Friday, July 29, 2011

MERS changes its rules.

MERS, the electronic mortgage registry that was supposed to simplify the foreclosure process for lenders, is facing multiple investigations for their role in tens of thousands of problematic foreclosures, Reuters reports.  The attorneys general of Delaware and Massachusetts have launched investigations.  County recorders and clerks in several different states have raised concerns that MERS does not record the proper paperwork as required by state laws.  MERS services 32 million, or 60%, of the country's mortgages.

In response to the increased scrutiny, MERS has changed its rules.  Its members are no longer allowed to file suit in MERS's name.  They must also now obtain and record mortgage assignments before filing suit.  The current robo-signing controversy involves the mass production of mortgage assignments, oftentimes long after the suit is filed, by MERS's members.  That will change, but only slightly.  MERS is still going to prepare the assignments, but they now just require the assignment as a prerequisite to filing suit.  So the robo-signing will now just take place at a different stage in the game.  

Plus, the legitimacy of the assignment will still be at issue.  They just won't be in the court file. You'll have to go to the recorder's website to get a copy.  But the homeowner can then challenge the assignment as part of the case.  I don't have any specific pointers for attacking the assignments off the top of my head, but I can tell you that the first thing you should look for is the name Linda Green anywhere on the document.  Anyone who doesn't know that name should click HERE, or google it.

Saturday, July 23, 2011

And the winner is....

Nobody!!!  There were no guesses for Hole 10.  I guess the coffee mugs will roll over until next year.  And I also heard some good suggestions for better prizes next year.  So next year's contest should be interesting. 

It's great to see the loyal Law Blog readers suggesting great prizes that I should buy with my own money so that they can win them for free.  Ha!!  Great times at the golf outing once again though.  See everybody next year.

Tuesday, July 19, 2011

ISBA Young Lawyers Division Golf Outing - Cog Hill

I am a member of the ISBA’s Young Lawyers Division Section Council. We are holding our annual Golf Outing to benefit the Children's Assistance Fund at Cog Hill, Course #3, on August 3, 2011.

There will be a one hour Professional Responsibility CLE on the Changes to the Rules of Professional Conduct by Mary Andreoni from the ARDC at 11:00 a.m. There will be a shotgun start to the Golf Outing at 1:00 p.m. with dinner and an open bar following the event. You are welcome to come for dinner only if you are unable to golf that day.

Numerous sponsorship opportunities are available.

The Children’s Assistance Fund is administered by the ISBA YLD and ISBA to help serve the legal needs of children in Illinois. The Children’s Assistance Fund provides grants to organizations across the state related to children and law, including funding children's waiting rooms in courthouses. The Children’s Assistance Fund is a 501(c)(3) charitable entity.

Information and online registration are available at Please do not hesitate to contact me with any questions you may have regarding the outing.

Saturday, July 16, 2011

Golf Outing Rescheduled

The rescheduled Golf Outing is coming up on Friday, July 22nd.  There is still time to enter the Second Annual Northern Law Blog Golf Outing Giveaway Contest.  The winner does not need to be present at the Golf Outing.  Click HERE to review the details and cast your vote.  There's only a few holes left to choose from.

Friday, July 15, 2011

"Screw you Rusty"

I told you earlier that I was going to write about a couple of interesting trials to keep up the Casey Anthony momentum.  The first one involved the Government's attempt to rob an innocent family of ten gold coins worth about $75 million.  The second one was going to be the Roger Clemens trial.  But, as you know, the judge declared a mistrial on the second day of trial.  So instead of getting into the details at this point, I'll just tell you why everybody yells "Screw you Rusty!" to Clemens' lawyer Rusty Hardin when they see him.

Mr. Hardin represented the estate of J. Howard Marshall, the Texas billionaire who married Anna Nicole Smith.  There was a very long and contentious trial concerning his billion dollar estate.  At one point during Hardin's cross examination of Anna Nicole, she was crying and sobbing while describing her love for her deceased husband. 

"Mrs. Marshall, have you ever taken acting lessons?" Hardin asked. 

"Screw you, Rusty," she shot back.

Now it is not uncommon for people in public to see him in the street and yell "Screw you Rusty!"  And he loves it!  That's hilarious.

Mr. Hardin is known for asking the right questions at the right time.  There is another story on this website about an exchange in the Calvin Murphy trial.  He is the NBA Hall of Famer who was charged with sexually abusing five of his own daughters.  During the cross examination of one of the daughters,  Hardin was getting nowhere with his questions when he suddenly stopped and asked her, point blank, “Do you sometimes make things up?” Amazingly, the daughter answered, “Yes.”

Instead of stopping there, Hardin pressed on. “Is there any way for the jury to tell when you’re making something up?”

“No,” she said.

The jury took less than two hours to acquit Calvin Murphy.

Tuesday, July 12, 2011

Intrusion upon seclusion: A new tort?

Any rights we may have to seclusion are highlighted by the recent First District case of Lawlor v. North American Corporation of Illinois, ___ Ill.App.3d ___, ___ N.E.2d ___ (March 24, 2011) (2011 WL 1205479). This very interesting and fact-driven case involves Kathleen Lawlor, a former sales employee of North American Corporation of Illinois, who, after she terminated her employment, learned that her former employer had surreptitiously obtained her telephone records without consent using nefarious means or “pretexting.” The employer suspected unlawful competition. North American hired Probe, an investigator, who, in turn, retained Discover who had no difficulty in obtaining details on all of Kathleen Lawlor’s phone calls made both during and after her employment with North American.

A jury verdict was returned in favor of Lawlor on her intrusion upon seclusion claim for $65,000.00 in compensatory damages and $1,750,000.00 in punitive damages. The trial judge, acting under the discretionary powers granted to him by 735 ILCS §5/2-1207, determined that the punitive damages were excessive and entered a remittitur. The Appellate Court, Justice Lavin presiding, declared that the trial court abused his discretion in reducing the punitive damages and reinstated the original award for North American’s reprehensible conduct. Although most of the case involved the circumstances under which punitive damages can be awarded, for our purposes it’s good to review the nature and extent of the tort identified as “intrusion upon seclusion” in the opinion.*

Intrusion upon seclusion is, of course, a form of invasion of privacy as enunciated in Melvin v. Burling, 141 Ill.App.3d 786, 490 N.E.2d 1011 (3rd Dist., 1986). Melvin traces the history of this tort to an article written by the former Supreme Court Justice, Louis Brandeis (Warren and Brandeis, The Right to Privacy, 4 Harvard Law Review 193 (1890)). Dean Prosser expanded the tort with court approval in his treatise (D. Prosser, Torts, Sec. 112, 3.Ed., 1963). Historically, Illinois first recognized the right to privacy cause of action in Eick v. Perk Dog Food Co., 347 Ill.App. 293, 106 N.E.2d 742 (1952). Early privacy cases refer to the tort as “appropriation”. The Illinois Supreme Court ventured into the area of privacy law in Leopold v. Levin, 45 Ill.2d 434, 259 N.E.2d 250 (1970) (although recognizing right to privacy, convicted killer of Bobby Franks, Leopold was unsuccessful in his suit for the book fictionalizing his life in “Compulsion”). The first case that actually used the words “intrusion upon seclusion” appears to have been Bureau of Credit Control v. Scott, 36 Ill.App.3d 1006, 345 N.E.2d 37 (1976) (Individual harassed by credit bureau filed suit sounding in intentional infliction of mental distress and invasion of privacy by unreasonable intrusion upon her seclusion and solitude). In Bureau of Credit Control, the Fourth District Appellate Court ruled that the plaintiff had stated a cause of action for severe emotional distress, but since she already had a remedy for that tort, there was no need to grant her a separate remedy for invasion of privacy, i.e., intrusion upon seclusion.

The history of this tort continues in Bank of Indiana v. Tremunde, 50 Ill.App.3d 480, 365 N.E.2d 295 (1977). The Fifth District stated that although it could find no reported cases for “unreasonable intrusion upon seclusion,” on the basis of Leopold it assumed that the Supreme Court would recognize the tort as a separate cause of action. In Kelly v. Franco, 72 Ill.App. 642, 391 N.E.2d 54 (1st Dist., 1979), the First District affirmed the trial court’s order dismissing the “intrusion” count finding that Illinois did not recognize a cause of action for invasion of privacy except for the unlawful use of an individual’s name or likeness.

Melvin v. Burling, supra, breathed new life into the intrusion theory by citing the Leopold case, while casting aside the negative language in Bureau of Credit Control. The complaint in Melvin was found to have sufficiently stated facts to support a cause of action for intrusion upon seclusion predicated upon the invasion of privacy doctrine. Nothing was said about limitation of a cause of action only to “unauthorized use of an individual’s name or likeness for commercial purposes” as enunciated in Kelly v. Franco.

The Illinois Supreme Court revisited the intrusion tort in Lovgren v. Citizen’s First National Bank of Princeton, 126 Ill.2d 411, 534 N.E.2d 987 (1989). One of the counts in the Lovgren Complaint sought recovery for intrusion and the Court, after reviewing its decision in Leopold, found that although the facts in this case presented a case of a possible violation of privacy, they did not rise to the level of the tort of intrusion upon seclusion (534 N.E.2d 988). Lovgren recounts the fact that the Restatement of Torts adopted Professor Prosser’s “intrusion” as one of four branches of privacy torts [Restatement (2nd) of Torts, 625(b) at 378 (1977)]. The Lovgren decision points out that the essence of this tort is not publication or publicity, but “highly offensive prying into the physical boundaries or affairs of another person.” In ruling that the defendant’s conduct did not come within the classification of this branch of invasion of privacy, the Supreme Court states that discussion of “intrusion” “as enunciated in the Restatement and by Prosser does not imply a recognition by this Court of such a cause of action”. The opinion then notes that there is a conflict in the appellate districts as to whether the unreasonable intrusion into the seclusion should be recognized in this state as a separate tort, but ultimately the Court found it unnecessary to resolve the differences in the various Appellate Court districts in this case.

The First District following Melvin clearly holds that the “intrusion” count has legs and can stand alone as a branch of right to privacy as demonstrated in the later case of Johnson v. K-Mart, 311 Ill.App.3d 573, 723 N.E.2d 1192, 1996 (1st Dist., 2000).

Fast forward to the Fourth District case of Burns v. MasterBrand Cabinets, Inc., 369 Ill.App.3d 1006, 874 N.E.2d 72 (4th Dist., 2007) where the Court there notes that since its decision in Bureau of Credit Control, all four of the other appellate districts have explicitly recognized the tort of intrusion upon seclusion. Benitez v. KFC National Management Co., 305 Ill.App.3d 1027, 714 N.E.2d 1002 (2nd Dist., 1999) (female employee of fast food restaurant recovery for invasion of privacy for spying on female employees through the ceiling of the women’s bathroom) also found a split between the districts on recognition of the tort. Benitez finalizes its opinion finding nothing in Leopold or Lovgren to suggest that our Supreme Court would not recognize such a claim and the fact that the elements of that tort may overlap with other torts is not reason to reject it as a separate self-standing viable cause of action. Having specifically recognized this new tort as intrusion upon seclusion of another, it held that the one-year Statute of Limitations for defamation would not apply to this cause of action (714 N.E.2d 1007).


Notwithstanding the lack of endorsement or approval from the Illinois Supreme Court, there is sufficient Appellate Court approval for intrusion upon seclusion in Illinois. This is perhaps why the defense in Lawlor did not even argue the existence or viability of the cause of action during the trial. Now we are all refreshed as to the nature of the tort, and we can readily separate it from the other branches of the invasion of privacy arena. Woe be the employer who surreptitiously obtains an employee’s personal phone records.

*The case also notable for its agency findings hotly contested in the trial court.  The trial court also found Lawlor guilty of breach of fiduciary duty in a counterclaim, but the Appellate Court reversed that finding on a manifest weight argument.  My thanks to Nancy Temple, the successful plaintiff’s attorney for some trial court background.


Monday, July 11, 2011

What's the next big trial?

Casey Anthony sure got everyone interested in the legal system for a week or two.  To keep that momentum rolling I have selected a couple of interesting trials from around the country to tell you about.  The first one doesn't have the nationwide allure of a dead toddler and the Miami nightclub scene, but it does involve a whole lot of money and has a similar theme of governmental overreaching.

The first case is United States of America v. Ten 1933 Double Eagle Gold Pieces.  In 1933 President Franklin D. Roosevelt ordered the destruction of all Double Eagle coins shortly after they were minted due to economic concerns.  A very limited number of coins escaped destruction.  A massive Secret Service investigation during the 1940s and 1950s linked every known Double Eagle to one man, Isreal Switt, but the government decided not to prosecute him. 

Isreal Switt died in 1990.  His estate was probated without complication.  But in 2004 his daughter discovered a previously unknown safety deposit box that contained 10 Double Eagle coins.  She took the coins to the U.S. Treasury to have them authenticated, but the Government seized the coins and initiated forfeiture proceedings in federal court.  The trial started last Friday.

The Government argues that the coins were never released into circulation by the Treasury and were supposed to be destroyed, so any surviving coins must be stolen.  The daughter argues that there were several legal ways that Gold Eagles could have left the Mint in 1933.  The daughter also argues that the Government should have to prove that these particular coins were stolen, not just that all Gold Eagles must have been stolen.

The daughter has precedent on her side.  The only other Double Eagle to surface in the last 60 years occurred in 2000 when a British coin dealer was arrested by Secret Service agents during a sting operation.  The coin dealer was acquitted of all charges, then sued the government for the return of his coin.  As part of a settlement in that case, the government authorized an auction of the coin.  It brought $7.6 million. So the daughter is looking at a big payday in this case if she can prevail. The trial is supposed to conclude this week.  I'll try to follow up with a report.

Friday, July 8, 2011

Unreasonable Legal Fees: How Much is Too Much?

What makes a flat fee for a lawsuit so large that it is unreasonable?  A recent news article makes me wonder if a flat fee would be unreasonable just because it may be two or three times higher than any other law firm would charge.  According to THIS post from the Wall Street Journal Law Blog, Joe Nacchio, the former CEO of Qwest Communications, the high speed internet company, has sued his former lawyers in New Jersey state court for malpractice, claiming that they were negligent for grossly over billing him. 

His lawsuit alleges that his lawyers breached their fiduciary duties because they charged him a flat fee of $5 million to defend him on insider trading charges and an additional $20 million to defend him in several related civil suits.  The full complaint is linked HERE.  The complaint is pretty short on facts relating to the underlying litigation.  Mr. Nacchio does not even state how many different civil suits there were.  Nor does he allege the scope of the litigation or the time frame.  He doesn't really state why the fees were excessive, he just concludes that they were. 

If the Nacchio case had happened in Illinois, and if we knew a little bit more about it, we could analyze it under Illinois Rule of Professional Conduct 1.5, which prohibits lawyers from collecting an unreasonable fee or an unreasonable amount for expenses.  Under Rule 1.5, the factors to be considered in determining the reasonableness of a fee include the following:
  • the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
  • the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;
  • the fee customarily charged in the locality for similar legal services;
  • the amount involved and the results obtained;
  • the time limitations imposed by the client or by the circumstances;
  • the nature and length of the professional relationship with the client;
  • the experience, reputation, and ability of the lawyer or lawyers performing the services; and
  • whether the fee is fixed or contingent.
I don't disagree with anything in the Illinois rule, but the sophistication of the client should also be a factor.  The CEO of multi-billion company who is facing 25 years in prison and potential civil liability into the hundreds of millions may set out to hire a specific law firm even at an increased cost. The client may wish to secure a particular lawyer or law firm's reputation, skills, experience with the judge, etc.  The client always has the option to seek a competitive bid from another law firm, but sometimes people are not simply looking for the cheapest lawyer.

In this case, the client signed on the dotted line with a particular lawyer, Herbert J. Stern.  Mr. Stern was a federal judge for 13 years.  He's a former U.S. Attorney.  He charges a lot of money.  Clients know that before they call him.  I'm guessing Joe Nacchio didn't pick his name out of the yellow pages.  I don't see how Mr. Nacchio can now claim that a flat fee to which he already agreed is unreasonable.  Sounds like a case of buyer's remorse following his 70 month sentence and $63.6 million in fines and restitution.