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Jury Clears Title Insurance Company Of All Claims In Bad Faith Lawsuit
Category: News | Friday, May 25th, 2012 | Comments Off on Jury Clears Title Insurance Company Of All Claims In Bad Faith Lawsuit
RIVERSIDE, Calif. — A California state court jury on April 25 returned a unanimous verdict clearing a title insurance company of wrongdoing in a bad faith lawsuit regarding a failed $37 million construction loan made by a bank to a developer for the construction of a residential development (Central Pacific Bank v. Fidelity National Title Insurance Co., No. RIC 525131, Calif. Super., Riverside Co.).
After one day of deliberations, the jury cleared Fidelity National Title Insurance Co. (FNTIC) and Fidelity National Title Co. (collectively, FNT) on two claims for breach of contract, breach of the implied covenant of good faith and fair dealing, declaratory relief, two claims for reformation, breach of fiduciary duty, negligence, fraud and negligent misrepresentation, which were made by Central Pacific Bank, the lender in the construction loan transaction.
Central Pacific Bank, in its second amended complaint filed in the Riverside County Superior Court, alleged that FNT breached “the escrow instructions and its fiduciary duties as escrow agent in numerous ways” with regard to FNT’s role as escrow agent for Central Pacific Bank for the construction loan.
Escrow Instructions
“Had FNT complied with the escrow instructions and its fiduciary duties, it could not have closed the Construction Loan or the subsequent loan modification and could not have distributed the Construction Loan proceeds. Nor would Central Pacific Bank have made the Construction Loan or the modification and disbursed the Construction Loan funds in the first instance,” Central Pacific Bank said.
“One of FNT’s obligations under the escrow instructions was to obtain an American Land Title Association Loan Policy of Title Insurance with specific required endorsements that insured Central Pacific Bank’s deed of trust was a first priority lien. FNT obtained a title insurance policy from its sister company, Fidelity National Title Insurance Company. However, the policy did not satisfy the requirements of the escrow instructions. Moreover, FNTIC subsequently wrongfully denied insurance coverage under the policy that FNT did obtain causing Central Pacific Bank further damages and forcing Central Pacific Bank to file this action to establish the existence of the title insurance that FTN was required to obtain.”
Counsel
Central Pacific Bank is represented by Harvey L. Rochman and Dinesh R. Badkar of Manatt, Phelps & Phillips in Los Angeles and Amy B. Briggs of Manatt Phelps in San Francisco.
FNT is represented by Eric P. Early, William A. Wright, Christopher I. Ritter … and Sophia Lau of Early Sullivan Wright Gizer & McRae in Los Angeles.
Source: Timothy Raub, Mealey’s
ABC Fires Back at CBS Lawsuit Over ‘Big Brother’-Type Reality Show
Category: News, Press | Thursday, May 24th, 2012 | Comments Off on ABC Fires Back at CBS Lawsuit Over ‘Big Brother’-Type Reality Show
“Even CBS must realize it cannot copyright the idea of 14 contestants living in a house rigged with cameras,” the ABC court papers argue.
ABC has shot back in the legal war over its upcoming reality series Life in a Glass House, which is the subject of a federal lawsuit filed by Big Brother network CBS.
As we first reported May 10, CBS sued ABC and several producers for copyright and trade secret infringement, alleging Glass House is a “carbon copy” ripoff of Big Brother and is being produced by a team of 19 staffers who formerly worked on the long-running hit show.
CBS then filed court papers May 14 asking for limited fact-finding to support a planned motion for a preliminary injunction to stop development of the ABC series before its scheduled premiere on June 18. And now ABC has responded, offering its first detailed argument for why the case is bogus and the request for an expedited timetable for a preliminary injunction motion should be denied.
Calling the suit a “meritless attempt to shut down development of ABC’s newest reality television program,” the network claims it hasn’t even finalized rules or constructed a set, but it nonetheless lays out several alleged distinctions between the two shows: Unlike Big Brother, Glass House contestants will be able to see outside the house and interact with fans via social media, there will be no host (Julie Chen hosts Big Brother), and it will be team-oriented rather than the every-man-for-himself theme of Big Brother. For these reasons and others, ABC argues that the CBS copyright claim will fail. “Even CBS must realize it cannot copyright the idea of 14 contestants living in a house rigged with cameras,” the ABC court papers state.
On the trade secret violation claim, ABC argues that there’s nothing secret about a show that has aired on CBS since 2000 (and around the world via deals with creator Endemol) and that workers typically move around a lot in the unscripted TV business. “Employee mobility is the norm, not the exception in reality TV,” the ABC court papers argue. “Employees, who generally must be rehired each season, are often itinerant, going from series to series looking for a better opportunity.” That’s especially true at Big Brother, ABC argues, due to the show’s “low pay and 24 hour a day/7 days a week filming schedule.”
After arguing that Judge Margaret Morrow should deny the request for “expidited” discovery, ABC then sets out a proposed schedule that, if adopted by the court, would culminate in a hearing on the motion for a preliminary injunction June 11.
CBS wants the judge to intervene immediately, and the network is requesting permission to obtain documents and deposition testimony from ABC relating to Glass House and several former Big Brother producers who are involved in making the new show. CBS says the requests are urgent.
“Because Glass House is now in the midst of production, the value to Defendants of CBS’ trade secrets and confidential information is at its highest, and those trade secrets are likely being disclosed on the production of Glass House every day,” the network argues. “CBS will suffer substantial and irreparable harm if these wrongs are allowed to continue, as compared to the limited burden that this discovery will place on Defendants.”
With Glass House set to premiere in less than a month, the clock is ticking. Will CBS successfully persuade the judge to stop the show in its tracks?
ABC is repped by Glenn Pomerantz and a team from Munger Tolles & Olson and Devin McRae of L.A’s Early Sullivan firm. CBS is repped by Scott Edelman and a team from Gibson Dunn & Crutcher.
Source: Matt Belloni, Hollywood Reporter, Esq.
Underwriter Successful In Limiting Liability to Lender After Borrower Default
Category: News | Friday, May 11th, 2012 | Comments Off on Underwriter Successful In Limiting Liability to Lender After Borrower Default
After a borrower in California defaulted on a $37 million construction loan, the lender sued the underwritten title company and the title insurer for allegedly breaching the lenders closing instructions and the title policy and also for alleged fraud, breach of fiduciary duties and bad faith. After almost 2 months of trial, a jury found otherwise, finding no fault on the part of the title company or the title insurer.
“There was a lot at stake in this case,” said Eric Early, partner at the Los Angeles-based firm of Early Sullivan Wright Gizer & McRae LLP, the lead trial counsel for the title companies. “We are very grateful that the jury saw it 100 percent the right way.”
While he couldn’t speak generally for the title insurance community, Early noted that he has seen a number of similar lawsuits.
“We see a lot of lenders trying to overcome their failed underwriting decisions by going after title insurance companies and underwritten title companies,” he said. “The loan in question in our lawsuit was made shortly before the market crashed, when lenders were throwing around money left and right. There was a lot of money at stake here, and one of our main themes at trial was that behind the bank’s theories of purported liability, this was really a case of a bank trying to recoup from my clients, who had done nothing wrong, a loss caused by the bank’s failed underwriting and lending practices, and by the market crash.”
The case, heard in the Superior Court of the State of California for the County of Riverside, is Central Pacific Bank v. Fidelity National Title Insurance Company and Fidelity National Title Company (No. RIC 525131).
The facts
The lawsuit arose out of a $37 million construction loan made by Central Pacific Bank (and participating lender Preferred Bank) (collectively, the “Bank”) to finance the construction of a residential development on Tract No. 29843 in Hemet, California. Fidelity National Title Company (FNT) acted as the underwritten title company for the bank with respect to the original $35 million construction loan pursuant to written lenders closing instructions in 2006, as well as a loan modification in 2007. Fidelity National Title Insurance Co. (FNTIC) was the title insurer of the bank’s deed of trust.
The title insurance covered lots 1-120 on Tract No. 29843, excluding lots 121-125, which, according to county records, were owned by Temecula Valley LLC, not PCG-Peppertree LP, the borrower. Before the loan in question was made, PCG-Peppertree owner William Lo had sold a controlling interest in Pacific Century Homes (PCH) to Lennar Homes, which formed Temecula Valley to develop more than 10,000 home sites originally controlled by PCH, including the subject property. Temecula Valley owned the property from 2003 until 2005. Lennar chose not to develop the property further and sold the project back to Lo. In November 2005, Peppertree bought the property back from Temecula, but only lots 1-120, according to the legal description on the grant deed recorded after the sale.
In 2008, PCG-Peppertree failed to repay the construction loan and abandoned the development with millions of dollars of mechanic’s liens and stop notices arising from unpaid work performed by project contractors. Following PCG-Peppertree’s abandonment, numerous lawsuits were filed against the Bank by sub-contractors and suppliers seeking to foreclose mechanic’s liens and assert related causes of action. Following its default, PCG also informed the Bank that its deed of trust did not cover Lots 121-125. The Bank tendered the underlying mechanics lien actions to FNTIC in April 2008. The Bank also tendered a separate claim to FNTIC in July 2008 for coverage of Lots 121-125. FNTIC accepted the defense of the mechanics lien claims under a reservation of rights. In December 2008, FNTIC denied coverage as to Lots 121-125.
FNTIC retained the Luce Forward law firm to defend the bank against mechanic’s lien claimants, paying more than $1 million in attorneys’ fees to defend the bank in those cases. The insurer also paid approximately $700,000 under a reservation of rights to the mechanics to help settle the claims.
Central Pacific Bank’s allegations
In its complaint against Fidelity, in which the bank sought recovery of the full amount of the loan, plus interest, attorneys’ fees, receiver fees and punitive damages, in an amount exceeding $50 million, the bank alleged that FNT breached the lenders closing instructions and its fiduciary duties, and fraudulently concealed information about Lots 121-125 from the bank.
“Had FNT complied with the escrow instructions and its fiduciary duties, it could not have closed the construction loan or the subsequent loan modification and could not have distributed the construction loan or the modification and disbursed the construction loan funds in the first instance,” the bank alleged.
“One of FNT’s obligations under the escrow instructions was to obtain an American Land Title Association (ALTA) loan policy of title insurance with specific required endorsements that insured Central Pacific Bank’s deed of trust was a first priority lien,” the bank continued. “FNT obtained a title insurance policy from its sister company, FNTIC. However, the policy did not satisfy the requirements of the escrow instructions. Moreover, FNTIC subsequently wrongfully denied insurance coverage under the policy that FNT did obtain, causing Central Pacific Bank further damages and forcing Central Pacific Bank to file this action to establish the existence of the title insurance that FNT was required to obtain.”
Among other things, the bank alleged that FNT failed to attach an accurate legal description to the recordable documents or verify the accuracy of the legal description.
“Instead, FNT prepared and attached a legal description that it knew was materially incorrect and internally inconsistent,” the bank alleged. “Although FNT knew that property covered by the construction loan included all lots within Tract 29843, and further knew that Tract 29843 consisted of numbered lots 1 through 125, the legal description it prepared and then attached to the recordable documents failed to expressly refer to lots 121-125 in Tract 29843.”
The bank further alleged that FNT failed to inform it that the title insurance policy did not cover all lots within Tract 29843 and did not insure that the construction deed of trust was a first lien on the property.
“Had FNT undertaken to strictly comply with the closing instructions and to fulfill its fiduciary duties as escrow agent, it could not have closed the construction loan because it could not satisfy its obligations under the closing instructions,” the bank alleged. “In addition, it would have recognized all of the disabling problems and learned any of the material facts described above that were not actually in its possession prior to the close of escrow. At a minimum, FNT was required to advise Central Pacific Bank of the facts described, to ask the inescapable questions arising from those facts and to seek further written instructions, in which case the construction loan would not have closed and Central Pacific Bank would have avoided the massive losses and the costs described.”
According to the bank, before the loan modification took place, PCG-Peppertree requested FNT update the legal description to include the originally omitted lots, 121-125. The bank further alleged that FNT did not advise the Bank of PCG-Peppertree’s request.
“Had FNT informed Central Pacific Bank of PCG-Peppertree’s Aug. 16, 2007, communication, Central Pacific Bank would not have proceeded with almost $6 million in additional advances and would have had an opportunity to mitigate its damages,” the bank alleged. “Moreover, as with the original construction loan, FNT prepared a revised legal description that was used in connection with the loan modification which again contained an erroneous legal description.”
The bank also alleged that FNTIC wrongfully and in bad faith denied coverage as to Lots 121-125.
“FNTIC denied insurance coverage as to lots 121-125 in Tract 29843 and refused to act reasonably to promptly settle mechanic’s lien claims to mitigate Central Pacific Bank’s losses,” the bank alleged. “Adding insult to injury, FNTIC’s denial of insurance coverage is bootstrapped from FNT’s own failure to prepare a correct legal description of the real property, which faulty description FNTIC subsequently incorporated into the ALTA loan policy it issued to Central Pacific Bank then used as a circular and pretextual basis to deny insurance coverage.
“Moreover, rather than respond simply to Central Pacific Bank’s claims, Fidelity conducted a purported ‘investigation’ for more than nine months, forcing Central Pacific Bank to provide tens of thousands of documents at significant cost, only to deny coverage based upon purported facts in its possession the entire time,” the bank alleged.
The bank made claims for breach of contract, breach of the implied covenant of good faith and fair dealing, declaratory relief, reformation of the scope of the title insurance policy, reformation of endorsements to the policy, breach of closing instructions, breach of fiduciary duty, negligence, fraud and negligent misrepresentation.
Fidelity’s response
In its trial brief, both Fidelity entities maintained that they did nothing wrong and the bank’s loss was due to its own actions.
“Before making the loan the bank calculated that over the two-year course of the loan, PCG-Peppertree would construct and sell over 400 housing units, enabling it to repay the loan,” Fidelity stated. “When the two years had passed, only 29 units had been built, only 13 sales of units had closed and at the end of the day, only seven units were inhabited. The property is strewn with construction defects, and the cost of fixing those defects, taken together with the drop in value of the property thanks to the real estate collapse, renders the entire Peppertree property literally worthless. Fidelity, of course, had nothing to do with any of these decisions or occurrences. The cause of the bank’s loss has nothing to do at all with Fidelity. Undaunted, however, the bank — with $37 million gone and a worthless property as security — has fashioned its creative lawsuit to seek a bailout from Fidelity for its disastrous underwriting practices. The bank tries to turn Fidelity into the super guarantor of all things related to property. The bank’s theories, its case and all of its causes of action fail.”
Fidelity noted that the bank had retained outside lender’s counsel to handle the loan and that FNT followed the bank’s counsel’s lenders closing instructions, by attaching the proper legal description to the bank’s deed of trust. Fidelity also maintained that the legal description in the Preliminary Report in question clearly informed the bank that only Lots 1-120 were going to be covered (this notwithstanding the bank’s contention that the address line on the Preliminary Report, and APNs appearing on the report, allegedly provided otherwise).
“After the borrower defaulted, the bank asserted that it discovered for the first time that the legal description was missing lots 121-125,” Fidelity stated. “And conveniently, only after this lawsuit was filed did the bank inform Fidelity for the first time that it did not retain [its attorney] to make sure that the bank had fully and properly secured its $35 million loan. If the bank in fact limited [the attorney’s] representation in this regard, it violated longstanding lending industry custom and practice. If it did not, then the bank should have sued the law firm for malpractice. Yet the bank claims it has no tolling agreement with the firm. A title officer follows instructions and he did just that. An attorney, as well as the bank’s in-house loan officers, are, pursuant to industry custom and practice, the ones who make sure the bank has all of its collateral. The bank and its counsel both failed miserably. All of the claims against FNT (breach of the closing instructions, negligence, breach of fiduciary duty and fraud) simply lack merit. Nevertheless, the bank has the temerity to argue in this case that the instructions were violated (because the deed of trust was missing the five lots), and thus the loan never should have closed, and therefore, that FNT should reimburse the bank for the entirety of its terrible loan.”
While defending the bank as to its mechanic’s lien claims, Fidelity retained the law firm of Miller Starr Regalia to conduct the coverage investigation as to those claims and the claim regarding Lots 121-125.
“The policy is clear on its face that those lots are not covered, and the underlying investigation revealed that Fidelity never intended to provide coverage for the missing lots, and indeed, that neither Peppertree nor the bank ever expressed anything to Fidelity to the contrary,” Fidelity stated. “And they are not covered because the bank, it’s outside counsel and in-house loan officers, were asleep at the wheel when the deed of trust was created, and the policy was negotiated and issued.”
Fidelity also noted that the borrower, Lo, had offered the bank to reform the deed of trust to include the missing lots, and yet the bank had failed to inform Fidelity of this offer. “Inexplicably, the bank never took Peppertree up on its offer,” Fidelity stated. “The bank could have had all of the lots it claims it so badly wanted, but never received, within weeks of its discovery of the purported problem with these lots. Instead, the bank apparently has used this purported title defect as a pretext to seek a complete bailout from Fidelity for the bank’s disastrous loan to Peppertree.”
“In short, and at the end of the day, this is a case brought by a grossly negligent bank and a team of clever attorneys, who will put forth any argument they think can possibly fly to cause Fidelity to bail out the bank,” the insurer stated.
After deliberating for less than a day, the jury issued a complete defense verdict, answering all questions in favor of Fidelity.
Source: The Legal Description
Jury Rejects Bank’s Suit Over Loan
Category: News | Monday, April 30th, 2012 | Comments Off on Jury Rejects Bank’s Suit Over Loan
The $55 million lawsuit has the real estate and banking industries watching closely.
RIVERSIDE – A jury here rejected a $55 million lawsuit against a title company that a bank accused of committing fraud and fiduciary duty breaches in connection with a multimillion-dollar loan on a failed home development in Hemet.
A case watched closely by the real estate title insurance, escrow and banking industries, it’s part of a wave of litigation from banks facing criticism of their lending activity during the mortgage meltdown. In an attempt to restore money lost in the housing bust and recession, banks are increasingly filing lawsuits attempting to collect damages from title companies that underwrote and insured their loans.
On Wednesday, the Superior Court panel turned aside Central Pacific Bank’s arguments that Fidelity National Title Company and Fidelity National Title Insurance Company misled the bank about the scope of the title policy and the collateral for the loan and that it failed to comply with escrow instructions – issues Central Pacific alleged led it to make the loan that ultimately defaulted.
“There was a lot at stake here,” said Eric P. Early, a partner at Early Sullivan Wright Gizer & McRae LLP who was lead trial attorney for Fidelity. “You had a bank bringing a lawsuit based on a large failed loan and trying essentially, from our position, to recoup its loss on the backs of a title insurance company and an underwritten title company.”
“This is a major victory for my clients,” he added. “The jury got it 100 percent right, and we’re very grateful for that.”
Craig S. Bloomgarden, an attorney for Central Pacific and a partner with Manatt, Phelps & Phillips LLP, said Friday that he wasn’t authorized to comment on the matter.
No one else with the firm responded to a request for comment.
According to Early, the jury rejected the bank’s request for $55 million in damages, an amount that included the $50 million in compensatory damages and interest, punitive damages and about $5 million in attorney fees for Manatt.
The underlying dispute centered on Central Pacific’s 2006 loan of $35 million to PCG-Peppertree LP to build a 456-unit home development for seniors in Hemet called Peppertree. Two years later, with the housing crash in full freefall, the borrower defaulted on the loan.
In trial arguments, Central Pacific contended Fidelity acted improperly in underwriting the loan, including failing to inform the bank that the borrower didn’t have title to the entire tract. In addition, the bank alleged the title company’s legal description of the project didn’t cover the whole development and that its title policy was insufficient.
According to Central Pacific, after the default, the title company’s insurance division refused to insure the project. The bank contended it was unable to recoup its losses through a foreclosure proceeding and had to incur millions in extra expenses, including paying for a receiver to maintain the property.
At trial, Fidelity said it bore no responsibility for the bank’s loss.
“The bank’s underwriting process was flawed from the start, the money never should have been loaned, and even after the loan was made, the Bank could have, but failed, to stop continuing to disburse the entirety of the loan proceeds to Peppertree,” wrote … co-counsel for Fidelity, in a trial brief. “Fidelity, of course, had nothing to do with any of these decisions or occurrences.”
The 2-month-long trial was held before Judge John W. Vineyard. The case is Central Pacific Bank v. Fidelity National Title Insurance Company, RIC525131 (Riverside County Super. Ct., filed 2009).
Source: Jason W. Armstrong, Los Angeles Daily Journal
Fidelity Wins Verdict In $55M Suit Over Development Loan
Category: News | Friday, April 27th, 2012 | Comments Off on Fidelity Wins Verdict In $55M Suit Over Development Loan
Law360, New York (April 27, 2012, 5:08 PM ET) — A California state jury on Tuesday handed a verdict in favor of Fidelity National Title Co. in a $55 million lawsuit by Hawaii-based Central Pacific Bank over an unpaid construction loan in which Fidelity was the escrow agent.
Central Pacific had claimed that Fidelity had obtained an inadequate title insurance policy from its sister firm Fidelity National Title Insurance Co. to cover a $37 million loan that Central Pacific had given a unit belonging to Southern California developer William Lo in 2006. The policy was used to finance the construction of a residential development in Hemet, Calif., according to its second amended complaint.
The bank had claimed also that Fidelity had also wrongfully failed to provide insurance coverage under that policy, but after a trial that lasted less than two months, the jury delivered a unanimous defense verdict in favor of both Fidelity defendants on all counts, according to court documents.
“We’re obviously very happy with the jury’s decision,” Eric Early of Early Sullivan Wright Gizer & McRae LLP, an attorney for Fidelity, said Friday. “It was a hard fought lawsuit and we were thrilled to prevail because my clients did not do anything wrong.”
William Lo’s unit PCG-Peppertree LP allegedly had not repaid the loan in 2008, and discarded the development with millions of dollars of mechanic’s liens from unpaid work that the project’s contractors had done, according to Central Pacific’s complaint.
Fidelity had argued that Central Pacific’s underwriting process was flawed and that it should not have loaned the money to Peppertree, which defaulted in January 2008 and whose principal Lo filed for bankruptcy protection, according to Fidelity’s March trial brief.
Central Pacific had projected that its loan would help Peppertree build and sell more than 400 housing units, and repay the loan, but after two years, only 29 units had been built and only 13 sales had closed, according to Fidelity, which argued that the property had lost value because of construction defects and other related issues.
“The cause of the bank’s loss has nothing at all to do with Fidelity,” the firm said in the brief. “Undaunted, however, the bank — with $37 million gone and a worthless property as security — has fashioned its creative lawsuit to seek a bailout from Fidelity for its disastrous underwriting practices.”
Central Pacific had argued meanwhile that Fidelity had closed the loan transaction without authorization, violated its escrow requirements and given misleading reports about the property, according to its trial brief.
“Fidelity repeatedly provided the bank with reports which described the subject property as ‘all lots’ with the [tract] even though it now claims that it never intended to insure the bank’s interest in the entire tract and that it knew that the borrower did not even have record title to the entire tract,” Central Pacific said in the brief.
Central Pacific had sought roughly $50 million in damages, along with several million dollars in attorneys’ fees and punitive damages, according to the firm.
An attorney for Central Pacific could not immediately be reached for comment Friday.
Fidelity was represented by Eric P. Early, William A. Wright, Christopher I. Ritter … and Sophia Lau of Early Sullivan Wright Gizer & McRae LLP.
Central Pacific Bank was represented by Manatt Phelps & Phillips LLP.
The case is Central Pacific Bank v. Fidelity National Title Insurance Co., case number RIC525131, in the Superior Court of California, County of Riverside.
Source: Sindhu Sundar, Law360
Southwestern Law School Profiles Eric Early
Category: News | Thursday, April 26th, 2012 | Comments Off on Southwestern Law School Profiles Eric Early
Meet Southwestern’s first President of the Entertainment and Intellectual Property Alumni Association
Step foot into the hip, modern, yet understated and professional office of Early Sullivan Wright Gizer & McRae and you would never guess that the firm is less than two years old. That is, if you can manage to pull your gaze away from the striking, almost 360 degree view of Los Angeles that provides a fitting backdrop for this successful young firm.
Early Sullivan opened its doors in June of 2010 with Southwestern Alum Eric Early and four of his colleagues at the helm. In its short existence, the firm has grown from just five partners to 14 attorneys and is currently developing offices in New York and Las Vegas. The success of the firm comes as no surprise when you consider the experience, passion, and dedication of Eric Early.
Bryan Sullivan Named Founding Board Member Of Non-Profit Aiming to Support Child Abuse Victims
Category: News | Wednesday, April 11th, 2012 | Comments Off on Bryan Sullivan Named Founding Board Member Of Non-Profit Aiming to Support Child Abuse Victims
April 11, 2012 – Los Angeles, CA – A diverse and far-reaching group of professionals announced the formation of “Lion Fund For Children” (LFFC), a non-profit organization aiming to thwart child abuse and raise child abuse awareness. LFFC’s mission is to support local charities and other organizations that provide counseling and treatment to child abuse victims and their families. LFFC will also promote and support initiatives in local communities that raise awareness about this epidemic problem.
Among LFFC’s Founding Board Members is Early Sullivan Wright Gizer & McRae’s founding partner, Bryan Sullivan. “It is with great honor that I join a strong, lasting voice in addressing child abuse. My number one goal as a Founding Board Member is to make sure support goes to those who need it most,” says Sullivan.
The new organization has a six-member board that includes professionals with diverse experience in the non-profit, legal, education, business, entertainment and media arenas. There is also a twenty-member Advisory Council comprised of several PSU alumni, and former and current campus leaders, including the 2011-2012 Panhellenic and IFC Presidents.
Sullivan goes on to say “We were all appalled by the incidents of sex abuse reported to have occurred at Penn State and my own alma mater, Syracuse University, and I, along with other LFFC board members, felt the need to take action because such incidents are not isolated to those two college campuses. So, we formed this charity to raise awareness, support those that fight against abuse, and help its victims.” He brings a wealth of non-profit experience to LFFC; he is also Co-Founder, Chief Financial Officer and Board Of Director Member of BASTA, Inc., a non-profit tenants’ rights group with offices in Los Angeles, Lancaster and Compton.
LFFC is currently seeking tax-exempt 501(c)(3) status with the IRS.
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‘Scare Tactics’ Producer Sues to End Distribution Deal
Category: News | Tuesday, March 20th, 2012 | Comments Off on ‘Scare Tactics’ Producer Sues to End Distribution Deal
WMTI Productions, producers of the Syfy reality show Scare Tactics, has filed both arbitration claims and a separate lawsuit against Rive Gauche Television, which is responsible for licensing and exploiting the show worldwide.
The show, which has been hosted in different seasons by Shannen Doherty, Stephen Baldwin and Tracy Morgan, and features individuals being pranked on hidden cameras by horror movie-style set-ups, is now the subject of a dispute over an alleged concealment of income, deduction of foreign taxes and whether the show has been properly exploited around the world. The plaintiffs are seeking damages for breaches of contract and also looking for a declaration that a licensing agreement between the parties is now terminated.
The TV series has been running since 2002. That year, WMTI entered into a licensing agreement with Rive Gauche to distribute the show in non-U.S. markets. The deal was renewed in 2006, and then again in 2008 and 2010.
As part of the first deal, Rive Gauche got 20 percent of “gross receipts” and was permitted to recoup expenses in addition to its distribution fee, up to 3.5 percent of receipts, according to the suit. In 2006, the Rive Gauche’s commission for distributing the series around the world was bumped up to 30 percent.
But WMTI says it discovered in late 2009 that Rive Gauche was taking fees based on a pre-tax estimate of the value of distributing Scare Tactics.
“Though the 2006 Agreement does not expressly define ‘gross receipts,’ under no reasonable interpretation of the term ‘gross receipts’ could Defendants expect to add the estimated value of taxes on the income generated by the distribution of Scare Tactics to the actual receipts therefrom, in order to assess its fees,” says a complaint filed in LA Superior Court on Friday.
The prospect of its distributor recouping foreign taxes has compelled WMTI to file the lawsuit. Additionally, the production company says that the defendant has failed to submit to an accounting to flesh out allegedly concealed funds and wants a judge to declare that the distribution agreement terminates automatically on March 20, 2012. That’s today.
The lawsuit was filed in state court because Rive Gauche has allegedly refused to permit arbitration of the 2006 Agreement.
Last month, WMTI also submitted claims against Rive Gauche with the American Arbitration Association that sought to punish the defendant for allegedly breaching its contract by failing to provide accountings, failing to inform WMTI of every deal entered, failing to pay all money owed, and failing to use its best efforts to exploit Scare Tactics in the licensed territories.
The production company, represented by Devin McRae at Early Sullivan Wright, is demanding the end to its distribution agreements and a return of all 84 episodes of the series in various versions.
Rive Gauch CFO Jay Behling has given us a statement in response:
“We don’t normally comment about legal matters, however these claims are without merit and will be proven as such. As our company prepares for its 20th anniversary, we are proud of our long commitment to integrity and best practices across all levels of our business associations and partnerships. We therefore do not take these accusations lightly. They conducted an audit in 2009 and no issues resulted from it. Without any basis for their claims, it appears they are trying to use Scare Tactics to make their case.”
Source: Eriq Gardner, Hollywood Reporter, Esq.
Eric Early Again Named to Southern California Super Lawyers
Category: News | Thursday, March 8th, 2012 | Comments Off on Eric Early Again Named to Southern California Super Lawyers
For the eighth year in a row, Eric Early has been selected as a 2012 Southern California Super Lawyer. He was also named in the 2012 Super Lawyers Business Edition.
Super Lawyers selects attorneys using a rigorous, multiphase rating process. Peer nominations and evaluations are combined with third party research. Each candidate is evaluated on 12 indicators of peer recognition and professional achievement. Selections are made on an annual, state-by-state basis. The final published list represents no more than 5 percent of the lawyers in the state.
Source: Super Lawyers
Fighting Fraud with Due Diligence
Category: News | Thursday, March 1st, 2012 | Comments Off on Fighting Fraud with Due Diligence
Criminals will always find ways to take advantage of unsuspecting victims, but crime itself is evolving constantly. In today’s economic climate, more criminals are hatching intricate escrow- fraud schemes to bilk innocent people out of equity and other finances. As such, mortgage professionals need to be diligent about protecting themselves and their clients. Although crime can come in different forms and approaches, it’s a good idea for mortgage professionals to familiarize themselves with a few of the common ways that criminals direct their efforts at the housing industry. An example Criminal threats can come from a variety of places, both inside and outside the mortgage industry. Let’s say, for instance, that a real estate agent, escrow officer and shortsale negotiator collude with each other to scam a pair of distressed homeowners. They might begin by simply approaching the homeowners about short-selling their property. The scammer would then have the real estate agent get the listing, advertise the property as a short sale and then even contact a lender to start the shortsale process. From there, consider the following sequence of events:
•• The property is listed, and innocent buyers bid on the property.
•• The unsuspecting sellers are told that their buyer is a limited liability company (LLC), but in fact it’s a shell corporation created by the fraudsters themselves.
•• Short-sale approval letters are forged in favor of the LLC, using a template from a prior approval obtained from the bank and then forwarded to the sellers to induce them to execute a grant deed in favor of the LLC.
•• The buyers are told that the short sale has been approved, so they transfer the purchasing money into escrow.
•• The escrow company, which is also involved in the scam, fails to verify the veracity of the short-sale agreement with the lender, as lender-underwriting requirements could jeopardize the scheme.
•• The conspiring escrow officer then transfers the money to the scam’s coconspirators and provides false HUD-1s showing that the funds were used to pay off the lender.
•• Deeds are then created by the shell LLC and transferred to the buyers.
•• The sellers, meanwhile, assume that their loans have been paid off and thus stop making payments, causing the lender to begin foreclosure proceedings. It’s only now when the innocent buyers — and any innocent mortgage professionals involved — first learn that they have been defrauded.
Be diligent
This is just one example of the many real estate scams that floated in the market in recent years. It’s become critical for borrowers, brokers and lenders alike to conduct proper due diligence and ensure the safety of a transaction. The sophistication of scams has increased with technology. In addition, cash-strapped homeowners have become more desperate to sell. That is why it can be helpful to use attorneys that are familiar with real estate schemes to prevent fraud before it occurs or, alternately, to unwind a scam and press charges against wrongdoers after it occurs. Regardless, keeping yourself educated while also undertaking proper due diligence can help your clients’ transactions move more smoothly and, in certain cases, can even help you avoid being liable for a breach of fiduciary duty.
By: Eric P. Early and Scott E. Gizer
Source: Scotsman Guide