Resolving Cross Motions for Summary Judgment

Katchemak Bay Oysters
Katchemak Bay Oysters

The Alaska Supreme Court overruled a Superior Court’s resolution of Cross Motions for Summary Judgment.  Stavenjord v. Schmidt.  The case started back in 2001.  The matter had been fully briefed by both parties, first on the motion for preliminary injunction and then again in cross motions for summary judgment.  The Superior Court denied Stavenjord’s motion and granted the State’s motion.  On appeal the Supreme court overturned the matter and sent it back to the trial court for further development.

Summary judgment motions are granted or denied based upon viewing the facts in the light most favorable to the nonmoving party.  Accordingly, in cross motions for summary judgment the court doesn’t evaluate the merits of the evidence offered by the parties and make a ruling.  Instead the court must look at each motion in a vacuum and view the facts against the movant.  A typical result will be both sides simply lose their motions and the matter proceeds to trial on the factual issues.  Where, as here, the court grants someone judgment, the appellate court reviews the opinion without deference to the trial court’s decision.

There is an alternative to ruling on motions in this fashion.  The parties could stipulate to the facts in the written record and allow the court to pass judgment on the merits..  The court itself could invite the parties to stipulate to the facts in the record and allow judgment on the evidence on one or all of the issues presented.  See, TRIAL ON THE PAPERS:   AN ALTERNATIVE TO CROSS-MOTIONS  FOR SUMMARY JUDGMENT, by  MORTON DENLOW (1998). 

While Denlow discusses federal court procedures they are as applicable to Alaska courts.  Alaska Rules 52 and 58 allow the court to resolve a matter based on the record prepared.  Such a procedure in this case could have saved years of legal procedure in this case.  The cost to the parties and the community for all of the legal time spent considering these issues has been and will continue to be considerable.

Stavenjord is serving time for a double homicide and was previously a bank robber.  He’s litigating with the state over his desire for religious privilege in prison.  The courts have interpreted a prisoner’s religious beliefs to only require the prisoner’s sincere yet personal belief.  They have not required the belief to have been adopted by any formal or recognized religious group.  When you expand the personal religious privilege to include food selection, public costs can escalate quickly.  The cost for special meals in at least one example was four times more expensive.  The prison population’s response to a prisoner’s win was mass adoption of the new religious diet.   There is nothing to stop a prison from experiencing a mass adoption of individualized religious diet requirements.

Strategic use of court procedure can reduce the cost and time to resolution.

 

 

 

1099-C Tax on Debt Forgiveness

Foreclosure SaleThe federal tax code taxes debt forgiveness.  The tax code also requires those forgiving debts to file information returns to the IRS, using form 1099-C. So, you lose your house in a foreclosure sale and the bank sends a 1099-C for the loss they take on the house.    Many taxpayers and tax preparers simply include the debt forgiveness in the taxpayers return as income.   However, there are many exceptions to taxation.  Some of the most common are:

  1. Gifts, bequests, devises and inheritances that forgive debts;
  2. Qualified Student Loan forgiveness plans;
  3. Cash basis taxpayers with debt that would qualify as a business deduction;
  4. Price reductions after a purchase;
  5. Required business debts;
  6. Bankruptcy discharged debts;
  7. Forgiveness when insolvent.

If you don’t file your return timely, the IRS may file a substitute for return for you.  When the IRS prepares a return they won’t know if an exception applies.  The IRS will  tax you on the full amount reported.  To address the matter you need to file a corrected return where the IRS substitute was filed.

If you don’t report the income on your return it will probably be audited.  The IRS auditors have been adding huge tax bills to peoples return on this issue.  You use form 982 to claim your exemption from tax for debt forgiveness.  The IRS auditor may reject the claim of exemption.  To get relief from the bill you may have to file an appeal.  The time for filing an appeal to Tax Court is very short.  The advantage of tax court is that you don’t have to pay the tax to sue for a refund.   If your return was prepared without considering your exemptions we could assist in amending your returns.   For help in addressing amended returns, tax audits and appeals, give us a call.

Alaska Overtime — Professional Employee Exemption Doesn’t Cover Pilots

Alaska Overtime law requires covered employers to pay overtime to covered employees.  One exemption to the overtime law is the Professional Employee Exemption.  The old Alaska exemption was not the same as the Federal Exemption and was particularly vague.  The Alaska Supreme Court provided guidance on interpreting the old statute in Dayhoff v. Temsco Helicopters, Inc.,  848 P.2d 1367, 1371 (Alaska 1993).  In Dayhoff the court provided a four-part test to define whether an employee was an exempt professional.  Under Dayoff, an employee was an exempt professional if:

  1. the employee’s primary duty is to perform work requiring knowledge of advanced type,
  2. the work requires consistent exercise of discretion,
  3. the work [is] predominantly intellectual and varied, and
  4. the work [is] compensated on a fee basis.”

Under this test commercial pilots were exempt employees.  This position was previously affirmed in  Era Aviation, Inc. v. Lindfors,17 P.3d 40 (Alaska 2000). It was also the opinion other states had reached. Paul v. Petroleum Equip. Tools Co., 708 F.2d 168 (5th Cir. 1983); Kitty Hawk Air Cargo, Inc. v. Chao, 304 F. Supp. 2d 897 (N.D. Tex. 2004).  But these cases preceded the amendment to 29 C.F.R. § 541.301 in 2004.

The Alaska legislature amended the Alaska Overtime law (Alaska Wage and Hour Act) in 2005.  The legislature adopt the federal definition of this exemption.  However, the federal code of federal regulation implementing the federal definition was itself amended in 2004.  The new federal regulation restricted the exemption to employees in “professions where specialized academic training is a standard prerequisite.”   29 C.F.R. § 541.301(d) (2014).

Since the 2004 amendment of 29 C.F.R. § 541.301(d), every federal court considering whether pilots fall within the professional exemption has concluded that they do not, because commercial piloting does not require specialized academic training as a standard prerequisite. In Pignataro v. Port Authority, the Third Circuit Court of Appeals upheld a trial court’s determination that helicopter pilots did not qualify for the professional exemption under the Fair Labor Standards Act. The appellate court acknowledged the significant credentials required to become a Port Authority helicopter pilot: 2,000 hours of flying time, a commercial helicopter pilot certificate, a second class medical certificate, knowledge of the FAA’s rules and regulations, and a high school diploma or GED. But critically, none of those credentials involved the attainment of an advanced academic degree — the “pilots’ knowledge and skills were acquired through experience and supervised training as opposed to intellectual, academic instruction.” For this reason, the court concluded that the pilots were “not ‘learned professionals’ and . . . not exempt from the provisions of the [Fair Labor Standards Act].

Alaska Pilots are not exempt employees from the Overtime laws.  Accordingly, they are entitled to time and a half for any hours over 8 in a day or 40 in a week.  How many other professions don’t require specialized academic training as a standard perquisite?

Alaska Pilots Earn Overtime
Jerome Hoffman 2015.

No. 6966 S-14864/14883 Moody v. Royal Wolf Lodge

 

 

 

 

 

 

 

Purchased Property at Foreclosure Sale

Foreclosure SaleForeclosure Sale — Buyer’s Perspective

When people buy property at Foreclosure sales they often find that the house came with former owners still occupying the house.  How do you get them out?  In Alaska, you the new owner, must file an ejectment action, not a Forcible Entry and Detainer (FED) action.  The cases are substantially similar.  However, the FED matter provides very short statutory deadlines that normally is faster.  It is the wrong type of action and will likely slow the process.

 

 

Important Issues in Foreclosure Sales

There are two significant issues that resolve these matters.  First, does the buyer qualify as a Bona Fide Purchaser or just a purchaser.  When the sale is to a BFP the sale may only be set aside if the sale itself is Void.  If the purchaser fails to qualify for BFP status then a court may set aside the sale for any voidable reason.

Bona Fide Purchaser — Beware of Void Sales

Bona Fide Purchasers are third parties, wholly unrelated to the seller.  They are purchasers that buy at the sale without notice of any defenses to the sale.  Sometimes BFP is described as one that has an empty head and a white heart.  The court protects these from all but the following six categories of sale problems:

  1. The foreclosing party never had the power of sale conferred on them.
  2. The debtor was not in default.
  3. The debt was fully paid before foreclosure.
  4. The time and place of sale was never published.
  5. The price was so inadequate that it shocks the conscience.
  6. The foreclosure sale  proceeded despite a court order staying the sale, including an automatic bankruptcy stay.

If the sale is to the creditor in an offset bid, or to any party related to the creditor the sale may be subject to almost any attack that a debtor might find that would sound like it created an inequitable result.

Bank RESPA Violations

The recent changes in the Federal Real Estate Settlement Procedures Act, 12 U.S.C. 2605 (RESPA) have given rise to a host of new claims that the banks failure to follow RESPA regulations should invalidate sales.  The regulations at 12 CFR 1024.41 gave rise to HUD letter 2013-10.  Some debtors claim the banks violation of the regulations renders sales void.  However, 12 U.S.C. 2605(f) only provides for a private right of action.  The remedies are also limited to money damages, and costs against the loan servicer.  There are no provisions providing for voiding a sale or a right of action against a BFP.  The statute also addresses the scope of intended preemption — which they limit to only preemption of any conflicting state law notice periods.

The RESPA regulations creates many complicating requirements.  The proof issue on some elements are subject to factual interpretation.  Matters with subjective facts generally aren’t resolved short of trial.  For example, creditors can’t take action after a timely and qualified request is received until it is resolved.  A request is qualified if it has all the information necessary to evaluate the request.  These two issues are fact intensive and subject to a fact finder’s consideration of reasonableness in the creditor’s interpretation.   Debtors are using these issues to avoid tendering property when the bank buys the property.

Post Foreclosure Sale Representation

An Alaska Superior Court today joined both Alabama and Michigan courts in holding that RESPA violations do not state an adequate reason to find a sale void.  Coleman v. BAC Servicing, 104 So. 3d 195, 201 (Ala. Civ. App. 2012) Servantes v. Caliber Home Loans, Inc. 2014 U.S. Dist LEXIS 170667 (E.D. Mich., Dec. 10, 2014).  The debtor has an obligation to bring a preforeclosure action to  enjoin a sale and cannot void the sale later.  Wells Fargo Home Mort., Inc. v. Neal, 398 Md. 705, 922 A.2d 538 (2007); Lacy-McKinney v. Taylor, Bean & Whitaker Mort. Corp., 937 N.E.2d 853, 864 (Ind. Ct. App. 2010); Campbell v. Bank of Am., N.A., 141 So. 3ed 492 (Ala. Civ. App. 2012).

A BFP is entitled to possession as against any other person.  A.S. 34.20.090(b).  The trustee’s deed is conclusive evidence of sale compliance in a suit between a BFP and the prior owner. Id., Bauman v. Day, 892 P.2d 817 (Alaska 1995).

Real estate foreclosures, from either the debtor or creditor’s side, can be complicated by many things.  Having a lawyer in your corner to help navigate these issues is always helpful.  Our clients today were grateful for the outcome in their matter.  At the end of the day, the facts marshaled for our client, the legal research extending across the nation and our written and oral presentation skills delivered.

 

 

 

 

 

 

 

 

 

 

 

Alaska won’t Defend Employees in 1981 Claims

Sheldon Slade filed an action against an Alaska State Employee alleging a 42 U.S.C. 1981 claim.  That claim asserts that the employee discriminated against him. That claim cannot be asserted against a State. The Alaska Attorney General certified that the employee was acting within his scope of employment when Slade’s claim arose.  So, the State of Alaska agreed to defend the employee.

Alaska then moved to substitute the State for the employee using Alaska Statute the procedure in AS 09.50.253(c).  Once the State was substituted for the employee the State moved to dismiss the 1981 claim.  The Superior Court dismissed Slade’s 1981 claim.  Slade appealed.  The Alaska Supreme Court accepted the appeal on the issue of whether dismissal of the § 1981 claim violated the Supremacy Clause of the United States Constitution and Slade’s constitutional right to a jury trial.

Alaska statute AS 09.50.253(f) specifically precludes the use of the .253(c) procedure in the face of Constitutional claims.   Apparently this fact was pointed out in Slade’s opening brief or the Amicus Brief filed the U.S. Department of Justice.  Based on the opening briefs the Alaska Attorney General conceded defeat and sought dismissal of the appeal due to the concession.

The question remains, will Alaska not defend its employee’s acting in the scope of their employment?  Or, will Alaska defend them on the merits and simply not seek to dismiss the 1981 action after using the .253(f) procedure?

If you’ve been sued for a 1981 discrimination claim in your employment, you should seek independent counsel and not rely solely on your employer.

 

 

 

In the Supreme Court of the State of Alaska SHELDON E. SLADE, ) ) Petitioner, ) v. ) ) STATE OF ALASKA, DEPARTMENT ) OF TRANSPORTATION & PUBLIC ) FACILITIES, ) ) ) Respondent. ) ) Supreme Court No. S-15352 Order Order No. 87 – September 26, 2014 Trial Court Case # 3AN-11-08466 CI

 

Watch the Details When Leasing

When it comes to Landlord Tenant relationships, you need to watch the details.

Representing Landlords or Tenants in Lease Review
Representing Landlords or Tenants in Lease Review

In general, most people want to be liked and don’t want to sow seeds of hate and discontent.  When given the opportunity to agree and be amiable about something, and if there’s no obvious downside, we jump right up on that wagon and go for the ride.  But when it comes to legal relationships, rethink that impulse.

When one moves into a new property there is the inevitable signing of lease agreements, walk-through, and a myriad of other formalities.  Unfortunately, too often these formalities are either overlooked or ignored altogether.

Lease terms:  Know what the lease says.  Unfortunately most renters have little or no say in what the terms are.  Many leases are just basic forms someone swiped off the internet and was never designed for your specific property.  Know who’s responsible for what.  Know what the late fee terms are.  Know how to get a hold of your landlord or management company if there’s a problem.  Many see this as just a routine formality, but if there are later problems it’s the lease terms that tell you what you can and can’t do to fix it.

The walk-through:  this gets a lot of folks in trouble.  We all want to be nice and not complain, to go along to get along.  But your failure to note each item out-of-place is essentially your acceptance.  Who wants to complain to the little ol’ lady showing you the apartment?  You’re all best buds, aren’t you?  They won’t do you wrong.  What’s a little carpet staining, anyway?  Well, two years later that carpet stain belongs to you.  So does the scratched linoleum floor in the kitchen.  And the cracked window.  And the hole in the wall behind the kid’s bedroom door.  And anything else you felt just wasn’t important enough to mention.  Put all of this down on the report.  Your security deposit depends upon it.

When things do go wrong:  Sooner or later something comes up.  The heat goes out, the entry walk lights burn out, the neighbors just bought their teenaged son a new bass guitar, or the local nocturnal recreational pharmaceutical distributor just moved in next door.  Don’t hesitate to contact the landlord.  Better yet, and often required, put such notices in writing.  You don’t want to cause waves, after all, who wants to move out in the middle of winter?  But your ability to properly address the problems can depend on who you notified when, and how.  Landlords must give all notices in writing.  Tenants, too, if they wish to get out of their lease under proper circumstances, usually must also notify the landlord of any problems in writing.  When there’s a later argument about the right to terminate the lease, you will want to make sure you have all the documentation you can get.

Don’t be afraid to speak up and write things down.  When getting into that new apartment, make sure you are not taking the responsibility for old carpets and broken fixtures.  You can be sure that on the move-out report the landlord will list each anomaly they see.  If it you didn’t note it at the beginning then they will probably blame you.   Legal relationships require you to think about the details in the beginning or suffer consequences later.

These are just a few of the things to be thinking about in leases.