When most lenders, owners and lawyers think of title insurance, they (quite rightly) think of insurance that covers risks associated with title matters. The answer is in the name,
as it were.
"Consumer Arbitration: A Report From The Future" a keynote address by George Friedman - member, Board of Directors, Arbitration Resolution Services. Presented June 2013. For more information, visit https://arbresolutions.com or Follow us on Twitter @ARS_ARBS.
Recent Ethics and Professional Responsibility Cases (David Coale): Discussion of recent ethics and professional responsibility cases from the U.S. Court of Appeals for the Fifth Circuit, including the scope of the “attorney immunity” doctrine, when sanctions can be imposed for improper pleadings and litigation conduct, when a court’s contempt power is properly applied to the alleged violation of an injunction, and the contours of attorney-client privilege for in-house counsel.
Conflicts of Interest in Pricing (Kirk Bowman): Pricing is not always as black and white as we might think. As with the law, there are shades of gray. In this session, Kirk Bowman will explore conflicts of interest in pricing, especially as it relates to attorneys. Learn how to price your engagements based on the value you create, rather than the traditional method of hourly rates. Kirk will also discuss the ethic guidelines attorney’s face in pricing their services. This single innovation can enhance your relationship with your clients and help you avoid the ethical dilemma of thinking of your client as a number of hours per month rather than a person and business you have the privilege to serve.
Klemchuk LLP is an Intellectual Property (IP), Technology, Internet, and Business law firm located in Dallas, TX. The firm offers comprehensive legal services including litigation and enforcement of all forms of IP as well as registration and licensing of patents, trademarks, trade dress, and copyrights. The firm also provides a wide range of technology, internet, e-commerce, and business services including business planning, formation, and financing, mergers and acquisitions, business litigation, data privacy, and domain name dispute resolution. Additional information about the intellectual property law firm and its intellectual property attorneys may be found at www.klemchuk.com.
"Consumer Arbitration: A Report From The Future" a keynote address by George Friedman - member, Board of Directors, Arbitration Resolution Services. Presented June 2013. For more information, visit https://arbresolutions.com or Follow us on Twitter @ARS_ARBS.
Recent Ethics and Professional Responsibility Cases (David Coale): Discussion of recent ethics and professional responsibility cases from the U.S. Court of Appeals for the Fifth Circuit, including the scope of the “attorney immunity” doctrine, when sanctions can be imposed for improper pleadings and litigation conduct, when a court’s contempt power is properly applied to the alleged violation of an injunction, and the contours of attorney-client privilege for in-house counsel.
Conflicts of Interest in Pricing (Kirk Bowman): Pricing is not always as black and white as we might think. As with the law, there are shades of gray. In this session, Kirk Bowman will explore conflicts of interest in pricing, especially as it relates to attorneys. Learn how to price your engagements based on the value you create, rather than the traditional method of hourly rates. Kirk will also discuss the ethic guidelines attorney’s face in pricing their services. This single innovation can enhance your relationship with your clients and help you avoid the ethical dilemma of thinking of your client as a number of hours per month rather than a person and business you have the privilege to serve.
Klemchuk LLP is an Intellectual Property (IP), Technology, Internet, and Business law firm located in Dallas, TX. The firm offers comprehensive legal services including litigation and enforcement of all forms of IP as well as registration and licensing of patents, trademarks, trade dress, and copyrights. The firm also provides a wide range of technology, internet, e-commerce, and business services including business planning, formation, and financing, mergers and acquisitions, business litigation, data privacy, and domain name dispute resolution. Additional information about the intellectual property law firm and its intellectual property attorneys may be found at www.klemchuk.com.
The Supreme Court clarified the code’s object while keeping legislative intent in mind. The court, through this judgement, has struck a balance between creditors’ rights and debtor companies’ remedies.
Show Me My Money (Reisenfeld & Company v. The Network Group Inc..docxedmondpburgess27164
Show Me My Money (Reisenfeld & Company v. The Network Group Inc., p. 313)
Why does the court see this case as involving a quasi-contract as opposed to an actual contract? What other case law does the court rely on in finding precedent/support for compensating Reisenfeld? Does this decision appear to follow the golden rule guideline set forth in Chapter 2 (pp. 27 and 28)? Describe another example of an implied-in-fact or quasi-contract that you have experienced or is mentioned in the text.
Note: please read all the information correctly before you begin the assignment I have also copy and paste pages 27 and 28 that you would need to complete the assignment.
CASE
13-3
REISENFELD & CO. v. THE NETWORK GROUP, INC.;
BUILDERS SQUARE, INC.; KMART CORP. U.S. COURT OF APPEALS FOR THE SIXTH CIRCUIT 277 F.3d 856 U.S. App. (2002)
Network Group (“Network”) was contracted by BSI to assist in selling or subleasing closed Kmart stores in Ohio. A few years later, Network entered into a commission agreement with Reisenfeld, a real estate broker for Dick's Clothing and Sporting Goods (“Dicks”). Dicks then subleased two stores from BSI. According to executed assignment and assumption agreements signed in November of 1994, BSI was to pay a commission to Network. Network was then responsible, pursuant to the commission agreement with Reisenfeld, to pay a commission of $1 per square foot to Reisenfeld. There was no direct agreement made between BSI and Reisenfeld.
During this time, Network's sole shareholder was defrauding BSI. This shareholder was convicted of several criminal charges stemming from his fraudulent acts. Network was ordered by the district court to disgorge any commissions received from BSI, and BSI was relieved of any duty to pay additional commissions to Network. As such, Reisenfeld never received his commission related to the Dicks sublease.
Reisenfeld sued in state court for the $160,320 in commissions he had not been paid. In addition to suing Network, Reisenfeld also named BSI as a defendant. The suit alleged, among other things, that based on a theory of quasi-contracts, BSI was jointly and severally liable for the commission.
JUDGE BOOGS: . . .
A contract implied-in-law, or “quasi-contract,” is not a true contract, but instead a liability imposed by courts in order to prevent unjust enrichment. … Under Ohio law, there are three elements for a quasi-contract claim. There must be: (1) a benefit conferred by the plaintiff upon the defendant; (2) knowledge by the defendant of the benefit; and (3) retention of the benefit by the defendant under circumstances where it would be unjust to do so without payment. …
There is no disagreement as to the first two requirements. It is clear that Reisenfeld's work as broker benefited BSI and that BSI was aware of the work Reisenfeld was doing. The disagreement rests on the third requirement—whether it would be unjust for BSI to retain the benefit it received without paying Reisenfeld for it. … U.
Covenants Not to Sue in the Wake of Already LLC v. NikeMichael Cicero
Discusses the January 2013 Supreme Court decision bearing on the issue of when a covenant not to sue can nullify a claim for a declaratory judgment of invalidity. This was a TM case, but its principles are expected to apply to patent cases, as well.
ReferencesKahnke, R. E., Bundy, K. L., & Long, R. J. (2015). Key.docxsodhi3
References
Kahnke, R. E., Bundy, K. L., & Long, R. J. (2015). Key Developments in Trade Secrets Litigation. Business Torts Journal, 22(2), 7-12.
<!--Additional Information:
Persistent link to this record (Permalink): https://lopes.idm.oclc.org/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=102831068&site=eds-live&scope=site
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Key Developments in Trade Secrets Litigation
ARTICLES
Keywords: litigation; business torts; trade secrets; damages; patents; Defend Trade Secrets Act; Trade Secrets Protection Act
Trade secrets continue to increase in importance as companies and the U.S. government are focusing attention on their value and protection. This past year has brought a number of significant developments in trade secrets law. In this article, we highlight five of them: (1) the need to protect trade secrets during litigation, and the potential consequences of not doing so (i.e., the DuPont reversal); (2) the growing importance of specifically identifying trade secrets early in litigation; (3) the narrowing of patentable subject matter for software and the alternative of trade secret protection; (4) increasing support for passage of a federal civil trade secrets law; and (5) the continuing trend toward large damages awards and settlements in trade secrets cases.
The Reversal of a Massive Verdict on the Basis of Disclosure in Prior Litigation
When discussing reasonable efforts to protect trade secrets, the discussion typically focuses on the efforts taken by the company during its normal course of business. Equally important, however, are the reasonable efforts taken to protect trade secrets during litigation. Unsealed filings and public presentations in the course of past litigation can lead to a finding that the "trade secret" in question is no longer secret in future litigation, costing clients massive judgments. Such was the case in E.I. DuPont De Nemours & Co. v. Kolon Industries, Inc., 564 F. App'x 710, 714 (4th Cir. 2014).
In DuPont, the Fourth Circuit reversed a nearly $1 billion jury verdict on the basis of the lower court's evidentiary ruling. DuPont sued Kolon under the Virginia Uniform Trade Secrets Act, alleging that Kolon hired former DuPont employees in an effort to acquire its trade secrets related to the production of Kevlar, a proprietary DuPont product. At trial, Kolon intended to introduce evidence showing that a number of the alleged trade secrets at issue in the case involved publicly available information. Specifically, Kolon sought to demonstrate that DuPont had disclosed the trade secrets in the course of a 1980s intellectual property litigation between DuPont and a competitor called AkzoNobel.
According to Kolon, the Akzo litigation was a "widely publicized patent dispute" in which DuPont "disclosed vast amounts of technical information about the Kevlar manufacturing process-beyond its patent disclosures-in open court and public filings." Kolon contended that 42 of the 149 trad ...
Car Accident Injury Do I Have a Case....Knowyourright
Every year, thousands of Minnesotans are injured in car accidents. These injuries can be severe – even life-changing. Under Minnesota law, you can pursue compensation through a personal injury lawsuit.
The Supreme Court clarified the code’s object while keeping legislative intent in mind. The court, through this judgement, has struck a balance between creditors’ rights and debtor companies’ remedies.
Show Me My Money (Reisenfeld & Company v. The Network Group Inc..docxedmondpburgess27164
Show Me My Money (Reisenfeld & Company v. The Network Group Inc., p. 313)
Why does the court see this case as involving a quasi-contract as opposed to an actual contract? What other case law does the court rely on in finding precedent/support for compensating Reisenfeld? Does this decision appear to follow the golden rule guideline set forth in Chapter 2 (pp. 27 and 28)? Describe another example of an implied-in-fact or quasi-contract that you have experienced or is mentioned in the text.
Note: please read all the information correctly before you begin the assignment I have also copy and paste pages 27 and 28 that you would need to complete the assignment.
CASE
13-3
REISENFELD & CO. v. THE NETWORK GROUP, INC.;
BUILDERS SQUARE, INC.; KMART CORP. U.S. COURT OF APPEALS FOR THE SIXTH CIRCUIT 277 F.3d 856 U.S. App. (2002)
Network Group (“Network”) was contracted by BSI to assist in selling or subleasing closed Kmart stores in Ohio. A few years later, Network entered into a commission agreement with Reisenfeld, a real estate broker for Dick's Clothing and Sporting Goods (“Dicks”). Dicks then subleased two stores from BSI. According to executed assignment and assumption agreements signed in November of 1994, BSI was to pay a commission to Network. Network was then responsible, pursuant to the commission agreement with Reisenfeld, to pay a commission of $1 per square foot to Reisenfeld. There was no direct agreement made between BSI and Reisenfeld.
During this time, Network's sole shareholder was defrauding BSI. This shareholder was convicted of several criminal charges stemming from his fraudulent acts. Network was ordered by the district court to disgorge any commissions received from BSI, and BSI was relieved of any duty to pay additional commissions to Network. As such, Reisenfeld never received his commission related to the Dicks sublease.
Reisenfeld sued in state court for the $160,320 in commissions he had not been paid. In addition to suing Network, Reisenfeld also named BSI as a defendant. The suit alleged, among other things, that based on a theory of quasi-contracts, BSI was jointly and severally liable for the commission.
JUDGE BOOGS: . . .
A contract implied-in-law, or “quasi-contract,” is not a true contract, but instead a liability imposed by courts in order to prevent unjust enrichment. … Under Ohio law, there are three elements for a quasi-contract claim. There must be: (1) a benefit conferred by the plaintiff upon the defendant; (2) knowledge by the defendant of the benefit; and (3) retention of the benefit by the defendant under circumstances where it would be unjust to do so without payment. …
There is no disagreement as to the first two requirements. It is clear that Reisenfeld's work as broker benefited BSI and that BSI was aware of the work Reisenfeld was doing. The disagreement rests on the third requirement—whether it would be unjust for BSI to retain the benefit it received without paying Reisenfeld for it. … U.
Covenants Not to Sue in the Wake of Already LLC v. NikeMichael Cicero
Discusses the January 2013 Supreme Court decision bearing on the issue of when a covenant not to sue can nullify a claim for a declaratory judgment of invalidity. This was a TM case, but its principles are expected to apply to patent cases, as well.
ReferencesKahnke, R. E., Bundy, K. L., & Long, R. J. (2015). Key.docxsodhi3
References
Kahnke, R. E., Bundy, K. L., & Long, R. J. (2015). Key Developments in Trade Secrets Litigation. Business Torts Journal, 22(2), 7-12.
<!--Additional Information:
Persistent link to this record (Permalink): https://lopes.idm.oclc.org/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=102831068&site=eds-live&scope=site
End of citation-->
Key Developments in Trade Secrets Litigation
ARTICLES
Keywords: litigation; business torts; trade secrets; damages; patents; Defend Trade Secrets Act; Trade Secrets Protection Act
Trade secrets continue to increase in importance as companies and the U.S. government are focusing attention on their value and protection. This past year has brought a number of significant developments in trade secrets law. In this article, we highlight five of them: (1) the need to protect trade secrets during litigation, and the potential consequences of not doing so (i.e., the DuPont reversal); (2) the growing importance of specifically identifying trade secrets early in litigation; (3) the narrowing of patentable subject matter for software and the alternative of trade secret protection; (4) increasing support for passage of a federal civil trade secrets law; and (5) the continuing trend toward large damages awards and settlements in trade secrets cases.
The Reversal of a Massive Verdict on the Basis of Disclosure in Prior Litigation
When discussing reasonable efforts to protect trade secrets, the discussion typically focuses on the efforts taken by the company during its normal course of business. Equally important, however, are the reasonable efforts taken to protect trade secrets during litigation. Unsealed filings and public presentations in the course of past litigation can lead to a finding that the "trade secret" in question is no longer secret in future litigation, costing clients massive judgments. Such was the case in E.I. DuPont De Nemours & Co. v. Kolon Industries, Inc., 564 F. App'x 710, 714 (4th Cir. 2014).
In DuPont, the Fourth Circuit reversed a nearly $1 billion jury verdict on the basis of the lower court's evidentiary ruling. DuPont sued Kolon under the Virginia Uniform Trade Secrets Act, alleging that Kolon hired former DuPont employees in an effort to acquire its trade secrets related to the production of Kevlar, a proprietary DuPont product. At trial, Kolon intended to introduce evidence showing that a number of the alleged trade secrets at issue in the case involved publicly available information. Specifically, Kolon sought to demonstrate that DuPont had disclosed the trade secrets in the course of a 1980s intellectual property litigation between DuPont and a competitor called AkzoNobel.
According to Kolon, the Akzo litigation was a "widely publicized patent dispute" in which DuPont "disclosed vast amounts of technical information about the Kevlar manufacturing process-beyond its patent disclosures-in open court and public filings." Kolon contended that 42 of the 149 trad ...
Car Accident Injury Do I Have a Case....Knowyourright
Every year, thousands of Minnesotans are injured in car accidents. These injuries can be severe – even life-changing. Under Minnesota law, you can pursue compensation through a personal injury lawsuit.
NATURE, ORIGIN AND DEVELOPMENT OF INTERNATIONAL LAW.pptxanvithaav
These slides helps the student of international law to understand what is the nature of international law? and how international law was originated and developed?.
The slides was well structured along with the highlighted points for better understanding .
A "File Trademark" is a legal term referring to the registration of a unique symbol, logo, or name used to identify and distinguish products or services. This process provides legal protection, granting exclusive rights to the trademark owner, and helps prevent unauthorized use by competitors.
Visit Now: https://www.tumblr.com/trademark-quick/751620857551634432/ensure-legal-protection-file-your-trademark-with?source=share
How to Obtain Permanent Residency in the NetherlandsBridgeWest.eu
You can rely on our assistance if you are ready to apply for permanent residency. Find out more at: https://immigration-netherlands.com/obtain-a-permanent-residence-permit-in-the-netherlands/.
WINDING UP of COMPANY, Modes of DissolutionKHURRAMWALI
Winding up, also known as liquidation, refers to the legal and financial process of dissolving a company. It involves ceasing operations, selling assets, settling debts, and ultimately removing the company from the official business registry.
Here's a breakdown of the key aspects of winding up:
Reasons for Winding Up:
Insolvency: This is the most common reason, where the company cannot pay its debts. Creditors may initiate a compulsory winding up to recover their dues.
Voluntary Closure: The owners may decide to close the company due to reasons like reaching business goals, facing losses, or merging with another company.
Deadlock: If shareholders or directors cannot agree on how to run the company, a court may order a winding up.
Types of Winding Up:
Voluntary Winding Up: This is initiated by the company's shareholders through a resolution passed by a majority vote. There are two main types:
Members' Voluntary Winding Up: The company is solvent (has enough assets to pay off its debts) and shareholders will receive any remaining assets after debts are settled.
Creditors' Voluntary Winding Up: The company is insolvent and creditors will be prioritized in receiving payment from the sale of assets.
Compulsory Winding Up: This is initiated by a court order, typically at the request of creditors, government agencies, or even by the company itself if it's insolvent.
Process of Winding Up:
Appointment of Liquidator: A qualified professional is appointed to oversee the winding-up process. They are responsible for selling assets, paying off debts, and distributing any remaining funds.
Cease Trading: The company stops its regular business operations.
Notification of Creditors: Creditors are informed about the winding up and invited to submit their claims.
Sale of Assets: The company's assets are sold to generate cash to pay off creditors.
Payment of Debts: Creditors are paid according to a set order of priority, with secured creditors receiving payment before unsecured creditors.
Distribution to Shareholders: If there are any remaining funds after all debts are settled, they are distributed to shareholders according to their ownership stake.
Dissolution: Once all claims are settled and distributions made, the company is officially dissolved and removed from the business register.
Impact of Winding Up:
Employees: Employees will likely lose their jobs during the winding-up process.
Creditors: Creditors may not recover their debts in full, especially if the company is insolvent.
Shareholders: Shareholders may not receive any payout if the company's debts exceed its assets.
Winding up is a complex legal and financial process that can have significant consequences for all parties involved. It's important to seek professional legal and financial advice when considering winding up a company.
1. TITLE INSURANCE AND UNPERMITTED WORK
DECEMBER8,2015
When most lenders, owners and lawyers
think of title insurance, they (quite rightly)
think of insurance that covers risks
associated with title matters. The answer is
in the name,as it were.
However, for the time being at least, one
may be able to entertain a more expansive
view of what constitutes an insurable risk
under a standard faun title insurance policy,
because the Ontario Court of Appeal in
MacDonald v. Chicago Title Insurance
Company of Canada, 2015 ONCA 842
(CANLII), has just released its written
judgment which, in a nutshell, supports the
position that work done without necessary
building peanits or governmental approvals
that is not discovered until after closing,and
which leads to loss to the insured purchaser,
can be a cause of such title not being
marketable by the insured purchaser, and
therefore can constitute an insured risk.
The relevant facts are as follows.
MacDonald purchased the property in 2006.
At the time ofpurchase they obtained a title
policy from Chicago Title. What
MacDonald (and Chicago Title) did not
know at closing is that structural work had
been done to the home prior to closing
without the required building penults or
approvals. In 2013 the City of Toronto
issued work orders to have work done to the
property so as to ensure its safety.
The standard fon'title policy provided that
it insured "against actual loss resulting from
the following covered risks, if they affect
your Title on the Policy Date, or to the
extent expressly stated below,ifthey affect
your title[sic] after the Policy Date".For the
SIMON CRAWFORD
BENNETTJONESLLP
purposes of the policy, "title" meant "the
ownership of your interest in the Land, as
shown in Schedule A.
Asthe basis ofits claim,MacDonald pointed to
the "loss of marketability" coverage in
article 11 of the policy, which language
provided for coverage where "your title is
unmarketable, which allows another person to
refuse to perform a contract to purchase or
lease or to make a mortgage loan". There were
other coverage provisions of the policy that
MacDonald purported to rely on,but the Court
found that, for the purposes of the appeal, it
was sufficientto focus on article 11 alone.
First and foremost, the Court predicated its
finding with confiimation that insurance
coverage provisions must be interpreted and
construed broadly.
It is also important to note that the Courtfound
that Chicago Title had not contested that the
faulty condition ofthe Property would meetthe
second part of the test, namely that it would
allow "another person to refuse to perform a
contract to purchase or lease or to make a
mortgage loan." With the satisfaction of this
part of article 11 apparently being conceded,
the case came down to two things: did the
faulty condition render the title "unmarketable",
and if so, did any of the express policy
exclusions exclude coverage.
2. 2
The Court made the following findings:
1. The fact that the property could,
despite the faulty construction, be
sold to a third party at a cheaper
price, does not make the property
"marketable".
2. The condition ofthe property flowed
"directly from the failure of the
previous owner to obtain the
necessary municipal approval.....and
that failure has made the appellant's
title unmarketable within the
meaning of clause 11 of the Title
Policy."
Curiously, the Court made an interesting
distinction in order to come to this
deteanination. Inherent in finding that this
was a matter ofthe marketability oftitle was
that the Court found that the underlying
defect was the lack of necessary building
permits/approvals, not the improper
construction ofthe building.
Having found MacDonald's title to be
unmarketable for the purposes of clause 11
of the policy, the Court turned its attention
to the exclusions and limitations in the
policy. Chicago Title pointed to only one
exclusion: that coverage was unavailable
where the risk first affected the title after the
policy date. The Court did not accept
Chicago Title's position, and instead found
that "title was unmarketable within the
meaning of the Title Policy from the
moment they acquired the Property, even if
they were not yet aware of the fact" such
that "the unpermitted construction was an
existing defect that crystallized when the
appellants became aware ofthe defect".
There are more than a few points of interest
thatflow from this case.
Firstly, is the issue of the intent of the policy
and the provision. Chicago Title argued
(unsuccessfully)that the improper construction
of the property was a latent defect and that it
was not the intention of the insurer to insure
against latent defects. Putting intention aside,
the Court focused on the overall bias towards
reading insurance coverage provisions broadly
and reading insurance exclusionary provisions
restrictively. The insurer, therefore, bears the
risk that its language can be read more broadly
than it intended. This raises the obvious
question of whether Chicago Title (and other
insurers) will need to amend their marketability
coverage to specifically addressthis point.
Secondly, it raises the question of how title
insurers are to underwrite the risk that a prior
owner has obtained all necessary permits and
approvals for work done.Ifan offtitle enquiry
is made to the municipality or region, and the
response is "clear", that is only an indication
that the municipality or region is unaware of
outstanding work orders or building permits. It
is not an indication (or confilination) that all
requisite penults or approvals were obtained
for the building.
Curiously, however, what the Court did not
address (because it stopped its analysis on
clause' 11 ofthe policy), was the coverage set
out in clause 16 ofthe policy, which provided
coverage where "you are forced to remove your
existing structure...because any portion of it
was built without a building permit from the
proper government office or agency".
One can only speculate that the Court avoided
this provision becausethe facts did not squarely
fit with the test "you are forced to remove your
existing structure". But what this clause 16
does provide is some colour on whatthe insurer
was prepared to insure against. Conceptually,
clause 16 is insurance against the failure of a
3. 3
prior owner to get a proper building per nit
or approval,and although the Court does not
say so (or even imply so) one might
speculate that this provision coloured the
Court's determination that clause 11
included coverage for defects existing due to
the lack ofpermits/approvals.
Another curiosity of this case, which is
perhaps also tied to the colour ofclause 16,
is that the Court made a point of expressly
denying Chicago Title's assertion that the
improper construction was the cause ofthe
lack of marketability and instead stated that
the specific cause was the lack ofrequisite
permits/approvals. This is an interesting
distinction because there was nothing in
article 11 (the provision on which the case
turned) that appeared to require this
distinction. Arguably, had the work been
property permitted and approved, but was
still faulty to the point of affecting
marketability, then such work would have
amounted to an uninsured latent defect. In
addition,in pointing the finger at the lack of
approvals/permits,the Court may have been
somehow identifying the risk as something
searchable and discoverable, in the same
nature as one searches and discovers open
building permits and work orders, and in
doing so, wrapping the cause in the blanket
of so-called title and off-title matters. Yet
there seems to be something broken in this
approach, because unlike work orders and
building permits, which are searchable and
discoverable, unpermitted work is not so
easily discovered. It certainly won't show up
in a municipal search because the
municipality doesn't know what it doesn't
know.And unpermitted work will more than
likely not show up in a customary property
inspection,unless it is so obviously deficient
that a reasonable inspection would discover
it. So really,whatthe Court has done,is take
what we would ordinarily consider a latent
defect, and recharacterize it as a "title
deficiency" because the defect occurred as a
consequence of building/renovating without a
permit. Or to put it another way,the Court has
effectively stated that title insurance
"marketability" coverage insures that the
building was built and renovated with building
permits. Whatthe case does not establish is that
title insurance "marketability" coverage insures
that the building is in compliance with the
building code for reasons other than the lack of
building permits (i.e. if the permit was
improperly granted, if the final inspections by
the municipality were faulty, or ifthe building
code has been amended to be more stringent
since the permit was granted).
The question then,is whatis the potential effect
ofthis case. It is not clear that only serious or
material unpermitted work is captured. While
on the facts of this case, the underlying work
was structural (rending the home unsafe), the
test in the policy was whether the deficiency
would "allow another person to refuse to
perform a contract to purchase or lease or to
make a mortgage loan". Lenders refuse to
advance loans for all manner of unpermitted
work, and certainly a purchaser can refuse to
close a transaction where portions of the
property have been built or renovated without a
permit (even if the work is not a matter of
safety or would otherwise be in compliance
with the building code). So it is difficult to
determine where the line for coverage is. The
approach,however,appears to be thatthe Court
will view the lack ofmarketability,not in terms
ofthe purchaser's inability to sell or finance the
property, but in terms of the purchaser being
able to sell or finance the property in the state
that it believed it purchased it in. And while
historically "state" was generally thought of as
being the state of title (and the accuracy of
certain municipal responses and the like), it
now encompasses the state of"compliance" of
the property with building code permit
requirements.From a policy perspective,this is
a difficult decision to reconcile, and it has the
hallmarks of so many other "deep pocket"
insurance claim cases that appear more result
4. 4
driven ("someone has to pay for this") than
good law. For my part,I would suggest that
the Court too quickly discounted the
introductory language in the policy...that
coverage is for risks that "affect your Title"
where Title means "the ownership of your
interest in the land",and expanded coverage
from defects in "ownership" to defects in
construction.
For insurers however, this does raise an
interesting question. The custom in
commercial real estate transactions, is for
the vendor to contractually authorize the
purchaser and its counsel to make written
enquiries of municipal authorities with
respect to building permits and work orders,
but such authorization typically expressly
prohibits the purchaser from requesting or
peunitting such municipalities to inspect the
property. Perhaps title insurers will require that
this practice be changed, and that purchasers
make reasonable efforts to have a building
inspection done by the municipality in order to
have the benefit of this "marketability"
coverage for peunits/approvals, so that, at the
very least,there is a diligence componentto the
risk being underwritten.
At the end of the day, this case is both fact
specific and policy specific, and so it matters
only for so long as there are policies that
contain language that can be similarly broadly
and expansively interpreted. And if the title
insurance community collectively considers
this to have been too broadly interpreted, then
they will have to clarify and narrow their
limited marketability coverage.
5. 5
Simon Crawford is a recognized leader in commercialreal estate law,
having acted onsome ofthe country's largest and mostcomplex real estate
transactions.In additionto being active inthe trading and financing ofreal
estate and real estate companies,Simon has extensive experience in private
equity structures,public real estate structures,and the issuance ofreal
estate backed securities,including the private placement ofasset backed
bonds and debentures. Simon has also authored various complex real estate
structures involving credit and synthetic lease vehicles,participating and
mezzanine loans,and structured debt stack solutions. On the development
and financing front,Simon has acted on many ofCanada's landmark properties,including
Toronto's TD Centre,First Canadian Place,Brookfield Place,Bay Adelaide Centre,Royal Bank
tower,and the Aura condominium project(being the tallestresidential projectto date in Canada).
Simon's contact particulars and additional details in respect ofhis practice can befound at:
http://www.linkedin.com/pub/simon-cravvford/14/116/878
This discussionpaper is notintended to provide legal advice, but to highlight matters ofinterest
in this area oflaw. Ifyou have questions or comments,please contactSimon Crawford directly.
Theforegoing discussion paper does not establish anyform oflawyer-client relationship with
Simon Crawford or any lawfirm at which he is a partner or is otherwise affiliated with. The
information contained in this discussion paper is public information and is not individualized
legal advice. Readers should not rely on or take any action based upon this information;
professional advice should be obtained. This discussion paper may contain errors or omissions
and any liabilityfor anysuch errors or omissions is hereby disclaimed.
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