency relationship between the lender (Drew Mortgage) and the mortgagee (MERS), and the Mortgage contemplated that both the lender and MERS could assign their interests, and plaintiff did not challenge the validity of the assignment of either the Note or the Mortgage, the Court concluded that defendant has the authority, as agent of the noteholder, to exercise the power of sale. Therefore, the Court held that the trial court did not err in lifting the injunction and dismissing the action. The Court did not address whether defendant could foreclose if the agency relationship was irregular or legitimately challenged by the plaintiff. We also need not decide whether, absent an agency relationship between the noteholder and the mortgage holder, a party who holds only the mortgage has the authority to foreclose.
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NAMN LLC v. Morello
Court: Nebraska Supreme Court
Citation: 291 Neb. 462
Opinion Date:
July 24, 2015
Areas of Law:
Real Estate & Property Law
NAMN, LLC filed this action against Bernard Morello seeking, among other relief, an order declaring that a permanent easement existed over Morello’s property to allow vehicular access to NAMN’s property. The district court ruled that NAMN had a permanent easement implied from prior use for vehicle ingress and egress over Morello’s property and that NAMN was entitled to make reasonable upgrades to the easement. The Supreme Court affirmed, holding that the district court (1) did not err when it granted an easement to NAMN, as the equities did not preclude the relief granted to NAMN; (2) applied the correct legal standard as to the degree of necessity required for an easement implied by prior use; and (3) did not err when it granted an easement in favor of NAMN where the land abutted a public road.
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City of Ingleside v. City of Corpus Christi
Court: Supreme Court of Texas
Docket: 14-0548
Opinion Date:
July 24, 2015
Areas of Law:
Real Estate & Property Law
This case involved a boundary dispute between the City of Ingleside and the City of Corpus Christi over the scope of an ordinance establishing the adjacent bay waters’ “shoreline” as the common border. Each city claimed that several piers, bulkheads, wharves, and artificial structures affixed to Ingleside’s shore and projecting into bay waters fell within its jurisdictional boundaries. Ingleside sued Corpus Christi seeking a declaration that the structures were functionally part of the land and therefore were within the jurisdiction of the land side of the shoreline. The court of appeals concluded that the trial court lacked jurisdiction to establish the boundary between the two cities because the issue was a purely political question not subject to judicial review. The Supreme Court reversed, holding that whether natural and artificial conditions are protrusions of the “shoreline” is a justiciable issue materially distinct from a legislative determination about where to establish a municipal boundary line, and therefore, Ingelside’s declaration did not require the court to address a political question beyond the Court’s competence or authority. Remanded.
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McCardell v. HUD
Court: U.S. Court of Appeals for the Fifth Circuit
Docket: 14-40955
Opinion Date:
July 23, 2015
Areas of Law:
Constitutional Law, Government & Administrative Law, Real Estate & Property Law
This case concerns a plan to replace public housing units destroyed by Hurricane Ike in part by redeveloping on two of the sites destroyed by Ike. At issue are questions concerning the scope of standing to sue under the Fair Housing Act of 1968, 42 U.S.C. 3601 et seq.; whether Congress intended by that Act to abrogate States' sovereign immunity; and whether defendants can avail themselves of a safe harbor provision in the United States Housing Act of 1937, as amended by the Quality Housing and Work Responsibility Act of 1998, 42 U.S.C. 1437 et seq. The court held that it lacked jurisdiction to entertain the dismissal of the Individual Plaintiffs and GOGP because they did not appeal; plaintiff has Article III standing to bring her claim that the planned redevelopment will deprive her of the social and economic benefits that result from living in an integrated community; Congress did not make clear an intent to abrogate States’ Eleventh Amendment sovereign immunity from suits brought under the Fair Housing Act, a conclusion reached by other courts considering the issue; and the district court properly granted summary judgment to the remaining defendants on plaintiff’s Fair Housing Act claim, concluding that plaintiff's claim was precluded by a safe harbor provision found at 42 U.S.C. 1437p(d). Accordingly, the court affirmed the judgment.
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Rogers Cartage Co. v. Monsanto Co.
Court: U.S. Court of Appeals for the Seventh Circuit
Docket: 13-3052, Docket: 12-3624
Opinion Date:
July 27, 2015
Areas of Law:
Environmental Law, Real Estate & Property Law
Monsanto operated chemical plants and disposed of waste, including PCBs, at sites within Sauget Area 1. In 1999, the government filed suit under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), to recover EPA costs in removing hazardous substances from Area 1, which follows Dead Creek through Sauget and Cahokia, Illinois. Monsanto (later Pharmacia) and Solutia, original defendants, filed a third-party complaint adding Rogers, which formerly operated trucking depots near Area 1, alleging that Rogers washed trucks after hauling hazardous substances, releasing substances into drainage systems that emptied into Dead Creek. The government added Rogers as a defendant, and other defendants brought cross-claims. In 2003, the court dismissed other claims against Rogers because it had been found not liable on the government’s claim under 42 U.S.C. 9607. In 2007, the Supreme Court decided “Atlantic Research,” establishing that potentially responsible parties that incur voluntary CERCLA cleanup costs may seek contribution from other potentially responsible parties. Four defendants filed an amended cross-claim; Rogers filed counterclaims, alleging that Monsanto had arranged for transport and disposal of hazardous substances without informing Rogers of the nature of the substances involved. The four settled, with Rogers paying $50,000 if it cooperated in efforts to recover the difference from its insurer. The settlement released all claims “brought or alleged, or which could have been brought or alleged” in the EPA action. The agreement contemplated that cleanup of Rogers’s depot would be paid for out of settlement proceeds. Rogers leased that land from ConocoPhillips, which filed a separate action against Rogers, seeking contribution for its voluntary cleanup costs. Rogers filed a third-party complaint against Pharmacia and Solutia. The Seventh Circuit affirmed the subsequent dismissal, finding the claim barred, by the settlement, and sanctions against Rogers.
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Green Valley Inv., LLC v. Winnebago Cnty.
Court: U.S. Court of Appeals for the Seventh Circuit
Docket: 14-2473
Opinion Date:
July 27, 2015
Areas of Law:
Civil Procedure, Constitutional Law, Real Estate & Property Law, Zoning, Planning & Land Use
Stars is a nude dancing establishment in Neenah, Wisconsin. When Stars opened in 2006, the County had a zoning ordinance governing Adult Entertainment Overlay Districts. Stars’s application was stalled because, all parties agree, the 2006 ordinance violated the First Amendment. Its owner sued in federal court, arguing that anything is legal that is not forbidden, and Staars was banned only by an unconstitutional ordinance: therefore, Stars was permitted in 2006 and is now a legal nonconforming use that cannot be barred by a later ordinance. The court granted summary judgment to Winnebago County, reasoning that it was possible to use the law’s severance clause to strike its unconstitutional provisions. The Seventh Circuit reversed in part, agreeing that the permissive use scheme laid out in the ordinance was unconstitutional, but reasoning that, after the constitutional problems are dealt with, the remaining questions concern state law. Their resolution depends on facts that were not developed, and on the possible existence of a power not only to sever problematic language but to revise it—a power federal courts do not have. The district court should have declined to exercise supplemental jurisdiction over the state-law claims and should have dismissed them without prejudice so that the parties may pursue them in state court.
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Teton Coop. Reservoir Co. v. Farmer Coop. Canal Co.
Court: Montana Supreme Court
Citation: 2015 MT 208
Opinion Date:
July 28, 2015
Areas of Law:
Environmental Law, Real Estate & Property Law
Farmers Cooperative Canal Company (FCCC) was incorporated in 1897 for the purpose of appropriating, transporting, and using irrigation water from the Teton River. FCCC acquired two water rights with priority dates of 1895 and 1897. FCCC constructed two reservoirs, Harvey Lake Reservoir in 1913 and Farmers Reservoir in 1942. Using its reservoirs, FCCC began to store portions of the water diverted to it during the year, which allowed it to release water as needed throughout the year. Based on its rights and these practices, FCCC filed statements of claim for its 1895 and 1897 rights, claiming use of the two reservoirs as part of those rights. Teton Cooperative Reservoir Company (TCRC) objected to FCCC’s claims, arguing that FCCC’s reservoirs were not part of its 1895 or 1897 rights and, instead, were new, independent appropriations not entitled to the priority dates of either claim. The Water Court concluded that the reservoirs could be used as part of the 1895 and 1897 rights because they did not expand the period of diversion, volume, or flow rate of those rights. The Supreme Court affirmed, holding that the Water Court correctly concluded that FCCC’s reservoirs did not expand FCCC’s water rights and that the reservoirs could be included in FCCC’s 1895 and 1897 rights.
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Velez v. Cuyahoga Metro. Hous. Auth.
Court: U.S. Court of Appeals for the Sixth Circuit
Docket: 14-3978
Opinion Date:
July 30, 2015
Areas of Law:
Landlord - Tenant, Public Benefits, Real Estate & Property Law
The Section 8 low-income housing assistance voucher program, 42 U.S.C. 1437f(o), is administered by public housing agencies such as Cuyahoga Metropolitan Housing Authority (CMHA). Program regulations define “rent to [the] owner” as “[t]he total monthly rent payable to the owner under the lease for the unit. Rent to owner covers payment for any housing services, maintenance and utilities that the owner is required to provide and pay for.” Velez and Hatcher, voucher recipients, entered into one-year leases with K&D. The leases provide: “If Resident(s) shall holdover after the end of the term of this Rental Agreement, said holdover shall be deemed a tenancy of month to month and applicable month to month fees shall apply.” Velez entered into a month-to-month tenancy after her one-year term expired; Hatcher entered into month-to-month tenancies, and, later, a nine-month agreement. K&D charged fees of $35.00 to $100.00 per month. CMHA did not treat these short-term rental fees as rent under the voucher program. Velez and Hatcher were required to pay the fees and filed suit under 42 U.S.C. 1983. The court granted CMHA summary judgment, holding that the fees were not rent. The Sixth Circuit reversed. Recasting the charge as a short-term fee, rather than rent, does not change that it is consideration paid by the tenant for use of the rental unit.
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In re Crow Water Compact
Court: Montana Supreme Court
Citation: 2015 MT 217
Opinion Date:
July 29, 2015
Areas of Law:
Environmental Law, Native American Law, Real Estate & Property Law
At dispute in this case was the Crow Water Compact - an agreement among the United States, the Crow Tribe, and the State - which recognizes a Tribal Water Right of the Crow Tribe and its members in a number of sources of water that abut or cross the Crow Indian Reservation in Montana. Here, a group of Crow tribal member Allottees - persons who hold interests in parcels of former Tribal land mostly created by the General Allotment Act - objected to the Compact in the Water Court, claiming that the United States breached its fiduciary duties to the Allottees by failing to protect their water rights in the Compact and failing to adequately represent them in Compact proceedings. The Water Court dismissed the Allottees’ objections. The Supreme Court affirmed, holding that the Water Court (1) applied the proper legal standard of review in dismissing the Allottees’ objections; (2) did not exceed its jurisdiction by dismissing the Allottees’ action rather than staying consideration of the Compact pending resolution of the Allottees’ action in federal district court; and (3) did not err in determining that the Allottees have rights to a share of the Crow Tribal Water Right and that the United States adequately represented the Allottees during the Compact negotiations.
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Johnson v. Alexander
Court: South Carolina Supreme Court
Docket: 27553
Opinion Date:
July 29, 2015
Areas of Law:
Legal Ethics, Professional Malpractice & Ethics, Real Estate & Property Law
Amber Johnson filed suit against her closing attorney, Stanley Alexander, arguing he breached his duty of care by failing to discover the house Johnson purchased had been sold at a tax sale the previous year. The trial court granted partial summary judgment in favor of Johnson as to Alexander's liability. On appeal, the court of appeals held Alexander could not be held liable as a matter of law simply because the attorney he hired to perform the title work may have been negligent. Instead, the court determined the relevant inquiry was "whether Alexander acted with reasonable care in relying on [another attorney's] title search"; accordingly, it reversed and remanded. The Supreme Court reversed the court of appeals: even absent Alexander's admissions, the Court found it was error to equate delegation of a task with delegation of liability. The Court therefore agreed with Johnson that an attorney was liable for negligence in tasks he delegates absent some express limitation of his representation. Applying this standard to the facts, the Court found the grant of summary judgment was proper because there was no genuine issue of material fact as to liability. The case was remanded back to the trial court for a determination of damages.
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Voorhees Cattle Co. v. Dakota Feeding Co.
Court: South Dakota Supreme Court
Citation: 2015 S.D. 68
Opinion Date:
July 29, 2015
Areas of Law:
Contracts, Real Estate & Property Law
Voorhees Cattle Co. brought a foreclosure action against Dakota Feeding Co. (DFC). In answering the complaint, DFC brought a third party complaint against B and B Equipment, Inc. (B&B) for breach of contract. B&B counterclaimed, alleging breach of contract and impossibility of performance. After a jury trial, judgment was entered for Voorhees on the foreclosure claim and for B&B on its counterclaims against DFC. DFC satisfied the judgment granted to Voorhees, leaving DFC and B&B as the remaining parties to this appeal. DFC appealed, arguing that evidence admitted at trial violated the attorney-client privilege and that the error prejudicially tainted the trial. The Supreme Court affirmed, holding (1) the privileged evidence should not have been allowed, but the evidence did not prove, nor go to the heart of B&B’s claims; and (2) as a result, the erroneous admission of the privileged communications was not unfairly prejudicial to DFC as against B&B.
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Wells Fargo Bank, N.A. v. Fonder
Court: South Dakota Supreme Court
Citation: 2015 S.D. 66
Opinion Date:
July 29, 2015
Areas of Law:
Injury Law, Professional Malpractice & Ethics, Real Estate & Property Law
Matthew and Caralynn Fonder purchased a home and obtained a mortgage from Wells Fargo Bank, N.A. Wells Fargo selected Wells Fargo Insurance, Inc. Flood Services (WFFS) to conduct a flood hazard determination on the Fonders’ home. WFFS determined the home was not in a special flood hazard area, and therefore, the Bank did not require the Fonders to obtain flood insurance. A flood later destroyed the Fonders’ home. Wells Fargo later filed a complaint to foreclose on the Fonders’ home. The Fonders cross-claimed against WFFS seeking to recover damages sustained a result of their reliance on WFFS’s erroneous flood determination. The circuit court dismissed the cross-claim for failure to state a claim and dismissed the Fonders’ motion to amend their third-party complaint to assert a claim of negligent misrepresentation on the grounds that WFFS did not owe the Fonders a duty. The Supreme Court affirmed in part and reversed in part, holding (1) the circuit court erred when it dismissed the Fonders’ claims for professional negligence and negligent infliction of emotional distress but did not err in dismissing the Fonders’ breach-of-fiduciary duty claim; and (2) upon remand, the Fonders may amend their cross-claim to include negligent misrepresentation.
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In re Montierth
Court: Supreme Court of Nevada
Citation: 131 Nev. Adv. Op. No. 55
Opinion Date:
July 30, 2015
Areas of Law:
Banking, Bankruptcy, Real Estate & Property Law
Appellants filed a promissory note that was secured by a deed of trust on their property. At the time that Appellants defaulted, Respondent was the holder of the note and Mortgage Electronic Registration Systems, Inc. (MERS) was the beneficiary of the deed of trust securing the note. After Appellants filed for bankruptcy, MERS assigned its interest in the deed of trust to Respondent. Before the assignment was recorded, Respondent filed a proof of claim in Appellants’ bankruptcy claiming that it was a secured creditor. Respondent then filed a motion for relief from the automatic bankruptcy stay so that it could foreclose on Appellants’ property. Appellants argued that Respondent was not a secured creditor because it did not have a unified note and deed of trust when the bankruptcy petition was filed. The United States Bankruptcy Court certified two questions of law to the Supreme Court concerning the legal effect on a foreclosure when the promissory note and deed of trust are split at the time of foreclosure. The Supreme Court concluded (1) when the promissory note is held by a principal and the beneficiary under the deed of trust is the principal’s agent at the time of foreclosure, reunification of the note and the deed of trust is not required to foreclose; and (2) as a matter of law, the recording of an assignment of a deed of trust is a ministerial act.
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