In re Nosek - Bankr. D. Mass. - April 25, 2008
https://ecf.mab.uscourts.gov/cgi-bin/op.pl?jbr - Nosek decision 02-46025
or
http://online.wsj.com/public/resources/documents/LB_Nosek-Decision.pdf?mod=WSJBlog
In this individual bankruptcy case, the court sanctioned Ameriquest ($250,000), Wells Fargo ($250,000) and various attorneys ($25,000) and a firm ($100,000) under Bankruptcy Rule 9011 http://www.law.cornell.edu/rules/frbp/rules.htm#Rule9011 (Signing of Papers; Representations to the Court; Sanctions; Verification and Copies of Papers) for misrepresentations about the ownership of a note and mortgage.
holder/standing - The court expressed itself in the strongest language, e.g. - "As this Court has noted on more than one occasion, those parties who do not hold the note or mortgage and who do not service the mortgage do not have standing to pursue motions for relief or other actions arising from the mortgage obligation....The Court has had to expend time and resources, as have debtors already burdened in their attempts to pay their mortgages, because of the carelessness of those in the residential mortgage industry and the bombast this Court and others have encountered when calling them on their shortcomings."
intent - The court rejected the claim of lack of bad intent on the part of the attorneys, firms and creditors - "Virtually all of parties argue that there was no intent to mislead the Court. Because the standard to be applied is an objective one, the Court may quickly dispatch this argument. Intent is irrelevant. The argument that the assignment of the note and mortgage was a matter of public record and therefore the Debtor knew or should have known of Norwest’s identity is relevant but disingenuous, indeed even arrogant, since many of these same parties asserting this position allege they had no way of knowing about the assignment. They seek to bind the Debtor to one standard and themselves to a much lower one. Moreover the attorneys and law firms’ argument that notes and mortgages frequently change hands multiple times, often with written documentation executed later, which they offer as explanation as to why its reasonable for them to rely on the representations of their clients should provide little shelter when they insist that the Debtor should have known better than to take their pleadings literally. This Court will not countenance creditors and creditors’s attorneys holding themselves to a different and clearly lower standard than what they expect of the Debtor. It will not tolerate a lender’s or servicer’s disregard for the rules that govern litigation, including contested matters, in the federal courts. It is the creditor’s responsibility to keep a borrower and the Court informed as to who owns the note and mortgage and is servicing the loan, not the borrower’s or the Court’s responsibility to ferret out the truth." (emphasis added)
Tuesday, April 29, 2008
Friday, April 25, 2008
consumer - arbitration clause - unconscionability - waiver
Zimmer v. CooperNeff Advisors, Inc. - 3d Circuit - April 14, 2008
http://www.ca3.uscourts.gov/opinarch/051119p.pdf
The employer/federal defendant sued plaintiff in state court seeking injunctive relief under 6 different legal theories, asking the court to enjoin Zimmer from disclosing or using a stock trading model he had developed.
Six months later, plaintiff/employee, a Harvard Ph.D. in economics, sued the former employer for copyright infringement and other matters concerning the model. Defendant answered the complaint on September 7 and asserted two counterclaims seeking declaratory judgments. In an amended answer, filed two weeks later, defendant asserted a right to arbitration and then filed a motion to compel.
There had been extensive job negotiations before Plaintiff Zimmer became employed at CooperNeff. The contract included a clause requiring plaintiff to submit any disputes about intellectual property to arbitration but allowed the employer to retain the right to bring any action "directly in a court of competent jurisdiction and [without the need] to arbitrate any such claims."
The district court found the arbitration clause unconscionable and that the defendant had waived its enforcement. The appellate court reversed on the unconscionability issue and remanded for further fact-finding about waiver.
unconscionability
Under Pennsylvania law, a party challenging an arbitration agreement has the burden to demonstrate that the agreement is both procedurally and substantively unconscionable. Salley v. Option One Mortgage Corp., 925 A.2d 115, 119-120 (Pa. 2007).
procedural unconscionability
Procedural unconscionability refers specifically to “the process by which an agreement is reached and the form of an agreement, including the use therein of fine print and convoluted or unclear language.” Harris v. Green Tree Fin. Corp., 183 F.3d 173, 181 (3d Cir. 1999). The trial court had found the agreement was procedurally unconscionable. The appellate court overruled, contrasting the case of Alexander v. Anthony International, 341 F.3d 256 (3d Cir. 2003), in which the workers were uneducated crane operators to whom the contract was offered on a take-it-or-leave-it basis. Here, plaintiff was very educated and bargained about the contract terms. Plaintiff "did not lack a meaningful choice in accepting the challenged arbitration provision."
substantive unconscionability
Even though the lack of procedural unconscionability decided the case, the court said that it was going to "take the occasion" to register its "concern about the District Court's holding on substantive unconscionability," which looks to whether the arbitration provision “unreasonably favors the party asserting it.” Salley, 925 A.2d 115 at 119.
The court noted that the Salley court had expressly abrogated the holding in Lytle v. Citifinancial Servs., Inc., 810 A.2d 643, 665 (Pa. Super. Ct. 2002), that “under Pennsylvania law, the reservation by [one party] of access to the courts for itself to the exclusion of [another] creates a presumption of unconscionability, which in the absence of ‘business realities’ that compel inclusion of such a provision in an arbitration provision, renders the arbitration provision unconscionable and unenforceable under Pennsylvania law." Rather, it held that "there is no presumption of unconscionability associated with an arbitration agreement merely on the basis that the agreement reserves judicial remedies associated with foreclosure” for lenders, to the exclusion of borrowers." Salley at 129.
Salley did not hold that an arbitration clause reserving remedies could never be unconscionable; rather, it held that there “is a facially apparent business justification for such an exception [in the context of mortgage lending], as the safeguards thereby preserved assure regularity and consistency for the benefit of both lender and borrower, and accordingly, there are sound pragmatic and policy reasons why foreclosure proceedings should be pursued in a court of law.” Salley at 128.
The instant court went on to say, however, that it did "not hold, and we believe the Pennsylvania Supreme Court did not hold, that unequal access to the courts can never be the basis for finding an arbitration agreement unconscionable. The conclusion in each case will depend on the circumstances."
waiver
The district court held that the company had waived its right to compel arbitration solely on the basis of its initiation and pursuit of judicial enforcement of its rights in state court. On appeal the court held, initially, that the waiver issue was a judicial question, not one for an arbitrator. Ehleiter v. Grapetree Stores, 482 F.3d 207, 221 (3d Cir. 2007).
It went on, however, to reject the notion that litigation by itself constitute a waiver. It said that "prejudice [to the opposing party] is the touchstone for determining whether the right to arbitrate has been waived by litigation conduct" and cited a "nonexclusive list of factors" including the length and the breadth of the judicial action, and the assert of the arbitration right, and other factors tending to show that the party "too unfair advantage of the litigation process to the detriment of the other party" and availed itself of litigation procedures (discovery, etc.) not available in arbitration. It remanded on this issue for relevant fact-finding.
http://www.ca3.uscourts.gov/opinarch/051119p.pdf
The employer/federal defendant sued plaintiff in state court seeking injunctive relief under 6 different legal theories, asking the court to enjoin Zimmer from disclosing or using a stock trading model he had developed.
Six months later, plaintiff/employee, a Harvard Ph.D. in economics, sued the former employer for copyright infringement and other matters concerning the model. Defendant answered the complaint on September 7 and asserted two counterclaims seeking declaratory judgments. In an amended answer, filed two weeks later, defendant asserted a right to arbitration and then filed a motion to compel.
There had been extensive job negotiations before Plaintiff Zimmer became employed at CooperNeff. The contract included a clause requiring plaintiff to submit any disputes about intellectual property to arbitration but allowed the employer to retain the right to bring any action "directly in a court of competent jurisdiction and [without the need] to arbitrate any such claims."
The district court found the arbitration clause unconscionable and that the defendant had waived its enforcement. The appellate court reversed on the unconscionability issue and remanded for further fact-finding about waiver.
unconscionability
Under Pennsylvania law, a party challenging an arbitration agreement has the burden to demonstrate that the agreement is both procedurally and substantively unconscionable. Salley v. Option One Mortgage Corp., 925 A.2d 115, 119-120 (Pa. 2007).
procedural unconscionability
Procedural unconscionability refers specifically to “the process by which an agreement is reached and the form of an agreement, including the use therein of fine print and convoluted or unclear language.” Harris v. Green Tree Fin. Corp., 183 F.3d 173, 181 (3d Cir. 1999). The trial court had found the agreement was procedurally unconscionable. The appellate court overruled, contrasting the case of Alexander v. Anthony International, 341 F.3d 256 (3d Cir. 2003), in which the workers were uneducated crane operators to whom the contract was offered on a take-it-or-leave-it basis. Here, plaintiff was very educated and bargained about the contract terms. Plaintiff "did not lack a meaningful choice in accepting the challenged arbitration provision."
substantive unconscionability
Even though the lack of procedural unconscionability decided the case, the court said that it was going to "take the occasion" to register its "concern about the District Court's holding on substantive unconscionability," which looks to whether the arbitration provision “unreasonably favors the party asserting it.” Salley, 925 A.2d 115 at 119.
The court noted that the Salley court had expressly abrogated the holding in Lytle v. Citifinancial Servs., Inc., 810 A.2d 643, 665 (Pa. Super. Ct. 2002), that “under Pennsylvania law, the reservation by [one party] of access to the courts for itself to the exclusion of [another] creates a presumption of unconscionability, which in the absence of ‘business realities’ that compel inclusion of such a provision in an arbitration provision, renders the arbitration provision unconscionable and unenforceable under Pennsylvania law." Rather, it held that "there is no presumption of unconscionability associated with an arbitration agreement merely on the basis that the agreement reserves judicial remedies associated with foreclosure” for lenders, to the exclusion of borrowers." Salley at 129.
Salley did not hold that an arbitration clause reserving remedies could never be unconscionable; rather, it held that there “is a facially apparent business justification for such an exception [in the context of mortgage lending], as the safeguards thereby preserved assure regularity and consistency for the benefit of both lender and borrower, and accordingly, there are sound pragmatic and policy reasons why foreclosure proceedings should be pursued in a court of law.” Salley at 128.
The instant court went on to say, however, that it did "not hold, and we believe the Pennsylvania Supreme Court did not hold, that unequal access to the courts can never be the basis for finding an arbitration agreement unconscionable. The conclusion in each case will depend on the circumstances."
waiver
The district court held that the company had waived its right to compel arbitration solely on the basis of its initiation and pursuit of judicial enforcement of its rights in state court. On appeal the court held, initially, that the waiver issue was a judicial question, not one for an arbitrator. Ehleiter v. Grapetree Stores, 482 F.3d 207, 221 (3d Cir. 2007).
It went on, however, to reject the notion that litigation by itself constitute a waiver. It said that "prejudice [to the opposing party] is the touchstone for determining whether the right to arbitrate has been waived by litigation conduct" and cited a "nonexclusive list of factors" including the length and the breadth of the judicial action, and the assert of the arbitration right, and other factors tending to show that the party "too unfair advantage of the litigation process to the detriment of the other party" and availed itself of litigation procedures (discovery, etc.) not available in arbitration. It remanded on this issue for relevant fact-finding.
Thursday, April 24, 2008
mortgage foreclosure - Philadelphia Residential Mortgage Foreclosure Diversion Pilot Program
Philadelphia has recently (April 2008) started a Residential Mortgage Foreclosure Diversion Pilot Program.
Under the program, homeowners faced with foreclosure will have the opportunity, after seeing a housing counselor, to take part in a "concilliation conference" in which the parties try to work out an affordable modification of the loan or an affordable payment arrangement.
Here is a link to the program regulations:
http://fjd.phila.gov/pdf/regs/2008/cpjgcr-2008-01.pdf
Here is a link to the court order and relevant forms (fillable PDF): http://fjd.phila.gov/pdf/regs/2008/2008-01-Order-Certification-Objection.pdf
Under the program, homeowners faced with foreclosure will have the opportunity, after seeing a housing counselor, to take part in a "concilliation conference" in which the parties try to work out an affordable modification of the loan or an affordable payment arrangement.
Here is a link to the program regulations:
http://fjd.phila.gov/pdf/regs/2008/cpjgcr-2008-01.pdf
Here is a link to the court order and relevant forms (fillable PDF): http://fjd.phila.gov/pdf/regs/2008/2008-01-Order-Certification-Objection.pdf
UC- self-employment - employee v. independent contractor
CE Credits Online v. UCBR - Commonwealth Court - April 24, 2008
http://www.courts.state.pa.us/OpPosting/CWealth/out/1269CD07_4-24-08.pdf
The claimant was held to be an independent contractor rather than an employee and thus ineligible for benefits under sec. 402(h) of the UC Law, 43 P.S. sec. 802(h).
The claimant, who had an M.S. in adult education, was an online moderator, for several online educational institutions, including the employer in this case. The court held that the "heart of the issue of 'control'" of a person's work involves control over both the means and result of the work. "Every job, whether performed by an employee or by an independent contractor, has parameters and expectations. 'Control' for purposes of Section 4(l)(2)(B) of the Law is not a matter of approving or directing the final work product so much as it is a matter of controlling the means of its accomplishment."
"Whether an individual performs services as an independent contractor or as an employee is governed by Section 4(l)(2)(B) of the Law. It states as follows:
'Services performed by an individual for wages shall be deemed to be employment subject to this act, unless and until it is shown to the satisfaction of the department that -- (a) such individual has been and will continue to be free from control or direction over the performance of such services both under his contract of service and in fact; and (b) as to such services such individual is customarily engaged in an independently established trade, occupation, profession or business. 43 P.S. §753(l)(2)(B) (emphasis added).
Thus, where the claimant’s services are performed free of the employer's control and the claimant’s services are the type performed in an independent trade or business, the claimant is not in an employment relationship. The employer asserting that the claimant is not eligible by reason of Section 4(l)(2)(B) of the Law bears the burden of proof. Urban Redevelopment Authority of Pittsburgh v. UCBR, 596 A.2d 1209, 1211 (Pa. Cmwlth. 1991)."
The Commonwealth Court "has identified a number of factors relevant to whether an employee is free of 'control' for purposes of Section 4(l)(2)(B). They include: whether there is a fixed rate of remuneration; whether taxes are withheld from the claimant’s pay; whether the employer supplies the tools necessary to carry out the services; whether the employer provides on-the-job training; and whether the employer holds regular meetings that the claimant was expected to attend. Pavalonis v. UCBR, 426 A.2d 215, 217 (Pa. Cmwlth. 1981). No one factor is dispositive of the ultimate question of whether the putative employer “controls” the work to be done and the manner in which it is done." Only one factor - the fixed rate of remuneration - cut in the claimant's favor in this case.
The claimant only worked a few hours a week for the company, at times and a place (home) of his own choice, with his own equipment (a computer), and free of day-to-day supervision. In addition, there was a written contract stating the claimant was an independent contractor, and that he had the "sole right to control and direct the mean, manner and method by which the services required...will be performed." Claimant had a similar arrangement with several other companies. No taxes were deducted from his pay, and he got no job benefits (insurance, etc.).
http://www.courts.state.pa.us/OpPosting/CWealth/out/1269CD07_4-24-08.pdf
The claimant was held to be an independent contractor rather than an employee and thus ineligible for benefits under sec. 402(h) of the UC Law, 43 P.S. sec. 802(h).
The claimant, who had an M.S. in adult education, was an online moderator, for several online educational institutions, including the employer in this case. The court held that the "heart of the issue of 'control'" of a person's work involves control over both the means and result of the work. "Every job, whether performed by an employee or by an independent contractor, has parameters and expectations. 'Control' for purposes of Section 4(l)(2)(B) of the Law is not a matter of approving or directing the final work product so much as it is a matter of controlling the means of its accomplishment."
"Whether an individual performs services as an independent contractor or as an employee is governed by Section 4(l)(2)(B) of the Law. It states as follows:
'Services performed by an individual for wages shall be deemed to be employment subject to this act, unless and until it is shown to the satisfaction of the department that -- (a) such individual has been and will continue to be free from control or direction over the performance of such services both under his contract of service and in fact; and (b) as to such services such individual is customarily engaged in an independently established trade, occupation, profession or business. 43 P.S. §753(l)(2)(B) (emphasis added).
Thus, where the claimant’s services are performed free of the employer's control and the claimant’s services are the type performed in an independent trade or business, the claimant is not in an employment relationship. The employer asserting that the claimant is not eligible by reason of Section 4(l)(2)(B) of the Law bears the burden of proof. Urban Redevelopment Authority of Pittsburgh v. UCBR, 596 A.2d 1209, 1211 (Pa. Cmwlth. 1991)."
The Commonwealth Court "has identified a number of factors relevant to whether an employee is free of 'control' for purposes of Section 4(l)(2)(B). They include: whether there is a fixed rate of remuneration; whether taxes are withheld from the claimant’s pay; whether the employer supplies the tools necessary to carry out the services; whether the employer provides on-the-job training; and whether the employer holds regular meetings that the claimant was expected to attend. Pavalonis v. UCBR, 426 A.2d 215, 217 (Pa. Cmwlth. 1981). No one factor is dispositive of the ultimate question of whether the putative employer “controls” the work to be done and the manner in which it is done." Only one factor - the fixed rate of remuneration - cut in the claimant's favor in this case.
The claimant only worked a few hours a week for the company, at times and a place (home) of his own choice, with his own equipment (a computer), and free of day-to-day supervision. In addition, there was a written contract stating the claimant was an independent contractor, and that he had the "sole right to control and direct the mean, manner and method by which the services required...will be performed." Claimant had a similar arrangement with several other companies. No taxes were deducted from his pay, and he got no job benefits (insurance, etc.).
Wednesday, April 23, 2008
mortage foreclosure - Pew Reports (2008)
The Pew Charitable Trusts has just published a report on the governmental response to the foreclosure crisis.
It has also issued a report about each state.
Here is the general report http://www.pewcenteronthestates.org/uploadedFiles/PCS_DefaultingOnTheDream_Report_FINAL041508_01.pdf
Here is the report on Pennsylvania
http://www.pewcenteronthestates.org/uploadedFiles/wwwpewcenteronthestatesorg/Fact_Sheets/8013PCTS_StateFactSht_FINAL041508%20PA.pdf
It has also issued a report about each state.
Here is the general report http://www.pewcenteronthestates.org/uploadedFiles/PCS_DefaultingOnTheDream_Report_FINAL041508_01.pdf
Here is the report on Pennsylvania
http://www.pewcenteronthestates.org/uploadedFiles/wwwpewcenteronthestatesorg/Fact_Sheets/8013PCTS_StateFactSht_FINAL041508%20PA.pdf
Monday, April 21, 2008
real property - tax assessments - LIHTC properties - fair market value
1198 Butler Street Associates, et al. v.Board of Assessment Appeals - Commonwealth Court - April 17, 2008
http://www.courts.state.pa.us/OpPosting/CWealth/out/1374CD07_4-17-08.pdf
Taxpayers, seven limited partnerships operating under the aegis of a non-profit general partner, appealed property assessments for residential rental properties on which there were income and rent restrictions under the Low-Income Housing Tax Credit (LIHTC) provision of the IRS Code, 26 USC 42, which provides income tax credits for non-public entities that develop affordable rental housing.
All properties were developed with the same non-revocable restrictive covenant in order to benefit from the tax credits. They are all rent- and income-restricted for a period of 30 years. These non-revocable covenants restrict the renter’s income level to either 50% or 60% of area median income.
Taxpayers presented testimony, credited by the trial court, that they did not charge the maximum allowable rent because their tenants could not afford it. The testimony also established that there would be increased vacancy and collection rates if they charged the maximum allowable rent, and that taxpayers needed property tax relief because the income generated from the subject properties does not support the current real estate taxes
Taxpayers' expert identified the properties’ highest and best uses of the property as subsidized income tax credit housing facilities. Addressing the three methods of valuation for real estate tax purposes, as required by 72 P.S. 5020-402(a), Taxpayers’ expert discounted the cost approach (rental incomes would not support construction of new facilities) and the comparable sales approach (no other comparable units with similar rent restrictions) and adopted the income approach, which the trial court improperly (but harmlessly) referred to as "use value.
The General Assembly amended the Assessment Law in 2003 to include sec. 402(c)(1), 72 P.S. §5020-402(c)(1), which provides that: "[i]n arriving at the actual value of real property, the impact of applicable rent restrictions, affordability requirements or any other related restrictions prescribed by any Federal or State programs shall be considered."
The amendment is consistent with prior case law addressing the effects of rent restrictions and clearly mandates that rent restrictions be considered in determining fair market value. It has the laudatory goal of encouraging development of low income housing in exchange for reduced property valuation for real estate tax purposes. The amendment was intended to provide property tax relief to those entities that do not have unfettered ability to raise rent to combat increasing business expenses.
The position of the taxing authority failed to account for the amendment's direction that “affordability requirements” be considered in determining fair market value for tax assessment purposes. This new, express statutory directive must be viewed as overriding older court decisions to the extent they support a contrary result. In addition, federal tax law anticipates affordability restrictions in addition to maximum allowable rents. This is consistent with the statutory goal of making affordable housing available to lower income consumers.
"In light Section 402 of the Assessment Law, the taxpayers’ evidence regarding rent restrictions under 26 U.S.C. §42, the non-revocable restrictive covenants which limit taxpayers ability to produce income on the subject properties, and the affordability of taxpayers’ units, we discern no error in the trial court’s application of Section 402(c)(1) of the Assessment Law."
Judge Pelligrini, concurring -
Based on the issues raised, I join in the well-reasoned majority opinion. I write separately because I disagree that 72 P.S. §5020-402(c) is consistent with our Supreme Court’s decision in In re Appeal of Johnstown Associates, 494 Pa. 433, 431 A.2d 932 (1981). In that case, like here, rents in a subsidized housing project were fixed by the Department of Housing and Urban Development at a rate below the prevailing rate for comparable non-subsidized units in a long term arrangement in return for a subsidized mortgage. The taxpayer argued that the rent restrictions should be considered in valuing the property. Our Supreme Court agreed, holding that the certitude that the property did not have the potential for rental profit increases must at least be considered, but went on to hold that the depreciated tax shelter benefits associated with owning this type of property could be taken into consideration. Id., 431 A.2d at 935.
Read in full, 72 P.S. §5020-402 (c), however, provides that:
(c)(1) In arriving at the actual value of real property, the impact of applicable rent restrictions, affordability requirements or any other related restrictions prescribed by any Federal or State programs shall be considered. (2) Federal or State income tax credits with respect to property shall not be considered real property or income attributable to real property. (3) This subsection shall apply in all counties and other political subdivisions in this Commonwealth. (Emphasis added.)
Unlike our Supreme Court’s holding in Johnstown Associates, 72 P.S. §5020-402(c) precludes the substantial credits a taxpayer receives from being included in the income stream. By not allowing those tax credits, that provision could be considered to have created a back door partial tax exemption, calling into question whether it violates Article 8, Section 2 of the Pennsylvania Constitution which only allows tax exemptions for real property in certain enumerated areas. Article 8, Section 5 of the Pennsylvania Constitution provides that “All laws exempting property from taxation, other than the property above enumerated [Article 8, §2 of the Constitution] shall be void.”
We do not need to deal with that issue here because in the years in question in this appeal, taxpayer is receiving no tax credits. Moreover, the income stream used in the income capitalization method of valuation will need to be adjusted as the 30-year rent restriction nears its end. For example, in year 29 of the rent restriction, a willing buyer will look more at what market rent can be charged after the rent restriction has expired in determining what he or she is willing to pay for the property .
http://www.courts.state.pa.us/OpPosting/CWealth/out/1374CD07_4-17-08.pdf
Taxpayers, seven limited partnerships operating under the aegis of a non-profit general partner, appealed property assessments for residential rental properties on which there were income and rent restrictions under the Low-Income Housing Tax Credit (LIHTC) provision of the IRS Code, 26 USC 42, which provides income tax credits for non-public entities that develop affordable rental housing.
All properties were developed with the same non-revocable restrictive covenant in order to benefit from the tax credits. They are all rent- and income-restricted for a period of 30 years. These non-revocable covenants restrict the renter’s income level to either 50% or 60% of area median income.
Taxpayers presented testimony, credited by the trial court, that they did not charge the maximum allowable rent because their tenants could not afford it. The testimony also established that there would be increased vacancy and collection rates if they charged the maximum allowable rent, and that taxpayers needed property tax relief because the income generated from the subject properties does not support the current real estate taxes
Taxpayers' expert identified the properties’ highest and best uses of the property as subsidized income tax credit housing facilities. Addressing the three methods of valuation for real estate tax purposes, as required by 72 P.S. 5020-402(a), Taxpayers’ expert discounted the cost approach (rental incomes would not support construction of new facilities) and the comparable sales approach (no other comparable units with similar rent restrictions) and adopted the income approach, which the trial court improperly (but harmlessly) referred to as "use value.
The General Assembly amended the Assessment Law in 2003 to include sec. 402(c)(1), 72 P.S. §5020-402(c)(1), which provides that: "[i]n arriving at the actual value of real property, the impact of applicable rent restrictions, affordability requirements or any other related restrictions prescribed by any Federal or State programs shall be considered."
The amendment is consistent with prior case law addressing the effects of rent restrictions and clearly mandates that rent restrictions be considered in determining fair market value. It has the laudatory goal of encouraging development of low income housing in exchange for reduced property valuation for real estate tax purposes. The amendment was intended to provide property tax relief to those entities that do not have unfettered ability to raise rent to combat increasing business expenses.
The position of the taxing authority failed to account for the amendment's direction that “affordability requirements” be considered in determining fair market value for tax assessment purposes. This new, express statutory directive must be viewed as overriding older court decisions to the extent they support a contrary result. In addition, federal tax law anticipates affordability restrictions in addition to maximum allowable rents. This is consistent with the statutory goal of making affordable housing available to lower income consumers.
"In light Section 402 of the Assessment Law, the taxpayers’ evidence regarding rent restrictions under 26 U.S.C. §42, the non-revocable restrictive covenants which limit taxpayers ability to produce income on the subject properties, and the affordability of taxpayers’ units, we discern no error in the trial court’s application of Section 402(c)(1) of the Assessment Law."
Judge Pelligrini, concurring -
Based on the issues raised, I join in the well-reasoned majority opinion. I write separately because I disagree that 72 P.S. §5020-402(c) is consistent with our Supreme Court’s decision in In re Appeal of Johnstown Associates, 494 Pa. 433, 431 A.2d 932 (1981). In that case, like here, rents in a subsidized housing project were fixed by the Department of Housing and Urban Development at a rate below the prevailing rate for comparable non-subsidized units in a long term arrangement in return for a subsidized mortgage. The taxpayer argued that the rent restrictions should be considered in valuing the property. Our Supreme Court agreed, holding that the certitude that the property did not have the potential for rental profit increases must at least be considered, but went on to hold that the depreciated tax shelter benefits associated with owning this type of property could be taken into consideration. Id., 431 A.2d at 935.
Read in full, 72 P.S. §5020-402 (c), however, provides that:
(c)(1) In arriving at the actual value of real property, the impact of applicable rent restrictions, affordability requirements or any other related restrictions prescribed by any Federal or State programs shall be considered. (2) Federal or State income tax credits with respect to property shall not be considered real property or income attributable to real property. (3) This subsection shall apply in all counties and other political subdivisions in this Commonwealth. (Emphasis added.)
Unlike our Supreme Court’s holding in Johnstown Associates, 72 P.S. §5020-402(c) precludes the substantial credits a taxpayer receives from being included in the income stream. By not allowing those tax credits, that provision could be considered to have created a back door partial tax exemption, calling into question whether it violates Article 8, Section 2 of the Pennsylvania Constitution which only allows tax exemptions for real property in certain enumerated areas. Article 8, Section 5 of the Pennsylvania Constitution provides that “All laws exempting property from taxation, other than the property above enumerated [Article 8, §2 of the Constitution] shall be void.”
We do not need to deal with that issue here because in the years in question in this appeal, taxpayer is receiving no tax credits. Moreover, the income stream used in the income capitalization method of valuation will need to be adjusted as the 30-year rent restriction nears its end. For example, in year 29 of the rent restriction, a willing buyer will look more at what market rent can be charged after the rent restriction has expired in determining what he or she is willing to pay for the property .
Thursday, April 17, 2008
UC - willful misconduct - failure to report absence
Ross v. UCBR - UNREPORTED OPINION - Commonwealth Court - April 14, 2008
http://www.courts.state.pa.us/OpPosting/CWealth/out/1874CD07_4-14-08.pdf
Claimant committed willful misconduct by failing to properly report her absence, as required by acknowledged employer policy. Claimant's medication caused "extreme fatigue", but the Board found and claimant admitted that she was able to call the employer at some time during the day.
Although claimant's absence was justified, her failure to report it, as required, was willful misconduct. Sedor v. UCBR, 522 A.2d 118 (Pa. Cmwlth 1987)
The fact that the employer policy was not written did not excuse claimant's failure. "It is not necessary that Employer's directive be in writing" in order to establish willful misconduct. Graham v. UCBR, 840 A.2d 1054 (Pa. Cmwlth. 2004).
http://www.courts.state.pa.us/OpPosting/CWealth/out/1874CD07_4-14-08.pdf
Claimant committed willful misconduct by failing to properly report her absence, as required by acknowledged employer policy. Claimant's medication caused "extreme fatigue", but the Board found and claimant admitted that she was able to call the employer at some time during the day.
Although claimant's absence was justified, her failure to report it, as required, was willful misconduct. Sedor v. UCBR, 522 A.2d 118 (Pa. Cmwlth 1987)
The fact that the employer policy was not written did not excuse claimant's failure. "It is not necessary that Employer's directive be in writing" in order to establish willful misconduct. Graham v. UCBR, 840 A.2d 1054 (Pa. Cmwlth. 2004).
divorce - venue - residence or agreement - Rule 1920.2
Danz v. Danz - Superior Court - April 16, 2008
http://www.courts.state.pa.us/OpPosting/Superior/out/s21041_08.pdf
Motion to open decree granted where record did not not establish compliance with Rule 1920.2, showing that one of the parties resides in the county or the parties have agreed, in writing, that the action could be brought in the suejct county.
"The plain language of Rule 1920.2(b) and the history surrounding its promulgation lead us to an inexorable conclusion. Rule 1920.2(b) requires a trial court to ensure the record establishes venue is proper—either by residence, written agreement, or tacit agreement through participation— before directing entrance of a divorce decree. The divorce decree in this case suffers from “a fatal defect apparent upon the face of the record” due to the fact that the trial court failed to comply with Rule 1920.2(b)."
http://www.courts.state.pa.us/OpPosting/Superior/out/s21041_08.pdf
Motion to open decree granted where record did not not establish compliance with Rule 1920.2, showing that one of the parties resides in the county or the parties have agreed, in writing, that the action could be brought in the suejct county.
"The plain language of Rule 1920.2(b) and the history surrounding its promulgation lead us to an inexorable conclusion. Rule 1920.2(b) requires a trial court to ensure the record establishes venue is proper—either by residence, written agreement, or tacit agreement through participation— before directing entrance of a divorce decree. The divorce decree in this case suffers from “a fatal defect apparent upon the face of the record” due to the fact that the trial court failed to comply with Rule 1920.2(b)."
Wednesday, April 16, 2008
UC - willful misconduct - theft of employer property - legal entitlement
Mancine v. UCBR - Commonwealth Court - April 15, 2008
http://www.courts.state.pa.us/OpPosting/CWealth/out/2144CD07_4-15-08.pdf
The court reversed the UCBR and held that a claimant's use of free drink coupons, alleged to be only for the use of patients and their families, did not constitute willful misconduct. The employer did not satisfy its "burden of proving that Claimant had no legal entitlement to use the coupons."
The court distinguished other employer-property cases, notably
- Gibson v. UCBR, 760 A2d 492, where unlike here, the employer had a written policy prohibiting the removal of any employer property, including scrap and trash
- Temple Univ. v. UCBR, 772 A.2d 416, where the claimant could not overcome the lack of legal entitlement to pay for hours he did not work, in spite of the approval of his supervisor, who suggested that he list the hours on his pay records.
In order to satisfy its "burden to show that a claimant has engaged in willful misconduct by violating a rule against theft, an employer has the burden to establish that a claimant did not have legal entitlement to the subject property."
In this case, the coupons on their face contained no prohibition or limitation on the user or transferability of the coupons. The claimant apparently got the coupons from a patient, although the manner in which the claimant got them was not at issue.
In addition, the employer provided no proof that it had told employees that they could not use the coupons, or that the coupons were only for patients and their families. The testimony of an employer witness that such limitations existed was "insufficient to support a conclusion that Claimant had no legal entitlement to use the coupons."
http://www.courts.state.pa.us/OpPosting/CWealth/out/2144CD07_4-15-08.pdf
The court reversed the UCBR and held that a claimant's use of free drink coupons, alleged to be only for the use of patients and their families, did not constitute willful misconduct. The employer did not satisfy its "burden of proving that Claimant had no legal entitlement to use the coupons."
The court distinguished other employer-property cases, notably
- Gibson v. UCBR, 760 A2d 492, where unlike here, the employer had a written policy prohibiting the removal of any employer property, including scrap and trash
- Temple Univ. v. UCBR, 772 A.2d 416, where the claimant could not overcome the lack of legal entitlement to pay for hours he did not work, in spite of the approval of his supervisor, who suggested that he list the hours on his pay records.
In order to satisfy its "burden to show that a claimant has engaged in willful misconduct by violating a rule against theft, an employer has the burden to establish that a claimant did not have legal entitlement to the subject property."
In this case, the coupons on their face contained no prohibition or limitation on the user or transferability of the coupons. The claimant apparently got the coupons from a patient, although the manner in which the claimant got them was not at issue.
In addition, the employer provided no proof that it had told employees that they could not use the coupons, or that the coupons were only for patients and their families. The testimony of an employer witness that such limitations existed was "insufficient to support a conclusion that Claimant had no legal entitlement to use the coupons."
Monday, April 14, 2008
consumer - state UTPCPL - deceptive conduct - pleading
Chiles v. Ameriquest Mortgage Co. - ED Pa. - March 17, 2008
http://www.paed.uscourts.gov/documents/opinions/08d0302p.pdf
" [T]he Court recognizes that the requirements for fraud under the catchall provision are in flux in Pennsylvania state and federal courts. Several courts require a plaintiff to prove all elements of common law fraud. when asserting a claim under the catch-all provision.... Cf. Christopher, 2006 U.S. Dist. LEXIS 2255, *9-10 (Plaintiff must plead all elements of common law fraud only if alleging fraud, not deceptive conduct under UTPCPL.) In Christopher, the court interpreted the inclusion of the term “deceptive” into the catch-all provision as relaxing the standard of proof such that actual fraud need not be proved. Id. The Pennsylvania Supreme Court has not yet addressed this issue.
The UTPCPL must be construed liberally. See Keller v. Volkswagen of Am., Inc., 733 A.2d 642, 646 (Pa. Super. 1999). This Court will therefore adopt the view that in order for the addition of the terms “or deceptive” to be given effect, all elements of common law fraud need not be proven if Plaintiff alleges deceptive conduct. "
http://www.paed.uscourts.gov/documents/opinions/08d0302p.pdf
" [T]he Court recognizes that the requirements for fraud under the catchall provision are in flux in Pennsylvania state and federal courts. Several courts require a plaintiff to prove all elements of common law fraud. when asserting a claim under the catch-all provision.... Cf. Christopher, 2006 U.S. Dist. LEXIS 2255, *9-10 (Plaintiff must plead all elements of common law fraud only if alleging fraud, not deceptive conduct under UTPCPL.) In Christopher, the court interpreted the inclusion of the term “deceptive” into the catch-all provision as relaxing the standard of proof such that actual fraud need not be proved. Id. The Pennsylvania Supreme Court has not yet addressed this issue.
The UTPCPL must be construed liberally. See Keller v. Volkswagen of Am., Inc., 733 A.2d 642, 646 (Pa. Super. 1999). This Court will therefore adopt the view that in order for the addition of the terms “or deceptive” to be given effect, all elements of common law fraud need not be proven if Plaintiff alleges deceptive conduct. "
consumer - TILA - yield spread premium
Abbott v. Washington Mutual Finance Co. - ED Pa. - March 20, 2008
http://www.paed.uscourts.gov/documents/opinions/08d0326p.pdf
Amount held to be a yield spread premium, not part of a finance charge, and thus not requiring TILA disclosure.
http://www.paed.uscourts.gov/documents/opinions/08d0326p.pdf
Amount held to be a yield spread premium, not part of a finance charge, and thus not requiring TILA disclosure.
VA benefit claims - proposed rule
http://edocket.access.gpo.gov/2008/pdf/E8-7898.pdf
SUMMARY: The Department of Veterans Affairs (VA) proposes to reorganize and rewrite in plain language its regulations involving VA benefits claims. These revisions are proposed as part of VA’s rewrite and reorganization of all of its compensation and pension rules in a logical, claimant-focused, and userfriendly format. The intended effect of the proposed revisions is to assist claimants and VA personnel in locating and understanding these regulations involving VA benefits claims.
DATES: Comments must be received by VA on or before June 13, 2008.
SUMMARY: The Department of Veterans Affairs (VA) proposes to reorganize and rewrite in plain language its regulations involving VA benefits claims. These revisions are proposed as part of VA’s rewrite and reorganization of all of its compensation and pension rules in a logical, claimant-focused, and userfriendly format. The intended effect of the proposed revisions is to assist claimants and VA personnel in locating and understanding these regulations involving VA benefits claims.
DATES: Comments must be received by VA on or before June 13, 2008.
license suspension - refusal to take breath test
Riley v. DOT - Commonwealth Court - April 14, 2008
http://www.courts.state.pa.us/OpPosting/CWealth/out/145CD07_4-14-08.pdf
License suspended where officer "observed the odor of alcohol." DOT proved all elements under implied consent law, 75 Pa. C.S. 1547, under which DOT must establish that the licensee: (1) was arrested for driving under the influence by a police officer who had reasonable grounds to believe that the licensee was operating or was in actual physical control of the movement of the vehicle while under influence of alcohol; (2) was asked to submit to a chemical test; (3) refused to do so; and (4) was warned that refusal might result in a license suspension.
http://www.courts.state.pa.us/OpPosting/CWealth/out/145CD07_4-14-08.pdf
License suspended where officer "observed the odor of alcohol." DOT proved all elements under implied consent law, 75 Pa. C.S. 1547, under which DOT must establish that the licensee: (1) was arrested for driving under the influence by a police officer who had reasonable grounds to believe that the licensee was operating or was in actual physical control of the movement of the vehicle while under influence of alcohol; (2) was asked to submit to a chemical test; (3) refused to do so; and (4) was warned that refusal might result in a license suspension.
Saturday, April 12, 2008
admin. law - appeal - waiver/preservation of issues
Ductmate Industries v. UCBR - UNREPORTED OPINION - March 12, 2008
http://www.courts.state.pa.us/opposting/cwealth/out/1912cd07_3-12-08.pdf
Claimant did not waive any issue when, in appealing from the referee decision, he said only that he "did not agree" with it, and UCBR reversed and granted benefits. The initial determination and referee decision both dealt with a single issue, whether claimant's acts constituted willful misconduct.
The employer argued that claimant's reasons were not specific enough, citing Merida v. UCBR, 543 A.2d 593 (Pa. Cmwlth. 1988) and 34 Pa. Code 101.81(c)(4) http://www.pacode.com/secure/data/034/chapter101/s101.81.html both of which require an appellant to state the "reasons for appeal."
The court noted that in Merida there were two hearings. The employer did not attend the intial hearing, and the Board ordered a second one, during which the claimant raised a number of issues. The referee ruled against the claimant, but did not rule on the propriety of the second hearing. The claimant appealed to the Board, making only the general objection that he did not agree with the referee's decision.
The Board affirmed the referee, and the claimant appealed to the Commonwealth Court, arguing only that the Board erred in ordering the second hearing. The court determined that the claimant had waived the issue of the propriety of the second hearing, since he did not specifically bring it to the attention of the Board, which "could not be charged with scouring the record to determine every possible appeal."
In this case, however, there was only one issue - whether claimant's acts constituted willful misconduct. That was the issue decided in both the initial UCSC determination and the Board decision. Citing Black Lick Trucking Co. v. UCBR, 6677 A.2d 454 (Pa. Cmwlth. 1995), the court held that an "inartful appeal" claiming only general disagreement with the referee decision does not prevent the UCBR from addressing the issues ruled on by both the job center/UCSC and referee. The referee should review all issues in the initial determination, and the Board should review all issues the referee considered -- the precise case here.
http://www.courts.state.pa.us/opposting/cwealth/out/1912cd07_3-12-08.pdf
Claimant did not waive any issue when, in appealing from the referee decision, he said only that he "did not agree" with it, and UCBR reversed and granted benefits. The initial determination and referee decision both dealt with a single issue, whether claimant's acts constituted willful misconduct.
The employer argued that claimant's reasons were not specific enough, citing Merida v. UCBR, 543 A.2d 593 (Pa. Cmwlth. 1988) and 34 Pa. Code 101.81(c)(4) http://www.pacode.com/secure/data/034/chapter101/s101.81.html both of which require an appellant to state the "reasons for appeal."
The court noted that in Merida there were two hearings. The employer did not attend the intial hearing, and the Board ordered a second one, during which the claimant raised a number of issues. The referee ruled against the claimant, but did not rule on the propriety of the second hearing. The claimant appealed to the Board, making only the general objection that he did not agree with the referee's decision.
The Board affirmed the referee, and the claimant appealed to the Commonwealth Court, arguing only that the Board erred in ordering the second hearing. The court determined that the claimant had waived the issue of the propriety of the second hearing, since he did not specifically bring it to the attention of the Board, which "could not be charged with scouring the record to determine every possible appeal."
In this case, however, there was only one issue - whether claimant's acts constituted willful misconduct. That was the issue decided in both the initial UCSC determination and the Board decision. Citing Black Lick Trucking Co. v. UCBR, 6677 A.2d 454 (Pa. Cmwlth. 1995), the court held that an "inartful appeal" claiming only general disagreement with the referee decision does not prevent the UCBR from addressing the issues ruled on by both the job center/UCSC and referee. The referee should review all issues in the initial determination, and the Board should review all issues the referee considered -- the precise case here.
Wednesday, April 09, 2008
drivers license - suspension - ARD approved then withdrawn when underlying charges withdrawn
Ryan v. Dept. of Transporation - Commowealth Court - April 9, 2008
http://www.courts.state.pa.us/OpPosting/CWealth/out/1248CD07_4-9-08.pdf
Licese suspension improper where, although driver was initially admitted to the ARD program, that action was later withdrawn when the charges were withdrawn by DA due to questions about the propriety of the officer having administered a breath test.
http://www.courts.state.pa.us/OpPosting/CWealth/out/1248CD07_4-9-08.pdf
Licese suspension improper where, although driver was initially admitted to the ARD program, that action was later withdrawn when the charges were withdrawn by DA due to questions about the propriety of the officer having administered a breath test.
MA - overpayments - transfer of assets - presumption - opportunity to rebut
Gilroy v. DPW - Commonwealth Court - April 8, 2008
http://www.courts.state.pa.us/OpPosting/CWealth/out/1537CD07_4-9-08.pdf
Rcipient of MA benefits transferred assets of husband/decedent's estate to decedent's daughters, because she'd ony been married to decedent for very short period of time. OIG/DPW sought repayment of benefits already paid.
Recipient's attempt to rebut the ineligibility presumption through testimony that she transferred those assets to Decedent’s daughters, not to ensure her eligibility for MA benefits, but solely because she only had been married to Decedent for a short period of time and did not think it fair to take from Decedent's estate.
DPW regs permit an applicant to ebut the presumption that such a transfer was for the purpose of making herself eligible for MA benefits. An applicant can do this at various times during the application process, including at a prehearing conference, at a hearing or through a court order. 55 Pa. Code §178.106(1). However, in finding Gilroy ineligible for benefits, the ALJ refused to consider Gilroy’s attempt to rebut the presumption, holding that there never is an exception to the ineligibility provisions of 55 Pa. Code §178.104(d). The ALJ’s holding is contrary to well established case law and to DPW’s regulations, which clearly give the applicant an opportunity to rebut the presumption and, thus, constitutes an error of law.
Unfortunately, because the ALJ did not consider the possibility that Gilroy could overcome the ineligibility presumption, he made no findings of fact or credibility determinations pertaining to that issue. Accordingly, we vacate, and we remand the matter to DPW to remand to the ALJ to decide whether Gilroy rebutted the presumption of ineligibility and to make the necessary findings of fact and credibility determinations to support that
__._,_.___
http://www.courts.state.pa.us/OpPosting/CWealth/out/1537CD07_4-9-08.pdf
Rcipient of MA benefits transferred assets of husband/decedent's estate to decedent's daughters, because she'd ony been married to decedent for very short period of time. OIG/DPW sought repayment of benefits already paid.
Recipient's attempt to rebut the ineligibility presumption through testimony that she transferred those assets to Decedent’s daughters, not to ensure her eligibility for MA benefits, but solely because she only had been married to Decedent for a short period of time and did not think it fair to take from Decedent's estate.
DPW regs permit an applicant to ebut the presumption that such a transfer was for the purpose of making herself eligible for MA benefits. An applicant can do this at various times during the application process, including at a prehearing conference, at a hearing or through a court order. 55 Pa. Code §178.106(1). However, in finding Gilroy ineligible for benefits, the ALJ refused to consider Gilroy’s attempt to rebut the presumption, holding that there never is an exception to the ineligibility provisions of 55 Pa. Code §178.104(d). The ALJ’s holding is contrary to well established case law and to DPW’s regulations, which clearly give the applicant an opportunity to rebut the presumption and, thus, constitutes an error of law.
Unfortunately, because the ALJ did not consider the possibility that Gilroy could overcome the ineligibility presumption, he made no findings of fact or credibility determinations pertaining to that issue. Accordingly, we vacate, and we remand the matter to DPW to remand to the ALJ to decide whether Gilroy rebutted the presumption of ineligibility and to make the necessary findings of fact and credibility determinations to support that
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