Ohio Practical Business Law : Columbus Ohio Business Lawyer & Attorney : Teri Rasmussen : Plunkett Cooney Law Firm : Commercial Law, Creditors, Business Formation : Columbus, Central Ohio

Women, even professional women with careers as lawyers, CPA, bankers, etc., have been encouraged to give their "man" a little deference when it comes to things like our income tax return.  And we do, even in circumstances where we might tell a client they should be more alert.  But what happens if your spouse (and typically it IS the husband) decides to take a few shortcuts and be a little "aggressive" in his -- and YOUR - tax reporting to Uncle Sam?  A recent Sixth Circuit Court of Appeals decision should give us all pause.  

WAKE UP!!!   Totally apart from any moral or ethical obligations, what you sign off on with respect to your joint tax return CAN come back to haunt you BIG TIME!!!  So, calling all spouses, male or female, you really do need to pay attention and understand that tax return.

Recently, in Greer v. Commissioner of Internal Revenue Service, Case No. 09-1420, the United States Sixth Circuit addressed the "innocent spouse" doctrine whereby a spouse can escape liability for the wrongdoing of his or her spouse (traditionally the husband) if they essentially  had no knowledge of what that spouse was up to and no reason to be suspicious.  

In Greer, the case involved a high school music teacher wife who sought to evade liability for a failure to report tax liability associated with investments made by her husband.  The case concerned the Greers 1982 tax return and alleged understatement of income through erroneous deductions- at that time the Greers had been married for 15 years.  In part because the tax benefits exceeded the amount invested, the Tax Court had denied "innocent spouse" relief because it believed Mrs. Greer "should have at least made further inquiry."  The Sixth Circuit affirmed that decision.  The case dealt with erroneous deductions rather than omitted income and left the "knowledge of the transaction" test in place for omitted income cases.

The "innocent spouse" defense is based on section 6015 of the Internal Revenue Code which requires that the spose seeking to avoid liability must establish:

• they did not know and had no reason to know that there was an understatement of income.
• "taking into account all the facts and circumstances, it is inequitable" to hold that individual liable for the deficiency.

The Sixth Circuit began by determining "what test should be used in determining whether a taxpayer had a reason to know of an understatement, or to suspect a possible understatement, resulting from disallowed deductions or credits."  The Court ultimately adopted the "duty of inquiry" test laid out by the Ninth Circuit Court of Appeals in Price v. Comm'r, 897 F.2d 959 (1989) for erroneous deduction cases:

Even if a spouse is not aware of sufficient facts to give her reason to know of the substantial understatement, she nevertheless may know enough facts to put her on notice that such an understatement exists.  Such notice is provided if the spouse knows sufficient facts such that a reasonably taxpayer in her position would be led to question the legitimacy of the deduction.  In such a scenario, a duty of inquiry arises, which, if not satisfied by the spouse, may result in constructive knowledge of the understatement being imputed to her.

To determine whether a "duty of inquiry' has been triggered with respect to cases involving an erroneous deduction, the Court foud four factors relevant:

• Spouse's education
• Spouse's involvement in the family's financial affairs
• Presence of unusual or lavish expenditures beyond the family's norm
• Other spouse's evasiveness or deceitfulness concerning the family's finances

In some respects, this seems like a close case.  Indeed, the Sixth Circuit said as much, observing "[w]ere this de novo review, we might view the matter differently."  On the one hand, Mrs. Greer, while obviously well-educated, did not possess a financial education and there was no substantial change in the family's lifestyle.  However, although the Court also acknowledged that Mrs. Greer in fact had no actual knowledge of the erroneousness of the deductions taken and had no more involvement in the family finances than many spouses afforded the "innocent spouse" defense, it ultimately found that "Mrs. Greer was probably familiar enough with basic budgeting and accounting to understand representations made on a tax return, even if the ultimate legitimacy of sheltering income was beyond her experience. " Seems like this factor could have gone either way.  As far as evasiveness of her husband, the Court was unwilling to overturn the Tax Court'ds finding weighing this factor against Mrs. Greer because it thought the presence of the deduction on the return was enough.

The crux of Mrs. Greer's argument was that she left the family's financial matters to her husband.  Sound familiar?  Here the Court pointed out that several courts have held "being a homemaker cannot alone relieve a spouse of joint and several tax liability on a joint return and... one spouse cannot bury his or her head in the sand or turn a blind eye to the other's accounting." 

Takeaways?  Leaving the responsibility for filing your taxes to your spouse, while certainly convenient, may have really bad consequences.  So either file separately or be prepared to actually go over the return and ask questions before you sign.  Just because you didn't know what your spouse was doing does not let you offf the hook.

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One of the questions I get asked a lot by my bank and creditor clients is "how long?"  How long til we can get the property back?  And those on the unfortunate receiving end of a foreclosure have the same sort of question - how long til I have to move out? - for different reasons.  Of course the answer is that it depends on so many different things and varies considerably from one county to the nextand one case to the next.  But that's not really the sort of answer anyone can run a bank on or make personal decisions with.  So here are some slightly more specific FAQ  

     1.     How long can I stay in my home if it is in foreclosure? 

If your residence is in foreclosure, it still belongs to you until the time it is sold at sheriff's sale and a confirmation entry is entered by the Court.  So, in plain language, the house is still yours until it is sold at sheriff's sale.  At that time, title to the property passes to the successful purcahser at the Sherriff's sale.  However, it will typically be at least a few more weeks (maybe even two or three months) as a practical matter before the confirmation entry is entered by the Court and the successful purchaser at the sheriff's sale receives the deed.  Because foreclosures are taking so long, in "real life", we are probably talking a year or more.

Double-edged sword is that you ARE still the owner as far as taking care of property......  Soooo,,. if you were thinking about just walking away from the whole mess because you're so far underwater equity-wise, it may not be quite that simple.  For a brief summary of the consequenses ogf this approach, visit Connie Carr's post entitled Mortgage Debt: The Consequences of Walking Away over at the Ohio Real Estate Blog.

     2.      How long will the foreclosure take? 

Talk about impossible questions to answer!  I like to start with the absolute MINIMUMS as far as time periods required if everything went exactly perfectly and there were absolutely positively no delays whatsoever.   Here's what has to happen to at least get to the point of getting a Decree in Foreclosure.  

• Defendants must actually be "served" with the foreclosure Complaint, i.e. they must either actually receive a copy of the Complaint or be deemed served through "publication by service" which means that it's been advertised in those tiny print LEGAL NOTICES part of a local newspaper.  Figure probably a week or two if no problems arise.
• Once "served", under Ohio law, a defendant has twenty-eight (28) days to respond to the Complaint.  So, OK, figure another month here.
• If the defendant does not respond after being served, the plaintiff lender can seek a "default" judgment.  To do this, the plaintiff lender must file a Motion for Default with the Court and wait for the Court to enter the Default Judgment.  This is obviously a HUGE wild card.  Some judges may enter judgment right away while others may just let things sit on their desk for months.  And there's really not all that much the plaintiff lender can do to move things along.  Let's just pencil in a couple of months here as being a not unreasonable period of time for this to happen, but with the understanding that this might well be much longer.
• If, on the other hand, a defendant does respond by filing an Answer to the foreclosure Complaint or there are other complications, the plaintiff lender will need to file a Motion for Summary Judgment.  A Motion for Summary Judgment is similar to a Motion for Default Judgment, but will need to address any arguments brought up by any defendants.  In addition, an Affidavit by an officer of the plaintiff lender will probably also be included setting forth the amount owed and explaining other relevant facts.  Once the Motion for Summary Judgment is filed, defendants have fourteen (14) days to respond and customarily, the plaintiff lender will have an additional seven (7) days to file a responsive Reply.  Here again, it's up to the judge as to when a decree in foreclosure will be entered and there really isn't that much a lender can do to hurry things up.  So, OK, figure 2-6 months here (although I will tell you that I currently have at least one case in which the Motion for Summary Judgment has been pending for more than a year)    

So, to recap, to get from the point the foreclosure Complaint is filed to actually having a judgment Decree in Foreclosure, it's going to be AT LEAST 3 1/2 months or so, and THAT IS SUPER OPTIMISTIC!!!  More likely, you are really looking at six to seven months or more and even that assumes that everything goes perfectly.  My anecdotal expereince is whether commercial or residential, a year or more is NOT an unusual amount of time for a foreclosure to take right now just to get to judgment, even if there is no spirited defense.

     3.     So the case FINALLY has reached that Judgment Decree in Foreclosure stage!  NOW how long til it finally gets auctioned at Sheriff's sale? 

Short answer: one heckuva lot longer than you might expect.  Again, I like to go with what i know to be the MINIMUM periods of time required and work out from there.  Here's what has to happen at this point:

• First off, under Ohio law, the property MUST be appraised by appraisers working for sheriff's office.  This is because, under Ohio law, the opening bid  at sheriff's sale for the proerty MUST be at least TWO-THIRDS of this appraised value.  How long this takes will depend A LOT on what county the case is in.  However, in general, let's figure about a month here.        
• Once the appraisal is done, the Sheriff's Office must set the date on which the property will be offered for sale.  This is where, as a practical matter, things really SLOOOW down.  As a practical matter, this is taking MONTHS right now.  By way of example, Franklin County currently already has sheriff's sales already scheduled through March.  In other words, right now, this step is taking 3 months or more.
• Once the sale date is set, it must be advertised for at least three consecutive weeks.  If there is a silver lining anywhere, it's here where the advertising can take place during the waiting period between the time the sale is set and when it actually occurs.  Also, unlike some surrounding states such as indiana, typically most Ohio counties have sales on a weekly basis.    
• If the sale is cancelled for any reason,even if it was something like a blizzard, the property must be readvertised.  There is no such thing as "postponing" a shriff's sale without the necessity of having to readvertise the property.  However, a new appraisal is not required.

So, to recap here, we're probably talking 3-4 months AT BEST!!!!

    4.     The Sheriff's sale has happened!!!! When do I get $$$?  When do I get the property??? 

OK, here the "good news" is that in Ohio - unlike certain other states -- the "equity of redemption" ends when the hammer falls at sheriff's sale and the Confirmation Entry gets entered by the Court.   The exact process will probably vary from one county to the next.  (On its website, the Franklin County, Ohio Sheriff's Office has helpfully posted an overall summary of its procedures following sale as well as an even  more specific  "What You need to Know as a Potential Third-Party Purchaser"  For other counties, visit the Buckeye State Sheriffs' Association website.)  In general, here's the process: 

• Once the sheriff's sale is over, the confirmation entry is to be submitted within 30 days after the sale,
• Once the Order of Confirmation has been entered, the plaintiff's attorney is to submit the deed to the Sheriff's Office within seven (7) days thereafter
• The successful bidder generally has thirty (30) days following entry of the Order of Confirmation to pay the purchase price to the Sheriff's office, although the precise amount of time will be set forth in the Order of Sale.
• The Sheriff is supposed to record the deed within fourteen (14) days of payment, but that doesn't always happen.  Once the deed is recorded, it will be sent to the successful bidder. 
• The proceeds will be distributed as described in the order of Confirmation after the purchase price has been paid in.

So you're looking at another two or three months here.

     5.     Can I get control of the property sooner by getting a receiver appointed and how long will that take?

Yes, maybe. Appointment of receiver generally only makes sense in the context of commercial properties.  Most  commercial mortgages provide for the appointment of a receiver and especially if there are defaults other than  nonpayment, appointment of a receiver should not be especially difficult.  It is possible in certain cases to obtain appointment  of a receiver on an expedited basis, but the timing and the identity of the individual appointed is still a matter of discretion with the court.  Once the receiver is appointed, the receiver can collect the rents,  handle maintenance issues, and interface with tenants.  However, in non-emergency situations, it is sometimes difficult to obtain a quick hearing date on the Motion to appoint a receiver.  

    6.     What about a "deed in lieu"?  Can that speed things up?

Yes, it can.  However, a "deed in lieu" in which the borrower conveys the property over to the lender, usually in exchange for a release or limitation of liability, only really works if (A) the borrower wants to to do this; and (B) there are no other liens on the property.  If those two criteria are met, a deed in lieu (DIL in the biz) can happen very quickly, perhaps even in a month or less.    

     7.     So the bottom line is.....?

Any way you look at it, foreclosure in Ohio is a long process for either residential or commercial property.  Think at least a year before the property is auctioned at Sheriff's sale and another couple of months before it's finalluy done.  In a commercial foreclosure, getting a receiver appointed early in the case can make the long wait far more palatable to the foreclosing lender as it gives the lender control over the income being produced by the property.

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The recent late night television mess with Jay Leno and Conan O’Brien  is a great object lesson as to what contract law really is and does AND what it actually isn’t and doesn’t do.  In my last post, I highlighted some of the various legal arguments being made by Conan, NBC, and to a lesser extent Leno.  (Visit "Leno gives his side of 'Tonght Show' intrigue" for Leno's take on the events, including his guranteed payments under his contract.)    However, now that it’s over, let's look at some important points about contract disputes as they happen in "real life" well illustrated by the series of recent events.

            FIRST - Contract disputes frequently come down to the “letter of the contract” versus “spirit of the agreement” sort of dispute the Conan/NBC situation illustrates.  NBC’s initial saber rattling focused on the fact that Conan’s contract as host of The Tonight Show apparently did not specify an exact time slot.  (This is the nightmare every transactional lawyer dreads – the one thing you didn’t think of turns out to be the really crucial provision that should have been in there.)   From NBC’s perspective, this gave them the right to move The Tonight Show back a mere half hour without breaching their obligations under Conan’s contract.  Here, the LETTER OF THE CONTRACT.

Conan’s camp for their part pointed out that The Tonight Show has aired at 11:35 P.M. immediately after the local news for 60 years and essentially contended that the time slot was an “implied” term of the contract.   Here the SPIRIT OF THE AGREEMENT.  And that close cousin to “spirit” of the agreement”, namely, the “GOOD FAITH” requirement imposed in every contractual relationship.

Now, this is good stuff because it pits those careful enough (or perhaps lucky enough) to have said what they meant against those urging what might be considered a “fair” outcome built on what may well have been shared assumptions at the time the contract was made.  In a way, both sides are right, but only one’s perspective can be enforced. 

Should Conan have specified a time if that mattered so much?  Yeah, probably….. but seriously, who would think anyone would even propose moving The Tonight Show to a different slot?   Often, how a court decides to resolve this issue will do much to affect its determination of whether any breach of contract in fact occurred, and if so, what sort of damages should be awarded.  Which brings us to the second point of understanding>>>>>>

            SECOND – Resolving contract disputes OUTSIDE the court room is generally better for everyone. This three-way conflict had the potential to get really ugly really fast. Conan might have gone to Court to require NBC to keep him on at 11:35 PM until there could be a full hearing of how his contract with NBC should be interpreted. If instead Conan chose to walk away, well then there was a noncompete to deal with and the possibility of being held liable for a breach of contract by failing to continue to perform at the later time slot. The details of how Leno agreed to pass the torch to Conan in the first place (i.e. Conan’s contract was expiring and NBC needed a way to keep him at NBC) almost certainly would have been examined in graphic detail unlikely to be flattering to either NBC or Conan. Things could very well have gotten “personal” between Leno and Conan as they were already beginning to do, something which in the end was probably not going to enhance the image of either in the public eye. 

In short, long divisive publicity of this dispute was in no one’s interests. NBC decided that Leno was more valuable than Conan to it (or perhaps even more expensive proposition to jettison) and agreed to pay Conan and his crew enough to make the case go away.  And Conan got a nice severance package for himself and his staffers and, perhaps more importantly, the ability to host another show as early as September without having to deal with lawyers and lawsuits.  NBC was able to make amends to its affiliates whose unhappiness started the avalanche in the first place.  And Leno got back what he apparently never wanted to give up in the first place.

It's relatively unlikely that these three parties would all have wound up where a relatively brief period of intense negotiating got them.   And it would certainly have cost all of them A LOT more had this gone the litigation route.  Sometimes, it really isn't possible to resolve things among the parties themselves.  However,as a practical matter, it is almost always better for the parties themselves - who know and understand the situation better than any outsider could- to find their own resolution.

           THIRD - Leverage always matters.  In this case, it was the network affiliates -who were contractually obligated to run Jay Leno's 10 PM show - who really got the ball rolling.   And ultimately got exactly what they wanted...  They were losing money and they were not happy.  So even though - contractually - they didn't have a leg to stand on, none of the rest of this sordid affair would have tumbled out, but for NBC's desire to placate this important customer. Then there's Jay who was rumored to have an ironclad contract guaranteeing a hefty payment whether his show aired or not, thus perhaps presenting the economic decision for NBC that it would cost less to keep Jay than to get rid of Conan.  And Conan - well he had the ability to make the whole situation a truly horrendous mess both legally and perhaps more importantly from a PR standpoint, thus giving the impetus to NBC to pay him some money instead of insisting that he continue to perform.

In many contract disputes, there may be a well-written contract on which one party can rely from a legal perspective to enforce their position.  But that doesn't always mean that's the smart thing to do - never mind about what the "right' thing to do would be.  The point is: the law can preserve your options, but the decision must still be made in the context of the surrounding business world.

So, does all this mean lawyers and their contracts are an unnecessary evil to be dispensed with?  No - a well written contract helps set the parameters for what is open for discussion and can in some cases influence the amount of leverage one has or doesn't have.  it's simply important to understand that neither they, nor their breach, exist in a vacuum.

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Although the whole Leno-Conan-NBC mess appears to have now been settled by the parties, it's well worth looking more closely at the contractual issues involved which influenced the terms of that settlement.  For a great overview of the legal issues involved, visit Conan the Contractarian at the ContractsProf Blog.  And of course, some legal issues remain unanswered.  I'd like to start by recognizing what seemed to me to be the most cogent legal analysis of the situation.  Then in the Part 2 which will be my next post, I have some of my own observations about what is truly an excellent example of what contract law really is and how it actually works in  "real life".

Which is probably why I want to start with a practical "Everyman" take on what the restr of us can take from the entire fiasco, then move on to a more academic and scholarly analysis, followed by a pragmatic application of those foundational principles, and finished with a chaser of  a business oriented "brass knuckles" approach to determining who had the "leverage" to make the rules of contract law really work for them.  So here goes..........      

The Leno Deal,,, Be Careful What You Wish For >>>> David Willis of the Texas Small Business Law blog takes a stab at some important lessons the rest of us can take from the gigantic contract mess now facing NBC.  His important points:

• The terms of the contracts with the hosts do not meet the terms of the contracts with the affiliates.  A company's contracts can be interdependent.  Change the terms of  one and it can also affect what happens in other contractual relationships.  In simple terms, NBC didn't really think about the influence of the affiliates when it moved Jay and is now paying the price.
• Firing an employee with a contract can be expensive.  "The lesson for business owners is be careful of what you contract for because contracts are binding obligations and they can limit the decisions you can make."  
• Take advantage of the opportunity to maximize or limit your damages. 

Contract Law Issues in the Conan-NBC Affair and Conan NBC Contract Issues II >>>> Lawrence Cunningham of Concurring Opinions provides an excellent detailed and quite scholarly analysis of the many contractual issues raised by the NBC-Conan-Jay circus.  His overall assessment of the situation describes the situation found in most breach of contract circumstances:

Ongoing discussions between NBC and Conan illustrates the notion of bargaining in the shadow of the law, working out arrangements in light of known or probable legal claims and cosequences.  Non-legal forces of course are at work.  Conan's legal position, still incrementaly weaker to me.... may play a role in his decision to communicate directly to the public.  But his public relations gambit may also be deftly designed for other reasons [such as disaffecting viewers from NBC by paiting himself as the "guy in the white hat".] 

In NBC Did Breach Conan's Contract - Here's Why, Rachael Sklar focuses more informally on the various legal arguments as to whether Conan was contractually entitled to have his show start at 11:35 PM, concluding that he was.  Her analysis brings in many of the most treasured contract principles such as reliance and "spirit of the agreement" and is quite interesting in its description of various "facts" supporting her conclusion.  However you think things should have turned out, this account is well worth reading.

In Conan/Leno Madness: Parsing the Legal Ramifications, Conan/Leno Madness: The Legal Case for Conan, and Conan/Leno Madness: The Legal Case for NBC, the THR, Esq blog (aka The Hollywood Reporter) examines the strength of NBC's argument that because Conan's contract didn't specify a time slot, moving Conan to 12:05 would not be a breach of his contract.  Fascinating stuff.  Interesting "brass knuckle" approach to determining who has the leverage to make contract law principles work for them.  

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And now, a cautionary tale about the importance of actually paying attention to what a promissory note and mortgage say.  In the recent case of National City Mortgage  Co., v, Richards. 182 Ohio App.3d 534, 2009-Ohio-2556 (10th App. Dist.), the Bank found out that failing to comply with the relatively simple provisions  in a note and mortgage concerning notice to be given a delinquent borrower was a costly mistake. 

REALLY COSTLY >>>>>> as in DISMISSAL of a FORECLOSURE

FACTS.  The facts here are numbingly similar to those in any number of other cases.  Ms. Richards, the borrower had a loan from the Bank secured by a mortgage on her property in Columbus - presumably her residence, although the decision doesn't really say.  Anyway, when Richards defaulted, the Bank apparently sent her a notice of default by certified mail only; no notice was sent by regular mail.  The certified mail receipt came back "unclaimed".

In December 2005, the Bank initiated a foreclosure action.  Richards, acting pro se, filed an answer in January 2006 indicating that she had made a payment of $3,329,70 consisting of the January payment, the past-due amount and other fees totaling, all as indicated by her December 2005 statement, and therefore was not in default.  The Bank responded by sending Richards a letter stating that, not counting the payments already made by Richards it would take payment of $6,838.09 -which included payment of attorneys' fees - to reinstate her loan.

Richards filed a second response to the foreclosure Complaint indicating she had sent additional funds exclusive of the attorney fees to the Bank to bring her account current and had sought a payment plan for the attorney fees.  The Bank then returned all of the payments sent by Richards since the commencement of the foreclosure.and sought summary judgment on its foreclosure complaint.  Several months later, while the case was still pending, the Bank [for some inexplicable reason as far as I can see] sent a "demand/acceleration letter" to the property address; the case doesn't say whether the letter was sent by regular or certified mail and it doesn't appear to have figured in the decision.

Richards alleged among other arguments that the Bank had failed to provide proper notice of default and opportunity for cure, thereby failing to satisfy a condition precedent to acceleration of the note and foreclosure of the mortgage securing the note.  The trial court eventually granted summary judgment in favor of the Bank.  The Court of Appeals REVERSED.... 

>>>>>>   Here's where everyone needs to pay attention!   >>>>>>

THE NOTICE PROVISIONS.  The promissory note had a relatively ordinary notice of default provision providing for a thirty day cure period:

If I am in default, the Note Holder may send me a written notice telling me that if I do not pay the overdue amount by a certain date, the Note Holder may require me to pay immediately the full amount of Principal which has not been paid and all the interest that i owe on that amount.  That date must be at least 30 days after the date on which the notice is mailed to me or delivered by other means,

In addition, both the promissory note and mortgage had explicit provisions requiring notice to be given by first class mail.  The note said:

[A]ny notice that must be given to me under this Note will be given by delivering it or mailing it by first class mail to me at the Property Address above or at a different address if i give the Note Holder a notice of my different address.  

Similarly, the mortgage provided:

All notices given by Borrower or Lender in connection with this Security Instrument must be in writing.  Any notice to Borrower in connection with this Security Instrument shall be deemed to have been given to Borrower when mailed by first class mail or when actually delivered to Borrower's notice address if sent by other means.

LESSON TO BE LEARNED >>>>  Most lenders have realized by now that in the current economic environment, courts are not exactly tending to be sympathetic to lenders failing to cross all their "t"s and dot ail their "i"s.  This is yet another reminder that ESPECIALLY  where it is easy to comply, it is most certainly in the lender's best interests to do so .... to the letter. 

It is easy enough to send a demand letter by both regular mail and certified mail; even if the certified mail comes back "unclaimed", the lender will get the benefit of the "mailbox' rule that the regular mail got through.  Fed. Natl. Mtge. Assn. v. Doyle, (Oct. 9, 1998), 6th Dist. No. L-98-1010, 1998 WL 700663. 

And if your documents say first class mail, then make sure it at least gets done that way.  By the same token, if your documents provide for a cure period, make sure your demand letter incorporates the time period provided.

IN SHORT, READ YOUR LOAN DOCUMENTS BEFORE YOU START THE FORECLOSURE AND DO WHAT THEY SAY.   

For those particularly "in" to this issue, the decision also provides several helpful drafting pointers about ways the Bank's attorneys could have put together a tighter better drafted Complaint that might have helped their cause somewhat with respect to certain procedural issues.

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Franklin County Common Pleas Court has finally joined the courts of other large Ohio counties, and more than a few smaller counties (including Delaware County),  by making pleadings FILED on or after December 1, 2006 available on-line in PDF form.  The key here is FILED, 

In new cases filed on or after December 1, 2009, ALL pleadings will be available on-line.  Incases already pending on December 1, 2009, pleadings already filed will not be available on-line, although dockets showing their filing will continue to be available just as they have been,  However, NEW  pleadings filed in these older case WILL BE available on-line as they are filed, 

Pleadings filed in Tenth Appellate District/Franklin  County Court of Appeals on or after December 1, 2009 will aso be available on-line according to news reports in Business First.  Judges of the juvenile, domestic, and probate divisions of Franklin County Common Pleas Court have elected not to make records in those cases available on-line - probably a good thing given the nature of those sorts of cases. There are also plans to go back and add pleadings already filed to those on-line. 

No additional software or passwords are necessary.  Nor is there any additional charge to view pleadings.  Once on the Franklin County Common Pleas Clerk of Court's website, cases may be searched just as they have been.  When the desired case is located and the docket sheet displayed, a PDF icon will appear to the right of those pleadings available on-line.  Click the icon to view the pleading which can then be downloaded and/or printed, 

Cuyahoga County (Cleveland), Hamilton County (Cincinnati), and Montgomery County (Dayton) have already had pleadings available on-line for quite a while.  In fact, Montgomery County intends to begin requiring electronic filing of pleadings in 2010; this may be available in Franklin County sometime in 2011. 

It's amazing how happy small things ike this can make me.   

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Ever think there's got to be a better way than wasting time wrangling with another party with which you're doing business when there's a dispute over the amount really owed?  I’ve warned before about the risks of accepting checks intended as FINAL payment on a disputed obligation on my Fun with “Payment in Full” Checks post.  Now a couple of Ohio appellate decisions illustrate the “right” and “wrong” way to go about using a “payment in full” check to resolve a dispute and/or bring finality to the transaction. 

Two situationa in particular are addressed:

• When a landlord makes deductions from a security deposit, sending the balance to the former tenant, it assumes the relationship is now over.  So what happens if the former tenant cashes the check sent by the landlord, but then sues the landlord for the balance of its security deposit?
•  
• A customer complains to its vendor/supplier about the quality of the goods shipped to it and believes it is entitled to some sort of discount as a result.  If the vendor/supplier does not agree, what can a customer do?

Whichever side of the table you’re on, it’s important to understand the practical side of the legal concept of “accord and satisfaction” and how it can affect the ability of the tenant to get the rest of the security deposit back or of the supplier to receive full payment after cashing a partial payment check from the customer.   

Tourville v.Terzuoli, 2009–Ohio-2743 (Montgomery Cty) illustrates an ineffective use of "accord and satisfaction".  After the tenant moved out, the landlord sent the tenant a check for a refund of a portion of the security deposit originally made by the tenant, together with an itemization of the deductions made from the security deposit.  The tenant immediately called the landlord to discuss the itemized deductions and then cashed the check.  A few weeks later, the tenant sued the landlord for a refund of the remainder of the security deposit withheld.   

The trial court held that the tenant was barred from recovering the rest of the security deposit by the doctrine of “accord and satisfaction” because they cashed the check for a lesser amount.  The Court of Appeals reversed and said the tenant should have been allowed to present evidence showing it was entitled to the balance of the security deposit.

The Court explained the “accord and satisfaction” concept this way:

First the defendant must show that the parties went through a process of offer and acceptance – an accord.  Second. the accord must have been carried out – a satisfaction.  Third, if there was an accord and satisfaction, it must have been supported by consideration.

The Court further explained that when a check cashing is involved, there must have been reasonable advance notice that the check was intended to be in full satisfaction of the outstanding debt.  Because “there was no evidence that the check was the product of a negotiation between [the landlord and the tenant] regarding the amount of the security deposit that should be refunded,” the Court held no accord and satisfaction occurred.  In other words, merely cashing a check for a lesser amount did not preclude the tenant from getting the full security deposit back.

By contrast, the case of Barmar Enterprises, L.L.C. v. Benco Industries, Inc., 2009–Ohio-366 (8^th App. Dist. Cuyahoga Cty) is an example of an effective use of the accord and satisfaction doctrine to prevent recovery of the larger amount.  Here, a steel brokerage delivered product to a distributor.  Because the distributor’s end users rejected shipments on the basis of poor quality, the distributor issued itself six debit memos against the steel brokerage’s invoices.  The distributor eventually sent the steel brokerage a reconciliation showing the debit memos accompanied with the following statement:

Enclosed please find our reconciliation of your account.  In a show of good faith we have drafted a check in the amount of $30,892.96 representing  full and final payment to [the steel brokerage of invoices totaling more than $100,000] thus clearing our account to a zero (0) balance.  Upon your acceptance, [the distributor] will release your 44,860 lbs of steel [product in the possession of the distributor]. *** Please sign and fax back your acceptance of this accord and satisfaction in order to conclude this matter immediately.

The steel brokerage signed the document, the distributor sent the steel brokerage the specified check, and the check was cashed.  Later the steel brokerage sued the distributor for the difference, alleging it sustained damages when it resold the rejected steel to a third party at a reduced cost.  The Court said no dice and barred the steel brokerage from any recovery.

What these two cases illustrate is that putting a little thought into handling a dispute over an obligation can pay off – literally.  Had the landlord accompanied the check for a partial refund of the security deposit with a statement indicating that it was intended as full and final payment of all amounts due from the landlord, it might have gotten the same result as the distributor did, i.e. by cashing the check when it had notice that it was intended to resolve the entire issue of the amount of the refund, the tenant would be barred from any further recovery of the amount withheld. 

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It's always the little things you tend to take for granted that you really should be the most thankful for having.  Until recently, I had NO IDEA of how thankful I should be for the way Ohio courts have embraced and incorporated technology.  In the last few weeks, however, I have had substantial exposure to the way things work court technologywise in...  well let's just say, an adjacent State.  I felt like I'd travelled back in time ten years or more and could hardly believe how inefficient it all seemed.   

Among the modern technology I sorta thought EVERYBODY had was internet access to case docket sheets showing pleadings filed in particular cases.  In fact, I sometimes groused because my local trial court's Clerk of Courts website -- unlike those in Cleveland and other areas of the state -- would ONLY allow me to see the name of the pleading and the date filed and might be a few days behind to boot.  All federal courts (with a password) and many trial and appellate courts in Ohio also allow you to download from their Clerk of Court websites -  immediately and for free  (or at least at nominal cost) -- copies of the actual pleadings filed.  And, in some Ohio courts I can even electronically file pleadings right from my computer.    

Well, no, apparently that's not so normal in at least some other States.  In this particular State bordering Ohio, some of the trial courts don't even have a website at all and one heckuva lot have NO internet access to docket sheets.  Is this a big deal?  Well it is if you're used to being able to answer your own questions quickly about service and what's been happening in a case with which you're not familiar, but now need to jump in as a pinch hitter. 

Suddenly, I'm back to the time where I'd have to write a note to my secretary giving her the case number and party info, getting her to call the court and perhaps beg for information and/or documents BEFORE we sent them a search or copy fee, and if not successful, waiting hours, days, or weeks for information I need as a lawyer before I can decide what should be done next.  And of course, if it's a few days or weeks later that the information finally comes in, now I have to refresh my memory about what the issue in the case was that made me ask for the information in the first place.  Obviously, the additional time and effort now saved with implementation of modern technology is substantial.  And it's only when that sort of access isn't available instantly that you truly appreciate the impact of technology on your practice of law.

Ohio has benefited from a substantial emphasis on the importance of courts implementing technology.  When the Ohio Supreme Court  first began surveying courts in 1989 about whether any technology was available and being used, less than two thirds of the courts even bothered to respond to the survey.  In 1993, Chief Justice Thomas J. Moyer created a program of direct technical assistance to trial and appellate courts in Ohio to support various initiatives and implementation programs. 

As the bi-annual survey of technology use in Ohio courts continued, there has been a 100% participation response rate since 1996. Since 2002, all Ohio Clerks of Court have automated records and approximately 85% (and I would add from personal experence all major population centers) have websites of their own allowing some sort of access to case dockets.

For more detailed information on the progress and scope of the implmentation and integration of technology in Ohio courts, take a look at some of the bi-annual surveys:

• Technology and the Courts-2008 Survey
• Technology and the Courts-2004 Survey
• Technology and the Courts-2002 Survey

There's also this interesting 2003 speech by the Chief Justice.

Technology has interjected itself slowly into the way I practice law and I haven't  always initially been happy about changes it brought (I was orginally very NOT excited about electronic case filing aka ECF when that first came out - don't know how I managed without it now).   But it seems to have worked out well in the end an I'm not going back. 

Now I realize this isn't like world peace or anything, but in my day to day work life it matters.  Personally, I have now sworn to never ever complain about my access to Ohio court records again.

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Are we there yet?  Anyone who has ever been involved in a transactional deal of any complexity has udoubtedly at least thought, if not uttered, this well worn phrase in frustration as yet another obstacle arises to the successful completion of the contemplated transaction.   

Even sophisticated clients are sometimes frustrated by how long it seems to take lawyers to "close" and complete a transaction.  Clients with less experience can become positively apoletic about the fact that it takes more than a week or so for the lawyers to declare the deal done and finished.  Frankly, as one of the lawyers at the center of these trabsactions, I too am occasionally surprised how long it can take in certain situations to successfully complete the transactions.

So why does it take so long, and perhaps more importantly, how can everyone in the deal know how close we are to being able to answer yes to the perennial question "are we there yet?  One of the best tools to understand both what's involved in getting a particular transaction completed AND, on a real time basis what's left to do is a CLOSING LIST.  Every transactional attorney uses some variation of a Closing List to keep track of which tasks and items have been completed, which are still in process, and which issues and tasks still need to be addressed. 

A Closing List for a loan transaction  (Click here and  here  and here for examples) necessarily differs somewhat from a Closing list for a purchase/sale of a business or other transaction (click here and here for examples), both share the same basic elements and utility.  When I do my Closing List, I always start by putting the contact information for all the parties and their attorneys and other important agents and representatives at the top of the first page.  This way I'm never searching for a phone number or e-mail at a crucial point in negotiations.  

The rest of the Closing List is generally in the format of a table.  My tables have visible grid  lines so I can easily see each discrete item or task.  I usually have five columns: 

• Item Number (for quick reference and efficient organization of various folders pertaining to the deal)
• Name of Item or Task (for obvious reasons)
• Responsibility (i.e. which party is primarily responsible for preparing the documentation or completing the task) 
• Status (entries in this column are constantly changing as progress occurs)
• Comment (for additional useful information such as actual or potential obstacles to be resolved, other contact people, etc,)  

Because every deal is different, most closing lists are organic instruments which begin with certain basic items and tasks common to that sort of particular transaction and then initally grow longer as the unique aspects of the deal at hand become fleshed out.  Like other transactional attorneys, building out the Closing List helps me organize what needs to be done and the order in which tasks and items should be attacked.

I usually wait to give clients a copy of the Closing List until I am fairly certain it is a reasonably complete reflection of what will be entailed to make the contemplated transaction a reality in a manner that properly protects my client.  After circulating the intial Closing List, I try to provide updated revised Closing Lists on a regular basis which show where progress has been made and where we may have run into a roadblock or detour that may delay completion of the transaction. 

My hope and intention is that sharing these updated Closing Lists will allow clients to have as close to the same understanding as I do about "where we are" as far as getting the deal done and why we're not there yet.   Thus, if your attorney gives you something of this nature, don't just put it aside and assume it has no purpose relevant to you.  It's your best guide to what's been done so far to bring the deal to fruition and what still remians to make it a reality.   

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