“Modest” Overstatements of Amount Due and Interest Rate Actionable Under FDCPA, Ninth Circuit Rules | The National Law Review

“Modest” Overstatements of Amount Due and Interest Rate Actionable Under FDCPA, Ninth Circuit RulesFriday, September 1, 2017A debt-collection law firm’s overstatements in a state court complaint of $3,000 in the principal amount due and 0.315 percent in the interest rate were actionable under the Fair Debt Collection Practices Act (FDCPA) as material false statements, the U.S. Court of Appeals for the Ninth Circuit has ruled. In Afewerki v. Anaya Law Group, the creditor that hired the law firm to collect the debt provided the law firm with the correct principal amount and interest rate. The law firm discovered the overstatements in the complaint while preparing its response to a demand for a bill of particulars from the debtor’s attorney. The law firm asserted that the overstatements were inadvertent and filed a notice correcting the errors within 12 days of receiving the demand from the debtor’s attorney. In his lawsuit filed in federal district court, the debtor alleged that the overstatements violated the FDCPA and California’s Rosenthal Fair Debt Collection Practices Act (Rosenthal Act). The district court granted the law firm’s motion for summary judgment, concluding that the errors in the complaint were not material. The FDCPA prohibits debt collectors from making false statements when attempting to collect debts. The Ninth Circuit described the requirement that a false statement must be material to be actionable under the FDCPA as a corollary to the “least sophisticated debtor” standard. According to the Ninth Circuit, a false statement is material if it could “cause the least sophisticated consumer to suffer a disadvantage in responding to the collection attempt.” While noting that a materiality inquiry focuses on the reaction of a hypothetical least sophisticated debtor rather than on the plaintiff’s reaction, the Ninth Circuit observed that “the district court’s determination that [the plaintiff] would not have proceeded differently absent the error might mean that he did not suffer actual damages and might disqualify him from obtaining such damages.” The Ninth Circuit treated the law firm’s correction of the overstatements as irrelevant in determining whether the errors were material (but noted that the law firm had not attempted to invoke the FDCPA’s bona fide error defense). In the court’s view, the least sophisticated debtor in the plaintiff’s position, concerned about being sued, “may well have simply paid the amount demanded in the complaint and would have overpaid by approximately $3,000.” The court also raised the possibility that the state court case could have proceeded to a default judgment for the overstated amount, citing a California decision that held a creditor was not required to prove the amount sought was correct prior to entry of a default judgment. The Ninth Circuit vacated the district court’s grant of summary judgment in favor of the law firm on the FDCPA claim but affirmed its grant of summary judgment in favor of the law firm on the Rosenthal Act claim. While observing that the Rosenthal Act incorporates the FDCPA’s false-representation prohibition, the Ninth Circuit concluded that the law firm could avoid civil liability under the Rosenthal Act by relying on its 15-day cure provision, and rejected the plaintiff’s argument that 1999 amendments to the Act removed the cure provision.

Source: “Modest” Overstatements of Amount Due and Interest Rate Actionable Under FDCPA, Ninth Circuit Rules | The National Law Review

Eclipse Not Delay Trial Says Florida Judge

2017 Eclipse

Florida Judge says the trial must go on, despite celestial events.

Judge Merryday denied the United States Attorney’s motion, that “… boldly moves (where no AUSA has moved before) to postpone a trial because an agent of the Bureau of Alcohol, Tobacco, Firearms, and Explosives, has pre-paid the cost of visiting the zone of “totality” of a solar eclipse.”  Unimpressed with the motion, and apparently the eclipse itself, the opinion notes, “An eclip

 

se is just another astral event, precisely predictable since the day the Babylonians discovered the governing formula (although some contend for an earlier discovery).

Here’s the full opinion:

 

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION

 

UNITED STATES OF AMERICA

v. CASE NO. 8:17-cr-266-T-23JSS

JOSEPH BISHOP
____________________________________/

ORDER

Definitely recurrent, sometimes consequential, and occasionally spectacular,

the solar eclipse understandably occupies a provocative and luminous place in

history and in art. For example, Herodotus reports that a solar eclipse during the

war between the Medes and the Lydians caused the combatants, who interpreted the

eclipse as a divine omen, to suspend hostilities and to negotiate peace. In Borodin’s

magnificent opera, an eclipse portends disaster for Prince Igor’s military campaign

against the Polovtsians. In a popular 1970s song, the splendid Carly Simon

introduced the attendance of a former suitor (reportedly the actor Warren Beatty) at

a solar eclipse as probative evidence of his putatively insufferable vanity:

Well I hear you went to Saratoga
And your horse, naturally, won
Then you flew your Learjet up to Nova Scotia
To see the total eclipse of the sun
Well, you’re where you should be all the time
And when you’re not, you’re with some underworld spy
Or the wife of a close friend,
Wife of a close friend, and
You’re so vain
You probably think this song is about you
On a higher plane, Wordsworth wrote about an eclipse in 1820:

High on her speculative tower
Stood Science waiting for the hour
When Sol was destined to endure
That darkening of his radiant face

The solar eclipse is no longer mysterious, supernatural, foreboding, or

ominous (or even “total”; owing to the solar corona, the darkness of a “total” eclipse

is only partial). An eclipse is just another astral event, precisely predictable since the

day the Babylonians discovered the governing formula (although some contend for

an earlier discovery).

On this occasion, an Assistant United States Attorney boldly moves (where no

AUSA has moved before) to postpone a trial because an agent of the Bureau of

Alcohol, Tobacco, Firearms, and Explosives, has pre-paid the cost of visiting the

zone of “totality” of a solar eclipse that will occur on August 21 (about the eclipse,

the motion oddly uses the phrase “scheduled to occur,” as if someone arbitrarily set

the eclipse, as an impresario sets a performer, to appear at a chosen time and place,

subject always to some unstated exigency).* Cruel fate has dictated that the August

21 eclipse will occur during the trial of an action in which the agent is a principal

participant on behalf of the United States.

In any particular month, about four-hundred actions pend before each active

district judge in the Middle District of Florida; each action typically involves several

lawyers, at least two parties, and an array of witnesses. A trial prompts the clerk to

summon scores of potential jurors. The present motion proposes to subordinate the

time and resources of the court, of the opposing counsel, of the witnesses, and of the

jurors to one person’s aspiration to view a “total” solar eclipse for no more than two

minutes and forty-two seconds. To state the issue distinctly is to resolve the issue

decisively.

When an indispensable participant, knowing that a trial is imminent, pre-pays

for some personal indulgence, that participant, in effect, lays in a bet. This time,

unlike Carly Simon’s former suitor, whose “horse, naturally, won,” this bettor’s

horse has — naturally — lost. The motion (Doc. 31) is DENIED.

ORDERED in Tampa, Florida, on August 18, 2017.

 

  • According to the motion of the United States, a total solar eclipse last occurred in June
    1918. (Doc. 31 at 2) But total eclipses occur far more frequently than the United States claims; the
    National Aeronautics and Space Administration identifies six opportunities in the last decade to
    view a total eclipse. Eclipses and Transits, Nat’l Aeronautics & Space Admin., available at
    http://www.nasa.gov/eclipse.

Happy Fourth of July !!!

Happy Fourth Of JulyHave a save and Happy Fourth of July

John Adams said that Independence Day “ought to be commemorated as the day of deliverance by solemn acts of devotion to God Almighty. It ought to be solemnized with Pomp and Parade, with Shews, Games, Sports, Guns, Bells, Bonfires and Illuminations from one end of this Continent to the other from this Time forward forever more.” So before you celebrate the Fourth of July and ring the bells and light the bonfires, take a moment to read the document that started it and detailed some of the guiding principles of our country.

 

Declaration of Independence: A Transcription

 

In Congress, July 4, 1776.

The unanimous Declaration of the thirteen United States of America, When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.–That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, –That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.–Such has been the patient sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government. The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world.

He has refused his Assent to Laws, the most wholesome and necessary for the public good.

He has forbidden his Governors to pass Laws of immediate and pressing importance, unless suspended in their operation till his Assent should be obtained; and when so suspended, he has utterly neglected to attend to them.

He has refused to pass other Laws for the accommodation of large districts of people, unless those people would relinquish the right of Representation in the Legislature, a right inestimable to them and formidable to tyrants only.

He has called together legislative bodies at places unusual, uncomfortable, and distant from the depository of their public Records, for the sole purpose of fatiguing them into compliance with his measures.

He has dissolved Representative Houses repeatedly, for opposing with manly firmness his invasions on the rights of the people.

He has refused for a long time, after such dissolutions, to cause others to be elected; whereby the Legislative powers, incapable of Annihilation, have returned to the People at large for their exercise; the State remaining in the mean time exposed to all the dangers of invasion from without, and convulsions within.

He has endeavoured to prevent the population of these States; for that purpose obstructing the Laws for Naturalization of Foreigners; refusing to pass others to encourage their migrations hither, and raising the conditions of new Appropriations of Lands.

He has obstructed the Administration of Justice, by refusing his Assent to Laws for establishing Judiciary powers.

He has made Judges dependent on his Will alone, for the tenure of their offices, and the amount and payment of their salaries.

He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance.

He has kept among us, in times of peace, Standing Armies without the Consent of our legislatures.

He has affected to render the Military independent of and superior to the Civil power.

He has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation:

For Quartering large bodies of armed troops among us:

For protecting them, by a mock Trial, from punishment for any Murders which they should commit on the Inhabitants of these States:

For cutting off our Trade with all parts of the world:

For imposing Taxes on us without our Consent:

For depriving us in many cases, of the benefits of Trial by Jury:

For transporting us beyond Seas to be tried for pretended offences

For abolishing the free System of English Laws in a neighbouring Province, establishing therein an Arbitrary government, and enlarging its Boundaries so as to render it at once an example and fit instrument for introducing the same absolute rule into these Colonies:

For taking away our Charters, abolishing our most valuable Laws, and altering fundamentally the Forms of our Governments:

For suspending our own Legislatures, and declaring themselves invested with power to legislate for us in all cases whatsoever.

He has abdicated Government here, by declaring us out of his Protection and waging War against us.

He has plundered our seas, ravaged our Coasts, burnt our towns, and destroyed the lives of our people.

He is at this time transporting large Armies of foreign Mercenaries to compleat the works of death, desolation and tyranny, already begun with circumstances of Cruelty & perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the Head of a civilized nation.

He has constrained our fellow Citizens taken Captive on the high Seas to bear Arms against their Country, to become the executioners of their friends and Brethren, or to fall themselves by their Hands.

He has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants of our frontiers, the merciless Indian Savages, whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions.

In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury. A Prince whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a free people.

Nor have We been wanting in attentions to our Brittish brethren. We have warned them from time to time of attempts by their legislature to extend an unwarrantable jurisdiction over us. We have reminded them of the circumstances of our emigration and settlement here. We have appealed to their native justice and magnanimity, and we have conjured them by the ties of our common kindred to disavow these usurpations, which, would inevitably interrupt our connections and correspondence. They too have been deaf to the voice of justice and of consanguinity. We must, therefore, acquiesce in the necessity, which denounces our Separation, and hold them, as we hold the rest of mankind, Enemies in War, in Peace Friends.

We, therefore, the Representatives of the united States of America, in General Congress, Assembled, appealing to the Supreme Judge of the world for the rectitude of our intentions, do, in the Name, and by Authority of the good People of these Colonies, solemnly publish and declare, That these United Colonies are, and of Right ought to be Free and Independent States; that they are Absolved from all Allegiance to the British Crown, and that all political connection between them and the State of Great Britain, is and ought to be totally dissolved; and that as Free and Independent States, they have full Power to levy War, conclude Peace, contract Alliances, establish Commerce, and to do all other Acts and Things which Independent States may of right do. And for the support of this Declaration, with a firm reliance on the protection of divine Providence, we mutually pledge to each other our Lives, our Fortunes and our sacred Honor.

Georgia

Button Gwinnett

Lyman Hall

George Walton

 

North Carolina

William Hooper

Joseph Hewes

John Penn

 

South Carolina

Edward Rutledge

Thomas Heyward, Jr.

Thomas Lynch, Jr.

Arthur Middleton

 

Massachusetts

John Hancock

Maryland

Samuel Chase

William Paca

Thomas Stone

Charles Carroll of Carrollton

 

Virginia

George Wythe

Richard Henry Lee

Thomas Jefferson

Benjamin Harrison

Thomas Nelson, Jr.

Francis Lightfoot Lee

Carter Braxton

 

Pennsylvania

Robert Morris

Benjamin Rush

Benjamin Franklin

John Morton

George Clymer

James Smith

George Taylor

James Wilson

George Ross

Delaware

Caesar Rodney

George Read

Thomas McKean

 

New York

William Floyd

Philip Livingston

Francis Lewis

Lewis Morris

 

New Jersey

Richard Stockton

John Witherspoon

Francis Hopkinson

John Hart

Abraham Clark

 

New Hampshire

Josiah Bartlett

William Whipple

 

Massachusetts

Samuel Adams

John Adams

Robert Treat Paine

Elbridge Gerry

 

Rhode Island

Stephen Hopkins

William Ellery

 

Connecticut

Roger Sherman

Samuel Huntington

William Williams

Oliver Wolcott

 

New Hampshire

Matthew Thornton

 

Happy Fourth of July from Jonathan and  Holcomb Dunbar Attorneys!

New Mississippi Laws Take Effect Next Week

New Mississippi Laws

New Mississippi Laws DUIA host of new Mississippi laws take effect on July 1.  Below are Holcomb Dunbar’s top 15  new laws which includes new seatbelt requirements, microbrew beer sales, and allowing for the operation of golf carts on public roads.

To see the complete list of new laws, resolutions and appropriates from the 2017 Mississippi Legislative Session.

  1. Mississippi Senate Bill 2685

Summary

An Act To Amend Section 63-11-30, Mississippi Code Of 1972, To Require Secure, Online Access To Nonadjudication Records For Judges, Clerks And Prosecutors; To Require Dui Defendants To Reveal Prior Dui History When Pleading Guilty; To Amend Section 63-11-37, Mississippi Code Of 1972, To Clarify The Duty Of The Trial Court Clerk To Submit Disposition Information In A Timely Fashion; To Amend Section 1, Chapter 457, Laws Of 2016, To Extend The Existence Of The Dui Information-exchange Improvement Advisory Committee For One Year, To Revise The Membership Thereof, And To Require An Additional Annual Report From The Committee; To Amend Section 2, Chapter 457, Laws Of 2016, To Extend The Due Date Of The Report To Be Made By The Mandatory Statewide Offense-reporting System Task Force And To Make Certain Technical Corrections; And For Related Purposes.

  1. Mississippi Senate Bill 2271

Summary

An Act To Amend Section 49-7-5 And 49-7-9, Mississippi Code Of 1972, To Exempt Certain Honorably Discharged Veterans With A Combat-related Disability From Certain Hunting And Fishing License Requirements When Participating In A Special Hunt, Fishing Trip Or Other Outdoor Recreational Event That Is Available Only To Such Persons; And For Related Purposes.

  1. Mississippi Senate Bill 2680

Summary

An Act To Amend Section 43-15-13, Mississippi Code Of 1972, To Clarify That Relative Care Is A Legal Placement Option For Abused And Neglected Children; To Amend Section 43-15-17, Mississippi Code Of 1972, To Conform References To Child Protection Services; To Amend Section 43-21-105, Mississippi Code Of 1972, To Enact Definitions In The Youth Court Act Concerning Fictive Kin, Durable Legal Relative Guardianship, And Reasonable Efforts; To Amend Section 43-21-609, Mississippi Code Of 1972, To Clarify That Giving Custody To A Relative And Waiving Any Requirement For The Relative To Participate In Foster Parent Training Is Within The Discretion Of The Court And To Create A Durable Legal Relative Guardianship Alternative; To Amend Section 43-21-613, Mississippi Code Of 1972, To Conform; To Amend Section 93-5-1, Mississippi Code Of 1972, To Clarify The Status Of Spousal Domestic Abuse As A Fault Ground For Divorce; To Amend Section 93-17-303, Mississippi Code Of 1972, To Clarify The Right Of Adoptive Parents, Under Certain Circumstances, To Proceed Pro Se In The Matter Of Registration Of A Foreign Adoption; And For Related Purposes.

  1. Mississippi Senate Bill 2273

Summary

An Act To Require The State Board Of Education To Ensure Instruction In Cursive Writing As A Part Of The Basic Elementary Education Curriculum; To Exempt The Mississippi School For The Blind And The Mississippi School For The Deaf From The Provisions Of This Act; And For Related Purposes.

  1. Mississippi House Bill 1046

Summary

An Act To Amend Sections 37-173-1, 37-173-3, 37-173-7 And 37-173-9, Mississippi Code Of 1972, To Expand The Eligibility For The Mississippi Dyslexia Therapy Scholarship For Students With Dyslexia Program To Include Students In Grade 1 Through Grade 12; To Amend Section 37-173-15, Mississippi Code Of 1972, To Require Local School Districts To Use A Dyslexia Screener From A List Approval By The State Board Of Education; And For Related Purposes.

  1. Mississippi House Bill 1774

Summary

An Act To Authorize The Governing Authorities Of The City Of Pascagoula, Mississippi, To Allow The Operation Of Golf Carts On Certain Public Roads And Streets Within The City; To Require Individuals Operating A Golf Cart To Have A Valid Driver’s License Or Temporary Driver’s Permit; And For Related Purposes.

  1. Mississippi Senate Bill 2724

Summary

And Act To Create Harlie’s Law; To Amend Section 63-2-1, Mississippi Code Of 1972, To Require All Passengers Of A Motor Vehicle To Wear Seat Belts Except Those Required To Use A Child Passenger Restraint System; To Amend Section 63-2-7, Mississippi Code Of 1972, To Conform The Penalties For Failure To Wear A Properly Fastened Seat Belt; And For Related Purposes.

  1. Mississippi Senate Bill 2017

Summary

An Act To Reenact Sections 73-60-1, 73-60-3, 73-60-7, 73-60-23, 73-60-29 And 73-60-45, Mississippi Code Of 1972, Which Provide For The Licensure Of Home Inspectors By The Mississippi Real Estate Commission; To Amend Section 8, Chapter 442, Laws Of 2013, To Delete The Repealer On Those Sections; And For Related Purposes.

  1. Mississippi Senate Bill 2214

Summary

An Act To Amend Section 73-71-7, Mississippi Code Of 1972, To Provide That An Acupuncture Practitioner May Perform Acupuncture On A Patient Only If The Patient Was Evaluated By A Physician, As Appropriate, For The Condition Being Treated Within Six Months Before The Date That Acupuncture Is Performed; To Require The Practitioner To Obtain A Written Statement Signed By The Patient On A Form Prescribed By The State Board Of Medical Licensure Stating That The Patient Has Been Evaluated By A Physician Within The Prescribed Time; To Authorize A Practitioner To Perform Acupuncture On A Patient For Certain Conditions Without An Evaluation From A Physician; To Repeal Section 73-71-9, Mississippi Code Of 1972, Which Provides For Physician Referral To And Supervision Of Acupuncture Practitioners; To Repeal Section 73-71-53, Mississippi Code Of 1972, Which Provides For The Repeal Of The Acupuncture Practice Act; And For Related Purposes.

  1. Mississippi Senate Bill 2610

Summary

An Act To Amend Section 41-29-136, Mississippi Code Of 1972, To Clarify The Use Of Cannabidiol In Research Of Treatments For Seizures And Other Medical Conditions; To Amend Section 41-29-113, Mississippi Code Of 1972, To Conform Schedule I To The Requirements Of This Act; And For Related Purposes.

  1. Mississippi Senate Bill 2628

Summary

An Act To Amend Section 9-13-32, Mississippi Code Of 1972, To Expand The Authority To Cause A Proceeding To Be Recorded Where An Official Court Reporter Is Not Provided; And For Related Purposes.

  1. Mississippi House Bill 996

Summary

An Act To Amend Section 41-29-319, Mississippi Code Of 1972, To Authorize Health Care Practitioners To Issue A Standing Order To One Or More Individual Pharmacies That Authorizes The Pharmacy To Dispense An Opioid Antagonist To Certain Persons Without The Person To Whom The Opioid Antagonist Is Dispensed Needing To Have An Individual Prescription; To Augment The List Of First Responders Who Are Authorized To Administer Opioid Antagonists Such As Naloxone To Provide That Before A Pharmacist May Dispense An Opioid Antagonist Under The Authority Of Such A Standing Order, The Pharmacist Must Complete A Training Program Approved By The State Board Of Pharmacy On Opioid Antagonists; To Amend Section 73-21-73, Mississippi Code Of 1972, To Provide That The Definition Of The Term “prescription” In The Pharmacy Practice Act Includes Standing Orders Authorized By The Preceding Provision; And For Related Purposes.

  1. Mississippi House Bill 1322

Summary

An Act To Create New Section 67-3-48, Mississippi Code Of 1972, To Authorize Small Craft Breweries Located In Mississippi That Produce Not More Than 60,000 Barrels Of Light Wine Or Beer Annually To Sell On The Premises Of The Brewery Light Wine Or Beer Produced At Such Brewery For Consumption On Or Off The Premises Of The Brewery; To Create New Section 67-3-48.1, Mississippi Code Of 1972, To Authorize A Small Craft Brewery That Is Acquired By An Entity That Manufactures Light Wine Or Beer That Does Not Fall Within The Definition Of The Term “small Craft Brewery” To Continue To Operate As A Small Craft Brewery Under Certain Circumstances; To Authorize A Small Craft Brewery That Acquires An Entity That Manufactures Light Wine Or Beer That Does Not Fall Within The Definition Of The Term “small Craft Brewery” To Continue To Operate As A Small Craft Brewery Under Certain Circumstances; To Amend Section 67-3-22, Mississippi Code Of 1972, To Revise The Beer Production Limits That Apply To Brewpubs And To Authorize Brewpubs To Sell Light Wine Or Beer Produced At The Brewpub For Consumption Off The Premises Of The Brewpub In Certain Containers; To Amend Sections 67-3-3, 67-3-53, 67-3-55 And 67-3-69, Mississippi Code Of 1972, In Conformity Thereto; To Amend Sections 27-71-301, 27-71-307, 27-71-311 And 27-71-331, Mississippi Code Of 1972, To Impose An Excise Or Privilege Tax On Light Wine Or Beer Provided By Small Craft Breweries For Retail Sale By Such Breweries And Upon Beer Provided For Tasting Or Sampling; And For Related Purposes.

  1. Mississippi House Bill 453

Summary

An Act To Amend Section 83-11-551, Mississippi Code Of 1972, To Extend The Date Of The Repealer On The Statute Requiring An Insurer Paying An Automobile Insurance Claim To Add The Business Repairing The Automobile And The Lienholder As Payees On The Check; And For Related Purposes.

 

And as both Ole Miss and golf fans we’re especially proud of this on.

  1. Mississippi Senate Resolution 7

Summary

A Resolution Commending And Congratulating Ole Miss Sophomore Standout Braden Thornberry For Winning The University’s First-ever 2017 Men’s Ncaa Individual Golf National Championship.

Bare the Risk

Bare the RiskDigging through contract language—all of it—is the best way to ascertain who has been indemnified in a construction contract and if it’s legal.

By Daniel G. Katzenbach.

Construction litigation often carries the potential for significant damages exposure whether the case involves defect, delay or personal injury damages. As result, one of the most significant and important elements and considerations for construction contracts, whether in the drafting on the front end or in the analysis on the back end after litigation has ensued, is the possible shifting of liability and risk. Two of the most significant contract provisions used to attempt to shift liability and risk are indemnity and limitation of liability.

Indemnity Provisions
One of the primary risk-shifting devices in any construction contract can be indemnification provisions. These provisions attempt to allocate possible risks to those who should more appropriately bear responsibility based on the duties set forth under the parties’ respective contracts. Usually, indemnification clauses attempt to require one party to pay the damages and costs (including legal costs and expenses) incurred by another party. However, the common law (case law) of most states imposes limitations on the enforceability of certain risk transfers, like indemnity agreements. Courts will generally enforce these agreements only if they are convinced it will achieve the result intended by the parties. Because of the significance of these agreements in the construction context, most states have also enacted statutes that limit or prohibit the enforceability of certain indemnification agreements, especially for the construction industry. As a result, it is essential to understand the specific type of indemnification clause at issue and what your jurisdiction has to say about the enforceability of that type of provision.

Indemnity provisions can take on many different forms, but they typically fall into one of three categories, generally described as: broad, intermediate or limited form.

Broad Form Under this form, the indemnitor agrees to hold harmless the indemnitee for all liability, regardless of fault. Even if the indemnitee is solely at fault, the indemnitor still has the obligation to indemnify. The obligation to indemnify the other party is triggered if the indemnitor is at all responsible for a claim or damages, and it includes the obligation to indemnify even if the indemnitee is solely negligent. These clauses effectively shift the entire risk of loss from one party to the other. This form typically uses this type of language: “Shall indemnify for claims arising out of [an event]…whether caused in whole or in part by the negligence of the Indemnitee. … It is specifically understood that this indemnity shall be interpreted as indemnifying the Indemnitee from its own sole and/or partial negligence.”

These types of indemnity provisions are generally prohibited by statute in most states. For example, in Michigan, Mich. Comp. Laws §691.991, titled “Building Industry; certain contracts for indemnification void,” provides: “A covenant, promise, agreement or understanding in, or in connection with or collateral to, a contract or agreement relative to the construction, alteration, repair or maintenance of a building, structure…purporting to indemnify the promisee against liability for damages arising out of bodily injury to persons or damage to property caused by or resulting from the sole negligence of the promisee or indemnitee, his agents or employees, is against public policy and is void and unenforceable.”

Intermediate Form Under this form, the indemnitor agrees to hold harmless the indemnitee for all liability, unless the indemnitee is 100% at fault. Any amount of fault on the part of the indemnitor obligates it to cover the entire loss. The obligation to indemnify the other party is triggered if the indemnitor is at all responsible for a claim or damages; however, this includes the exception that the obligation to indemnify does not apply if the indemnitee is solely negligent. This form typically uses this type of language: “Shall indemnify…whether caused in part by the negligence of the Indemnitee. … This clause is not intended to indemnify the Indemnitee for claims, damages, losses and expenses caused by the sole negligence of the Indemnitee.” The language of the AIA A201 form follows this form of indemnity provision. “To the fullest extent permitted by law the Contractor shall indemnify and hold harmless the Owner…from and against claims, damages…arising out of or resulting from performance of the Work, provided that such claim, damage, loss or expense is attributable to bodily injury, sickness, disease or death, or to injury to or destruction of tangible property (other than the Work itself), but only to the extent caused by the negligent acts or omissions of the Contractor…, regardless of whether or not such claim, damage, loss or expense is caused in part by a party indemnified hereunder.”

About 50% of states have legislation that prohibits these types of indemnity provisions and have enacted statutes that prohibit indemnity for sole or partial negligence. North Carolina N.C.G.S. §22B-1, titled “Construction Indemnity Agreements Invalid,” is a good example and provides: “Any promise or agreement in, or in connection with, a contract or agreement relative to the design, planning, construction, alteration, repair or maintenance of a building, structure…, purporting to indemnify or hold harmless the promisee, the promisee’s independent contractors, agents, employees, or indemnitees against liability for damages arising out of bodily injury to persons or damage to property proximately caused by or resulting from the negligence, in whole or in part, of the promisee, its independent contractors, agents, employees, or indemnitees, is against public policy and is void and unenforceable.”

Limited Form Under this form, parties to the agreement are responsible for indemnity only to the extent of their own liability on a comparative basis of fault. The obligation to indemnify the other party extends only to the extent of the indemnitor’s negligence. This form typically uses this type of language: “Shall indemnify…but only to the extent caused in whole or in part by the negligent acts or omissions of Indemnitor…under a comparative basis of fault.” The ConsensusDOCS 200 language below follows this form of agreement. Most states allow this form of indemnity agreement.

10.1 INDEMNITY
10.1.1 To the fullest extent permitted by law, the Constructor shall indemnify and hold harmless the Owner…from all claims for bodily injury and property damage, other than to the Work itself and other property insured, including reasonable attorneys fees, costs and expenses, that may arise from the performance of the work, but only to the extent caused by the negligent acts or omissions of the Constructor.

While most states have “anti-indemnity” statutes that prohibit enforcement of broad or intermediate form indemnity clauses in construction contracts, the great majority of states allow parties to require insurance coverage which ultimately serves the same purpose of the very indemnity clauses it strikes down. This phenomenon is referred to as the “Additional Insured Loophole,” a gap in the anti-indemnity statutes that essentially allows broad and intermediate form indemnity if it results from the contract’s insurance provisions instead of an express indemnity provision.

However, through efforts of organizations like the American Subcontractors Association, a few states have started to close this loophole and now prohibit a party from requiring another party to name it as an additional insured under a policy of insurance that would provide broad form indemnity coverage. One such state is Oregon, which enacted a statute, Oregon Revised Statutes Section 30.140 (2009), upheld as constitutional by the Oregon Supreme Court in Walsh Construction Co. v. Mutual of Enumclaw, which reads:

Except to the extent provided under subsection (2) of this section, any provision in a construction agreement that requires a person or that person’s surety or insurer to indemnify another against liability for damage arising out of death or bodily injury to persons or damage to property caused in whole or in part by the negligence of the indemnitee is void.

Limitation of Liability Clauses
One of the more potentially significant risk-limiting provisions seen primarily in design professionals’ professional services agreements is the limitation of liability clause. Limitation of liability clauses generally establish the maximum liability or exposure of one party if there is a claim. The purpose of these clauses is to recognize the proportional role of the professional service provider in the project and limit its liability according to the level of compensation received under the agreement. If enforceable, the clause will serve to cap a party’s liability for damages to an amount certain. However, there some jurisdictions in which these types of clauses are either disfavored or even unenforceable. As a result, it is important to understand at the outset of a claim if one of these clauses exists and has a potential effect on the liability issues, as well as which jurisdiction is involved and what that jurisdiction’s case law and/or statutory law has to say about the enforceability of these clauses.

While there is no standard AIA or industry form document that contains limitation of liability provision language, most of them are proposed as a custom term added to these documents by design professionals. Most read along the lines of the following: “In recognition of the relative risks and benefits of the Project to both the Client and the Design Professional, the risks have been allocated such that the Client agrees, to the fullest extent permitted by law, to limit the liability of the Design Professional and Design Professional’s officers, directors, partners, employees, shareholders, owners and subconsultants for any and all claims, losses, costs, damages of any nature whatsoever whether arising from breach of contract, negligence, or other common law or statutory theory of recovery, or claims expenses from any cause or causes, including attorneys fees and costs and expert witness fees and costs, so that the total aggregate liability of the Design Professional and Design Professional’s officers, directors, partners, employees, shareholders, owners and subconsultants shall not exceed $__________, or the Design Professional’s total fee for services rendered on the Project, whichever amount is greater.”

As far as enforceability of these provisions, most states will enforce them where the parties to a contract are sophisticated business entities dealing at arm’s length, the limitation is reasonable in relation to the design professional’s fee, and the damages are purely economic. In the minority of states, these provisions are unenforceable unless properly worded and are subject to careful scrutiny, and others find them totally unenforceable for reasons ranging from violation of that state’s anti-indemnity statutes to public policy reasons.

A limitation of liability clause simply places a fixed cap on the amount of damages that may be recovered against a contracting party in the event of a claim. Generally, courts hold that such clauses are not, per se, against public policy, but several states are more protective, and some have enacted legislation by way of anti-indemnity statutes that hold such clauses void and unenforceable.

Generally speaking, in order to contractually limit damages for a party’s future negligence, the contractual language at issue must be: (1) clear, (2) unambiguous, (3) unmistakable and (4) conspicuous.

There are several principles that emerge from states that find limitation of liability clauses enforceable. As a rule, most states that enforce them strictly construe them against the beneficiary of the clause. The clause must still meet the above four language requirements. However, a theme from these cases is that the courts are not in a position to rewrite sophisticated parties’ business agreements and will generally enforce them as written.

For the jurisdictions that have taken a very restrictive view of these clauses, they will uphold them but heavily scrutinize them, requiring such things as separate negotiation or bargaining for the clause at issue, evidence of separate consideration for the limitation of liability clause, or that it be very conspicuous—in a different typeface, highlighted and not merely set out along with several other numbered paragraphs.

Jurisdictions that refuse to enforce the clauses do so for a number of reasons, including finding the clauses violative of the specific state’s anti-indemnity statute or holding that they are against public policy.

Source: Bare the Risk