Once you have obtained a judgment against someone through court action, you are cast onto the often far more difficult course of actually trying to collect it.  Sometimes the debtor has gone out of business or simply disappeared.  Sometimes the debtor is well meaning but completely broke.  You cannot find bank accounts, hard assets, accounts receivable or anything else to attach to collect your judgment.  Here is one more place you might look for funds from which to collect your judgment.

The Indiana Attorney General maintains a list of unclaimed property.  When a check has been outstanding for too long or other property goes unclaimed for a period of time, it is turned over to the Attorney General who holds it as unclaimed property.  It is held by the Attorney General for a period of time, with it listed in a central registry in the name of the person to whom it is owed.  While it is always a good idea to check your own name on the abandoned property registry to see if you missed cashing that dividend check years ago, this registry may also provide a source for collecting judgments.  The Office of the Attorney General advises that unclaimed funds standing in the name of a debtor can upon proper procedure levied upon by a judgment creditor.

Maintaining a list of people and entities who owe you money under judgments, and then periodically checking that list against the Attorney General’s Unclaimed Property Registry, may from time to time turn up an asset that can be levied upon to pay your judgment.

Author: Frederick R. Folz (bio)
Phone: 812.452.3504
email: ffolz@bamberger.com

Some of you may have heard your attorney talk about the “equitable doctrine of marshalling.”  This doctrine is sometimes used when a senior creditor has a lien that covers two separate funds owned by a borrower.  If a junior creditor has recourse as to only one of those funds, the senior creditor may be required to exhaust the fund that is not available to the junior creditor before going after the other fund.

There are three elements that must exist for marshalling to apply:

1. The senior creditor and junior creditor must be creditors of the same debtor
2. There must be two funds that belong to the debtor
3. Only one of the creditors can have the right to resort to both funds

This concept does not come out of the Uniform Commercial Code; it is an equitable principal that courts may apply.

Author: Lori Young (bio)
Phone: 812.452.3560
email: lyoung@bamberger.com

The women at Bamberger would like to invite you to a launch party for their new website Women’s Connections at Bamberger on Tuesday, February 21st at 4:00 pm.  The unveiling of this new networking site will take place in the Bamberger Conference Center on the 10th floor of the Hulman Building (20 NW Fourth Street, Evansville).  Light hors d’ouevres and beverages will be served.

There is no charge to attend the event.  Please RSVP to 812-452-3567 or rsvp@bamberger.com.

Author: Kim Jewell (bio)
Phone: 812.452.3588
email: kjewell@bamberger.com

Family law attorneys are well aware that for most clients, a contested family law case is anything but a positive experience regardless of the legal outcome.  Clients are dissatisfied as a result of cost, and as a result of the high level of stress and conflict which results from the litigation experience.  While settlements frequently occur in family law cases, those settlements are often after significant time is spent in the “battle” and when a trial date is approaching.

In addition to financial costs, family law disputes also commonly involve substantial emotional and psychological costs.  Mental health practitioners are all too familiar with the severe and long lasting wounds that high conflict family matters can inflict on the parties and on their children.  While most competent family law attorneys are aware of this impact and may try to conduct their practice in a way to help minimize the harm, the litigation process ends inevitably polarizing and increases rather than decreasing the tension between parties as well as their ability to co-parent.  Collaborative law is a method of handling family law matters outside the litigation setting.

The hallmarks of Collaborative Family Law approach include:

• A shared commitment to proceed honestly and in good faith, fully disclosing assets, debts, goals and concerns.
• An avoidance of the resort to litigation or even the threat of litigation.
• Active participation by the parties, including (often multiple) 4-way settlement conferences.
• Identifying common goals and legitimate interests of both parties with an attempt to meet the interests of both parties if at all possible.
• The potential to work directly with other professionals in a team approach to assist in a resolution process (counselors, accountants, financial planners, etc).
• Joint retention of any additional experts needed in the process.
• Disqualification of all lawyers, other professionals or experts involved in the collaborative process from participating in any litigation proceedings between the parties.

Collaborative divorce is not for every case.  It is dependent upon good faith participation, leaving a potential for abuse.  Formal court motions and orders are not available to force compliance or to resolve roadblocks, although mediation and arbitration are available.  Where there is a history of mental illness or uncontrolled spending or hiding of assets, the inability to resort to court enforcement may pose particular challenges.  Parties must be able and willing to participate in face-to-face 4-way meetings, which can be emotionally difficult for parties.

Benefits of the Collaborative Law Process:

• No financial or other incentive for attorneys to become “part of the problem” by refusing to participate in negotiations or taking “take it or leave it” positions;
• Specific needs and challenges of the individual family will be the guiding factors in crafting a unique agreement;
• It allows for effective inclusion of mental health professionals and financial specialists for maximum effectiveness in addressing emotional issues and need for financial planning;
• It significantly increases the likelihood of preserving a positive relationship for the benefit of the children, reducing hostility and conflict;
• Neither party has to face the risk or fear of an unknown imposed decision;
• Offers a high level of flexibility to explore creative solutions;
• Maximizes the client’s privacy by avoiding filed motions in open court hearings;
• Potential for costs savings;
• Offers the potential for parties to learn about and improve their communication, negotiation and problem solving skills.

Collaborative law requires a paradigm shift.  The idea is to avoid the orientation that one party must win and the other party must lose on all or many individual issues and instead attempt to adopt a “win-win” orientation.  For instance, the input of counselors or financial planners might be obtained with an effort to determine what resolution would help both parties move forward, rather than restricting arguments to what the law would require a parent to do.  Parenting schedules and child support are evaluated not just for what the law allows, but to determine what is truly in the child’s and therefore parties’ best interest.  The parties are encouraged to attempt to view the issues from each other’s perspective and the opportunity to manage conflict and educate and counsel a client during the process leaves the parties better able to negotiate future parenting issues as they arise.

Please contact a member of the family law section if you have any questions regarding this new option for resolving divorce matters.

Author: Kelly Lonnberg (bio)
Phone: 812.452.3505
email: klonnberg@bamberger.com

In this day and age, if you purchase products online, you probably already know the basics of being a safe shopper.  A safe shopper would never enter their credit card information on a screen that did not indicate that it was a “secure” site.  A safe shopper would never buy a product without carefully reading the product description in order to fully understand what was being purchased.  A safe shopper would always make sure that purchases were made from a reputable seller.  But as a safe shopper, have you ever checked to see what your legal rights are if an online purchase goes horribly wrong?

Your first stop should be to check the legal terms of the website where you are shopping.  Sometimes you have to click through several menus to find it, but it usually has a title such as “Terms and Conditions” or “Legal Terms.”  If the selling website does not have one, do not buy from that seller.  If you are buying from a website such as eBay or Amazon that also sells for third parties, make sure that you understand the differences between the legal terms and conditions on eBay’s or Amazon’s website, as well as any additional legal terms or conditions from the individual seller.  Again, this may require you to click on a link on the product description page or a link to the individual seller’s website.

When reading these terms and conditions, make sure you understand what your legal remedies are if the transaction goes wrong.  Are you able to sue in court?  Some sellers’ terms require that you use arbitration or mediation to resolve any disputes.  While these methods of resolution may be quicker than going to court, they can sometimes be more costly and may require you to travel to another part of the country to attend the arbitration or mediation proceedings.

Even if the terms and conditions allow you to sue, the seller’s terms may require that you sue in a particular state.  If you can only sue the seller in Alaska to recover your damages, the cost involved may be prohibitive in seeking the justice you deserve.

Do you know how long you have to file a claim or a suit against the seller?  Many sellers’ terms give you a very short window for raising any disputes or filing a suit related to a transaction with the seller.  In your state, you might have up to four years to file suit on a breach of contract action.  However, the seller’s terms and conditions might limit your period for filing suit to one year or less.

A quick review of the legal terms on a seller’s website can often save you heartache down the road, particularly if the purchase of a big ticket item does not go as planned.  A couple of clicks before you purchase can make you a safe and happy shopper down the road.

Author: Laura A. Scott (bio)
Phone: 812.452.3557
email: lscott@bamberger.com

The Federal Motor Carrier Safety Administration and the Pipeline and Hazardous Materials Safety Administration—both part of the Department of Transportation—issued a new rule effective January 3, 2012 restricting the use of hand-held mobile telephones and devices by drivers of commercial motor vehicles (CMV). The rule amends Federal Motor Carrier Safety regulations and Hazardous Materials regulations. It restricts CMV drivers from reaching for or holding mobile telephones while operating their vehicles, or pushing more than one button to operate the
device.

Commercial motor vehicle drivers are still permitted to use mobile telephones and other mobile devices as long as their use complies with the new regulation. Essentially, drivers may initiate, answer or terminate a call if they can do so: 1) with the push of a single button; 2) on a device within their reach; and 3) without holding it in their hand.

So the device must be either mounted or otherwise secured and within reach at the vehicle control panel.  Further restrictions are: 1) the mobile device cannot be located on the passenger seat, sleeper berth, or floor of the vehicle; 2) the driver must use the device without holding it by hand—thus requiring either a speaker phone, one-wire, or wireless ear set; and 3) the
operation of the device may only be performed by pushing a single button.

The new regulation prohibits the popular Push-To-Talk (PTT) feature used by many CMV drivers.  Functionally, the PTT feature is similar to the use of a CB or two-way radio.  Both
of these devices are still permissible, since they are not prohibited by the new rule.  The new rule prohibits PTT since a “PPT” device falls squarely within the definition of a mobile telephone.  It also requires the driver to hold it and push a button more than once. So its use while driving a CMV is the same as a hand-held mobile telephone, which is prohibited.

Employers of CMV drivers are encouraged to: 1) implement a policy consistent with the new regulation, and 2) train their CMV drivers about the policy; and 3) require that CMV drivers comply with the policy.  The new policy should set forth: 1) what is prohibited; 2) what is still permitted; 3) the consequences of violating the new rule; and 4) a contact person for questions about the rule.

Author: Michael Cork (bio)
Phone: 317.464.1594
email: mcork@bamberger.com

One of the remedies that a party holding a judgment in its favor gets paid is the attachment of bank accounts.  In a rare piece of good fortune, a judgment creditor was able to identify a bank account of the judgment debtor which at one point had over $450,000.00 in it.  The creditor promptly issued the pleadings necessary to have the bank account attached and the proceeds paid to it.  Unfortunately, it found out that the bank that held the deposit account was also a lender to the judgment debtor.  Further, not only did the bank have common law setoff rights for its loan against the account, it also had a security agreement that covered the account.  Even though the bank allowed other monies to come out of the account after the attachment pleadings were received, the Court of Appeals held that the lender could safely do this without waiving its security interest.  (The Court did not address whether or not this action would have waived the common law right of setoff.  Lenders need to keep that in mind when reviewing this case.)

The Court held that a judgment creditor can only step in to the rights that the debtor had to the deposit account.  Since the debtor’s rights were subject to both the security interest in favor of the lender/depository bank and subject to the common law setoff rights, the judgment creditor could only receive those amounts in the account that were over and above the amount owed to the bank.  In this case, the debt to the bank far exceeded the amount in the account and the judgment creditor got nothing.

This case underscores the enhanced value of having a security interest in a bank account rather than simply relying on common law setoff rights.  Where lenders are dealing with high dollar deposits, it may be advisable to take the added step of obtaining a security interest in the accounts.  This gives the lender the flexibility to allow funds to be removed from the account even if other creditors are attempting to seize them without running the risk that the lender may have waived its rights.

On the other hand, banks that are relying solely on their setoff rights to protect their prior claim to funds in a deposit account should consider two things.  They may wish to consider putting a provision in their loan documents that makes the attempted seizure of funds an event of default.  This would allow the bank to accelerate the loan and exercise its right of setoff rather than paying it over to the other creditor.  Additionally, the bank should carefully analyze what its interests were prior to the receipt of attachment pleadings.  Under Indiana law (and the practice of most states), once the attachment pleadings are received, a hold must be put on the account.  This still should be done, but a quick analysis of the bank’s setoff rights would be in order to determine if the lender may hold on to the funds.

Author: Terry G. Farmer (bio)
Phone: 812.452.3543
Email: tfarmer@bamberger.com

Even if the answer to the question is “Yes, we’re all friends,” the liabilities of a limited partner and a general partner in a partnership can mean a big difference.  General partners are personally responsible for the debts and obligations of the partnership, regardless of how much capital the general partner has contributed to the firm.  If there is more than one general partner, then the general partners are jointly liable for these obligations.  These obligations can include liability for torts committed by a partner in the ordinary course of business of the partnership or with prior authorization, and a partner’s breach of trust. 

In contrast, limited partners are not personally liable so long as they comply with the requirements of Indiana’s limited partnership statute.  To put it simply, there is a big difference between a general partner and a limited partner in a limited partnership, and failure to know the difference can quickly turn a friendly business arrangement into one that is not so friendly.

Author: Laura A. Scott (bio)
Phone: 812.452.3557
email: lscott@bamberger.com

Last week, the United States Supreme Court announced its unanimous decision in Hosanna-Tabor v. EEOC.  This case concerns the “ministerial exception” to an employment discrimination claim.  Here, a teacher at a Lutheran school was terminated and then filed a discrimination complaint under the Americans with Disabilities Act.  The church and its affiliated school defended the claim by arguing, in part, that the teachers’ duties were “ministerial” and that the First Amendment prohibited the Court from hearing a suit by a minster against her church claiming a violation of employment
discrimination laws.  The Supreme Court had not previously addressed the existence of this “ministerial exception.”  But this ruling holds that the First Amendment prohibits such claims.  The decision does not provide a “bright-line test” concerning the limitations of who is to be considered a “minister.”  But it found that this teacher (with her formal title, the substance of that title, her own use of the title, and the important religious functions she performed for the Church) was within the meaning of a “minister.” Accordingly, the church and school were protected from suit by the First Amendment.

The Court said in part:

“Requiring a church to accept or retain an unwanted minister, or punishing a church for failing to do so, intrudes upon more than a mere employment decision. Such action interferes with the internal governance of the church, depriving the church of control over the selection of those who will personify its beliefs. By imposing an unwanted minister, the state infringes the Free Exercise Clause, which protects a religious group’s right to shape its own faith and mission through its appointments. According the state the power to determine which individuals will minister to the faithful also violates the Establishment  Clause, which prohibits government involvement in such ecclesiastical decisions.”

Please contact a Bamberger attorney for more information.

Author: Michael Cork (bio)
Phone: 317.464.1594
email: mcork@bamberger.com

Indiana courts have issued several opinions in the last year that underscore the risk to a lender who does not make a physical inspection of the property before it loans money against it.  In these cases, the court ruled against lenders in various contexts for the reason that an inspection of the property would have revealed that there were parties in possession.  This knowledge then gives rise to a duty on the part of the lender to inquire as to what those rights might be.  Failing to take this step puts the lender at risk of being subordinate to any interest that the party in possession might have.

In one case in particular, a father was in possession of real estate that arguably had been conveyed to his son.  However, the father had disputed the title and had filed a quiet title action to determine actual ownership.  The father at all times remained in possession of the ground.  However, the failed to file in the public record a lis pendens notice.  This is a notice that alerts all other parties that there is a dispute relative to real estate title and cautions them that any action that they take with the real estate will be subject to that dispute.

The son borrowed money against the property.  The lender did a title search and did not see any evidence of the quiet title action.  However, the lender also did not inspect the property which the court indicates would have revealed that the father was in possession.

The son subsequently went bankrupt.  However, when the lender went to foreclose on the real estate, the father defended on the basis of its prior ownership claim.  The court ultimately found in favor of the father and that his ownership claim was superior to the son’s.  Then the court went on to invalidate the mortgage to the lender because the lender failed to make the inspection of the property.

Most lenders do not undertake an inspection of the property to ascertain whether they are parties in possession.  As this and other cases have illustrated this year, the failure to make this inspection and determine what parties might be in possession exposes the bank to risk and that its mortgage will be behind the prior rights of other parties.

Author: Terry G. Farmer (bio)
Phone: 812.452.3543
Email: tfarmer@bamberger.com