Wednesday, March 30, 2011

Welcome Spring and GO PHILLIES!

Last night, we took a bit of time off from the legal world to go to the Phillies pre-season game at the fabulous Citizen's Bank park.

As you can see - we had great seats, just 28 rows behind the Phillies dugout.

We brought blankets, hand warmers (Thanks Elizabeth!) and fleece jackets.

I made sure I wore Phillies red!

Go Phillies!  Good luck this season.

Thursday, March 24, 2011

Does your attorney have to keep your secrets?

It has long been the law that when a client makes confidential communications to his attorney in the context of seeking legal advice, those communications are privileged.  An attorney is bound by ethical obligations not to reveal those communications, even if so ordered by a judge or other authority.  

There are some exceptions to this rule, as there are really no absolute rules in the law.  For example, attorney-client privilege can be broken if the client waives the privilege.

This sacred privilege gives clients the freedom to openly discuss their confidential issues with their attorneys without fear that the attorneys would then reveal that information to someone else.

The Supreme Court of Pennsylvania recently opined in Gillard v. AIG Insurance Company, et al., J-58-2010, that the attorney-client privilege protects confidential information whether it was communicated by the attorney to the client or by the client to the attorney.  The Court hoped to promote “the encouragement of trust and candid communication between lawyers and their clients.”

Clients should remember that this privilege is limited to confidential communications.  Certain actions can break the confidentiality, such as having a third-person present for the conversation.  If you are concerned whether certain communications are privileged, ask your lawyer to explain and clarify this issue for you.

Monday, March 21, 2011

Five things most people never do, but should, when buying a house

(1) Google the address.

Sure the house might have welcoming curb appeal, plenty of closet space and a floor plan that is perfect for your lifestyle, but your inquiry should not end there. Sometimes houses have histories that could haunt new owners.  

If you think you have found your dream house — do an internet search of the the address and the names of the owners and look closely for warning signals: news reports, mentions of the address and/or blog articles.  You may discover that your dream house is actually a nightmare in the making.

One young couple in Minnesota found what they thought was the perfect house and plunked down their savings.  They relied on their real estate agent, hired a home inspector and thought they were buying the place of their dreams.

As they began remodeling the home, they noticed oddities – windows painted black, disconnected smoke detectors and rooms with unusually sturdy locks.  They suspected their new home may have had a history as a drug house, but the local police had no such records and a home testing kit proved negative.  Finally, a neighbor broke the news – their house had been a methamphetamine lab.  A company hired to assess the damages found dangerous levels of the drugs as well as the chemicals used to make the drugs all throughout the home.  The couple, horrified that they had been living and working there unprotected, vacated immediately.  The tab for the cleanup exceeded $30,000 and the couple were forced to rent another place to live while paying their mortgage — adding to the spiraling costs.  They won a lawsuit against the former owners, but have yet to collect a dime — so it is more of a moral victory than a monetary one. Eventually, the home was sold at Sheriff’s sale for significantly less than the buyers originally paid.

Another couple near Philadelphia, Pennsylvania purchased a quaint four bedroom home after it passed both a home inspection and a Certificate of Approval from the borough inspector.  However, a few days after moving into the home, a neighbor broke the bad news: they lived in a former meth lab.

Perhaps had these buyers googled the address and the names of the owners, they would have discovered news reports and articles about troubles at that address.  You can also search the U.S. Drug Enforcement Administration’s National Clandestine Registry which lists where local authorities have found drug-making paraphernalia.  Not every negative aspect of a house’s history will show up on an internet search, but because this is a step that only takes a few minutes, do not leave it out of your home-buying process.

(2) Study for the home inspection as if your life depended on it.

What is a home inspection?  A home inspection provides you with an opportunity for a professional home inspector to inspect your house and make sure everything is in good working order – sort of like hiring a veterinarian to perform a full physical on a horse in a race before you bet on it!  Most agreements of sale provide “opt out” provisions so that you can back out of the deal if the home inspection reveals serious issues.

Home inspections can be ripe breeding grounds for lawsuits — buyer’s remorse can turn into “the home inspector should have told me .......”  Accordingly, most home inspection agreements have waivers, conditions and exclusions that dwarf the actual inspection.  Nevertheless, home inspections can be useful tools, and there are ways that you can make yours even more productive.

Get a recommendation for a home inspector from someone other than your realtor.  A home inspector who is close with your realtor might feel a vested interest in the sale going through, so make sure your inspector is completely neutral.  In addition, bring along a handyman/contractor who can look over the inspector’s shoulder, and provide you with a second opinion on the spot.  Have a list of questions for the inspector so that you can find answers on what is important to you.  For example, if you enjoy a great deal of electronics, make sure the electricity can handle the load.  Hate to perform home repairs?  Ask about the age and quality of heating and cooling systems, plumbing and structural items.  Do not be fooled by clever stagings: look behind every door and in every corner and inspect the walls for paint jobs that could cover water damage.  Most important of all: never “opt out” of the home inspection in your Agreement of Sale.

(3) Understand the mortgage process.

Your mortgage broker and realtor should not be your only source of education on how the mortgage process works.  Understand the entire undertaking — from rates to terms to equity versus debt ratios.  There are significant legal obligations tied to mortgages, and being responsible for a mortgage that you cannot pay can ruin you financially for years, if not the rest of your life.  Do your homework ahead and understand what you are signing.  There are many books available at your local bookstore or library that will give you a good, basic working understanding of mortgages and home-buying.  You will feel more confident and be better equipped to ask appropriate questions if you understand the lingo and process.

(4) Go to the property one day without your realtor.

If you have a realtor, you should not speak to the Seller directly.  However, you should get a view of the property unfiltered by a sales pitch.  Check out the neighborhood and the neighbors.  Look at the cars parked on the street and the neighborhood both in daylight and at night.  Are neighboring houses neat and well kept?  Is there unusual traffic on the street or in and out of someone’s house?  Does the neighborhood’s atmosphere change after dark?  Are there businesses or restaurants nearby that could cause unpleasant noises, smells or traffic congestion?

Sometimes a realtor will give you estimates for traveling times to and from the house or proximity to public transportation.  Verify these statements yourself, during rush hour.  If you anticipate a 30 minute commute to your job and find out after you settle on the house, that the ride actually takes more than an hour, your dream house might not seem so dreamy.

(5) Do not fall in love with a property – there will always be another.

Even though a house may seem perfect, do not let your heart overpower your head and your gut.  Purchasing a home, at least for most people, is a significant investment.  As an investment, the purchase needs to make good financial sense.  This means that you should always consider re-sale of the home, even before you have made an offer.  If your gut is sending warnings about the noisy business across the street or the giant utility tower in the backyard, then you can be sure that the same warnings will occur to a future buyer.

Perhaps the home really is “perfect,” but the price is simply too high.  Stretching yourself financially to buy a house that you cannot afford will only lead to stress.  If you are constantly worried about being able to pay your mortgage, then you will never be able to enjoy living in your “dream” house.  It will only be a nightmare.  Wait to buy until you can save more money, or keep looking for that “dream” house that is a complete package.

Once you have used common sense and careful financial planning to find the right house, you will be able to happily enjoy and love the house without constant concerns about the condition of the house, the desirability of the neighborhood or your ability to timely pay your mortgage.

Friday, March 18, 2011

I signed an Agreement in mediation - can I have it set aside?

In a recent New Jersey Superior Court Appellate Division decision, N.H. v. H.H. (2011), the Court addressed the enforcement of a Marital Settlement Agreement (“MSA”) achieved with the assistance of a mediator when one of the parties later attempted to have the agreement set aside.  

The parties in this case were married in 1991 and had seven children. By Summer 2007, the parties were experiencing marital discord. In late Summer 2007, Wife was hospitalized at a treatment facility for a month-long treatment program to address various addiction, mental and behavioral disorders. Upon her return, the parties attempted to reconcile their differences and even retained the private mediation services of a retired judge.  However, by the end of 2008, it was clear that the parties could not mend their marriage. The parties retained separate legal counsel and began divorce mediation under the judge. 

During the mediation process, the parties, in addition to their separate attorneys, also jointly retained an accountant from a firm that had provided accounting and tax services to the couple and to Husband’s business for many years. In February 2009, the parties signed a MSA. The MSA contained confirmation by both spouses that: (1) they were both fully informed of their financial status, (2) they both had counsel who had advised them of their right to pursue further discovery including investigation into their financial statuses and (3) they voluntarily, with a full understanding of the legal consequences, entered into the agreed-upon terms of the MSA. 

The MSA granted Wife significant financial support. She was to receive $8,000.00 per month in alimony for two years after which the monthly payments would increase to $10,000.00 per month. Wife also was granted a percentage of Husband’s bonus for two years, $3.3 million in assets as equitable distribution, $800,000.00 in jewelry and clothing, as well as various furniture and artwork.  

The MSA also contained an agreement by both parties that they would be bound by the recommendations of a psychologist, who the parties had jointly retained to conduct a full evaluation of the parties and their seven children. Based on his evaluations, the psychologist was supposed to write a report including recommendations for custody and parenting time. At the time the MSA was executed, the psychologist’s report was not complete. The MSA stated that the parties would mediate a temporary custody and parenting-time plan until the report was completed. 

On June 8, 2009 the psychologist released an extensive ninety-three page report on his evaluation and findings. The psychologist’s research included group interviews with the parents and children, individual interviews with the children, psychological testing of the parents, interviews with the family’s therapist, reports and records from Wife’s treatment leading up to, and during, her time spent at the treatment program, a report from Wife’s personal therapist as well as police reports, letters, emails and private investigator reports. The information revealed in the detailed report did not flatter Wife. The personality tests indicated that Wife suffered from a significant personality disorder, while the group and individual interviews with the family revealed that Wife drank a substantial amount of alcohol and displayed erratic behavior, including instances of public intoxication, drunk driving and a general absence from the children’s lives. The family’s description of Wife was supported by further documentation, including the police and private investigator reports. The psychologist recommended that Husband be granted primary physical and sole legal custody of the children. Wife would have two day-time visits per week to visit with all visitation to cease if she was drinking during, or leading up to, her visitation periods. After fix months, re-evaluation of Wife’s visitation and the possibility of over-night custody time was to be performed. The psychologist followed up his report with supplemental recommendations that Wife immediately enter inpatient treatment for her alcohol abuse and personality disorders and that Wife only be allowed supervised visitation until treatment begins.

Shortly after the parties received the psychologist’s report and supplemental recommendations, a flurry of legal activity commenced. First, Wife sought to have the supplemented recommendations declared ineffective, which the Court denied. Husband and Wife then separately filed a variety of economic claims and Wife sought to have the entire MSA set aside. The motion court resolved the economic claims and refused to set aside the MSA financial provisions but agreed to review the custody and parenting provisions. However, the court insisted on compliance with the report and the supplement until the custody issue was resolved. The parties both filed for reconsideration. The court found that the parties willingly agreed to the terms of the MSA with full knowledge of its contents and that they were to comply with the MSA as well as the psychologist’s report and supplement. The court also issued a Judgment of Divorce. Wife appealed.

The opinion of the Superior Court of New Jersey Appellate Division Court began with a general overview of the state’s acceptance of mediated agreements. Out-of-court settlements offer many benefits such as: (1) each party is able to negotiate the terms most important to them, (2) the cost and stress of litigation is avoided and (3) the tedious and expensive appeal process can be avoided. In addition, as with this family, when children are involved, a settlement can save the children the stress of going through custody litigation. Mediation in New Jersey is an accepted method of resolving family matters and, although a mediated settlement may not have the same terms that a litigated order would have, if it is voluntary and was fair and equitable to the parties involved, then it is enforceable. Of course, an agreement that is reached through fraudulent or deceptive behavior or is unconscionable, may be set aside by the court. Here, where the parties agreed to their jointly-retained experts, had sufficient separate legal representation and jointly created an extremely detailed and thorough agreement, there was no reason for the court to set it aside. 

Wife attempted to claim that the MSA was unconscionable, that she did not understand the provisions and that she was deceived about the value of the marital estate. The court found absolutely no merit to any of Wife’s attempts to escape the financial terms of the agreement and moved on to analyze the terms dealing with custody and parenting time. 

In looking at the lower court’s enforcement of the custody and parenting provisions, the court discussed the applicability of the New Jersey Arbitration Act’s provisions. Here, although the MSA did not explicitly call the mediation process “arbitration”, the circumstances were sufficient to apply the Arbitration Act because the Agreement contained specific outlined procedures and the Agreement language indicated that the parties; (1) understood they were waiving their right to litigation, (2) accepted a limited ability to appeal, and (3) understood the implications of the agreement. The psychologist’s extremely extensive research and detailed report provided a sufficient arbitration record for Wife’s claims to be tested against. The appellate court held that the lower court was correct to enforce the MSA’s provisions on custody as well as finances. 

Finally, Wife attempted to claim that the judge’s role as mediator between the parties was inappropriate. However, the court found no error on the judge’s part and dismissed Wife’s claim. The court stated that the parties’ successfully utilized mediation to reach an agreement that best suited the family and that Wife’s post-agreement remorse would not be sufficient to set aside the agreement.

In New Jersey, absent fraud or other extraordinary circumstances, the results of mediations or arbitrations will be protected. Public policy dictates that the courts should nurture and protect settlement procedures, as long as the parties freely enter the process. The courts believe the parties choose to enter the settlement process because of the benefits, like decreased economic costs and decreased stress for family members, and that the parties understand that they may not receive the same results that they would receive through litigation. However, they knowingly assume the risk. 

Written by Elizabeth Early, law clerk at Law Offices of Linda A. Kerns, LLC.  Edited by Elizabeth A. Bokermann, Esquire, associate at Law Offices of Linda A. Kerns, LCC.

Thursday, March 17, 2011

Happy Saint Patrick's Day!

“It is easy to be pleasant when life flows by like a song, 

but the man worth while is the one who will smile when everything goes dead wrong. For the test of the heart is trouble, and it always comes with years, 

and the smile that is worth the praises of earth is the 

smile that shines through the tears.”

-  Irish Saying.

Wednesday, March 16, 2011

Reducing your financial stress

Balancing personal finances often is a significant source of stress for individuals and married couples.  Credit card debt often is a huge component of this stress.  Read this article for some practical tips suggesting ways to live without credit card debt.

Sunday, March 13, 2011

Quote of the Day

Eating words has never given me indigestion.

-Winston Churchill

Friday, March 11, 2011

Is your withholding correct in your paycheck?

Are you getting a huge refund when you file your taxes this year?  You may be having too much withheld for taxes from your paycheck.  You have the option of adjusting your withholding amount.

Do you owe taxes this year and want to make sure that you are withholding enough so that you do not owe when you file your taxes next year?  You can increase the amount withheld from your paycheck.

The IRS provides an online withholding calculator that can assist you with determining the correct amount of withholding tax.  You can also read more about this issue in IRS PUBLICATION 919: How Do I Adjust my Tax Withholding?