Firm Blog

Some of the best memories I have as an attorney are not in Federal or Common Pleas Court, but instead in the “People’s Court” ….  Small claims court that is.  I think the reason for that is that while small claims court provides access to the average person for what is a dispute too small to merit the expense or hassle of a larger court, it also throws open the door for every crazy claim that anyone can write down on paper and is willing to put twenty five bucks down to file.  At the end of these cases however, there is usually a lesson or piece of information that may seem obvious to some and not so clear to others.  As I revisit some of these cases, hopefully what you thought all along will simply be confirmed or alternatively you’ll learn something, not in front of a bailiff and courtroom full of other people waiting there turn, but instead behind the privacy of your own computer.  The first such lesson is that spicy beef-stick may be spicy.

Yes, you read that last sentence correctly, in approximately 2001, Toledo Small Claims Court swung open its doors to what I like to think was the northwest Ohio case of the decade, up until the Tom Noe or Father Robinson trials.  I represented a local grocery store that was being sued by an older gentleman because he claimed the spicy beef-stick (it was a homemade store brand) was too spicy.  While most plaintiffs would have undoubtedly hired some high-powered product liability attorney, this crafty gentleman chose to go it alone.  When given the opportunity to present his case he kept it simple.  He had purchased spicy beef-stick expecting it to be spicy, “* * * but not that spicy.”  His injuries:  His voice had been changed forever …..  oh, and he had back and neck pain, his hair gotten thinner and whiter, his feet and legs hurt, at times his shoulders would bother him, he had ongoing headaches and his elbow started to crack and bleed one day.  All this from two bites of spicy beef-stick.  Just when I thought his case couldn’t get stronger he pulled out his ace in the hole ….  He told the judge that it wasn’t necessary for the judge to believe him because the Plaintiff had kept the rest of the beef-stick in his freezer for the past year and a half and the Judge was welcome to take a bite to see for himself. 

Perhaps I should have realized that it was my lucky day when rather than try the beef-stick and have the Judge’s elbow start bleeding, the Judge declined citing that he had no desire to eat beef-stick, let alone beef-stick that had been frozen for a year and a half.  The other sign that things were going my way might have been that literally no one could look the Plaintiff in the eyes for fear of laughing hysterically.  Finally, I think it helped that on cross-examination the Plaintiff conceded that he had eaten spicier things in his life without the same results.  Whether it was the cosmos or application of common sense, I managed to triumph in the case with the Court’s ruling serving as an indelible lesson:  When you buy spicy beef-stick, you should expect it to be spicy.

As my practice has progressed to bigger cases involving far larger consequences the lesson to be gained from that case still seems pertinent:  When involved in litigation expect the crazy and unexpected and your chances of success improve greatly. 

In a recent article from Ohio Lawyer Magazine dated January/February 2012, Steven Voged presented an article on recreational immunity relative to government entities which caused me to consider some of the other activities that such immunity might apply to.

In my efforts I came across some jury instructions which I had written a number of years ago involving a trampoline case.  It had been my position at that time that the use of a trampoline as a recreational activity was such an activity that one should be immune from all but reckless or intentional actions.  In the case I defended, an individual had asked to use the trampoline then while in the course of using it, sustained an injury.  We looked at the case of Marchetti v. Kalish (1990) 53 Ohio St.3d 95, for the proposition that “where individuals engage in recreational or sports activities, they assume the ordinary risks of the activity and cannot recover for any injury unless it can be shown that the other participant’s actions were either “reckless” or “intentional” as defined by Sections 500 and 8A of the Restatement of Tort 2d.” (Marchetti, p. 100.)

In the case of Kelly v. Rosco, (2009) 185 Ohio App.3d 780, a child, while bouncing a trampoline, at a 4^th of July party, was injured breaking her leg.  The court in that case held that the use of the trampoline constituted the primary assumption of risk, and that certain hazards were known to people who used trampolines, and thus, the Court of Appeals upheld the granting of a summary judgment by the trial court.

From the law in the State of Ohio, it is likely that anyone who uses a trampoline, albeit in the neighbor’s yard, their own yard or somewhere else, they will not be able to collect for injuries they sustain as they have assumed certain risks which are known to arise in the use of a trampoline.  While this interpretation of the law does not constitute “recreational immunity” in the truest meaning of the term, it would be wise for the parents of any child or the parent should they be using the trampoline to be aware that they most likely will not be able to collect for injuries they sustain as a result of any mishaps on the trampoline.

While recently reading an article in the ABA Journal about techniques to taking an expert deposition, I began to do what I perhaps do best ….over-think the issue.  My focused turned not to expert depositions, but depositions in general and the different styles and techniques I have seen over the years, and what was most effective in different situations. 

One approach is the attorney that simply cannot overcome his own personality and thus every deposition is a reflection of his personality.  While sometimes effective, often times this can be the least effective because the defending attorney can prepare his client for what to expect.  If I know the other attorney always has an aggressive, jerkish style, I can let my client know that’s what should be expected.  When the attorney then follows through with the approach I’ve described, the client is not caught off guard, but instead feels assured that what I told him to expect is what’s happening.  If the attorney has a weak personality or is usually unprepared or unfocused a client can feel lost when being deposed because their natural thought is that an attorney is prepared and knows where they are going in a deposition.  Again forewarning the client to expect this aimless approach makes them feel reassured that the situation is as to be expected. 

My conclusion was that the best attorney is not subject to a particular style, but instead can have many styles depending on the person he is deposing and ultimate goal.  More important however is that the most effective technique is not always the one that mimics the personality of the deponent, but often times is the opposite of the deponent’s personality.

That brought me to the Grinch and Cindy Lou Who as an illustration of how taking an approach opposite to the deponent’s natural personality can be most effective.  If sent out on the task of deposing the Grinch and Cindy Lou Who, one’s gut reaction would be to think that an aggressive, in your face type approach would be best to use for the Grinch.  On the flipside, certainly little Cindy Lou would merit a pleasant, friendly environment … sweet as she was.  In reality, just the opposite approaches may produce better results.  The Grinch certainly is not expecting anyone to be nice to him.  Put him in a hostile situation, treat him poorly and disrespect him from the beginning and you’ve simply put him in his own living room.  He’s right at home and thus less likely to give you helpful information.  Treat him nicely, disarm him and force him to re-evaluate the entire situation and you will catch him off guard.  Suddenly you’re not the jerk his attorney told him you were and he’s questioning his attorney while talking to you.  After all, Cindy Lou Who’s kindness caught him off guard so much that his heart grew three sizes and he suddenly became a huge fan of Christmas.

On the other side, with a meeker Cindy Lou Who deponent, a more aggressive approach may produce better results.  The pleasant approach may make the deponent feel comfortable and thus give only the information he or she wants.  Taking the witness out of their comfort zone in this scenario can cause them to be more forthright in their attempt to please you, thereby hoping you will allow them to return to their comfort zone.  A caveat is that a sense of decorum is still necessary.  If Cindy Lou is simply beat up and bloodied she may retreat into her shell and produce absolutely no information.  Thus, the style is aggressive or confrontational, but not simply being a jerk.

Obviously while the approaches with the Grinch and Cindy Lou are only two of many possibilities, they underscore the importance of an attorney’s style being geared toward the desired result and not just a reflection of the attorney’s own personality.  They further underscore the importance of having an attorney that thinks through the strategy and approach of a case to maximize effectiveness on your side and minimize the impact of the other side.  After all, clients hire attorneys to win their case, not simply show up and be themselves.

As I write this blog the official first day of winter is only one day away and I am celebrating its arrival with having just won a slip and fall case stemming from the winter of 2009.  With winter comes the promise that undoubtedly there will be snow and ice and falls.  That’s right, fortunately or unfortunately for me, every winter numerous people fall on the snow and ice and then sue a business or someone else for their fall.  Luckily, slip and falls on natural accumulations of snow and ice are perhaps one of the most easily won premises liability cases.  While I would like to claim its due to the brilliance of defense attorneys (ok, well perhaps in my case), it has more to do with the Ohio Courts consistently recognizing that you cannot impose liability on others to protect an individual from what are natural occurrences in Ohio …. snow and ice.  

The general rule in Ohio is that a homeowner or business is not responsible for a patron/visitor’s fall on a natural accumulation of snow or ice.  Nor are they responsible for removing the snow thereby creating water left behind that turns to ice (i.e. courts do not want to punish people for making an effort to shovel).  Nor is snow or ice unnatural because it accumulates around a man-made structure such as a handicap ramp or curb.  I think you begin to get the drift of the arguments made …. all with the underlying reasoning that it is anyone but the injured person’s fault that they fell.  Keeping this in mind, over the years I have put together an informal list of points that, while they may seem obvious, apparently escape quite a few people until pointed out during a lawsuit. 

1. If it’s cold outside, what looks like a wet spot may be ice.
2. If there’s snow or ice outside, it is cold.
3. If there is snow or ice on the ground, it may be slippery.
4. If it feels slippery when you put your foot on it, it’s probably slippery – don’t continue to walk over it.
5. If you can walk around the snow and ice do it …. it really won’t take you that much longer to get into the dollar store and everything will still be a dollar when you get there.
6. If you’ve just walked around ice, there is a strong possibility that the next wet spot you’re approaching is ice.
7. Snow is the brother to ice.  When you can see snow, you shouldn’t be surprised that it is icy outside.
8. Your rubber soled shoes are not magic …. you can still slip on ice and snow while wearing them.
9. Much like rubber soled shoes, salt is not magic …. you can still slip when you see salt in the area.
10. Just because someone else didn’t slip on the ice doesn’t mean you won’t.

As obvious as these points may seem, if implemented I think about ninety percent of my snow and ice slip and fall cases would have been avoided.  Hopefully by letting you in on these “trade secrets” you can enjoy safe and happy holidays and a wonderful new year!

  About Toledo Distinguished Clown Corps: http://toledodcc.org/ourhistory.html

In this day and age when employers are interviewing perspective employees and trying to select the right employee, it is not unusual for a potential employer to obtain a credit report for a prospective employee.  This practice though has several pitfalls.  To be able to obtain a credit report on a prospective employee, one must inform that person that you are going to obtain the consumer report before requesting it from a credit-reporting agency.  Typically, this is at least a 5 to 7 day notice.  Further, one should obtain written approval from the applicant to do so. 

Now the question arises; what does one do if the applicant has a poor credit report?  The employer must notify the applicant of the contents of the credit report before making a decision as to whether to hire or not to hire the applicant.  Further, if the credit report has an impact on the employer’s decision not to hire the applicant, the applicant must be informed of this situation.  If a non-hire occurs, the applicant must be informed of the name, address and phone number of the credit reporting agency that supplied the credit report.  This would allow the applicant to obtain their credit report at no cost.  The applicant may want to do so for the purpose of validating/repairing potentially problematic items appearing on said report.

While the use of credit reports may aid an employer with screening prospective employees/applicants, they must use the reports carefully to avoid any liability.

For a more in depth analysis, refer to the Federal Fair Credit Reporting Act, 15 U.S.C. §1681.

We all have our favorite legal show—whether it’s Law and Order, Judge Joe Brown, or my personal favorite, the Three Stooges classic “Disorder in the Court”—and just about everyone knows (or thinks they know) a little about how the legal system works.  In some of those shows, the people arguing the cases aren’t lawyers; they’re just regular people arguing their own cases in front of a judge without the help of an attorney.  What these people have to do usually isn’t very hard; in fact, you’ve probably even said to yourself, “I could do a better job than he could!”  Maybe you’ve even considered representing yourself in a legal issue—after all, who needs a high-priced attorney when you can go it alone?

Let’s be clear, though: watching Judge Judy once a week or having “TiVoed” a few episodes of Boston Legal does not make you qualified to argue your case in front of a judge or jury—the real-life legal system is not like what you see on television.  There are many factors to take into consideration before deciding to make the (potentially life-altering) decision to represent oneself in court.  In this article and those that follow, I’ll give some tips and point out some potential problems to anyone considering acting as their own lawyer in handling a legal issue.

A person who represents himself or herself in a court of law or another legal capacity is said to be acting pro se (pronounced “pro say”).  Pro se is a Latin term—and get used to Latin if you decide to represent yourself, since many of the legal terms still in use today derive from Latin—defined as “for oneself; on one’s own behalf; without a lawyer” (see Black’s Law Dictionary, 8^th Ed., p. 1258).  People choose to act pro se in legal proceedings for a variety of reasons: they may wish to avoid the expense of hiring an attorney, the issues involved in the case may be simple enough to handle on their own, they may want to control their own case directly, and so on.

There are certainly situations in which it may make sense to act as your own attorney, such as certain legal matters that may be simple enough to handle on your own.  In Small Claims courts, for example, the amounts being disputed are frequently fairly small, while hiring an attorney can cost hundreds of dollars per hour!  If you’ve been sued for a small amount (a few hundred dollars, for example) it may not make sense to pay an attorney—your costs are going to outweigh any potential benefit.  On the other hand, remember that in the legal world there is no such thing as a “one size fits all” approach.  For example, if you’re only being sued for a few hundred dollars but losing the case means that you’ll miss a house payment or a credit card payment, choosing to represent yourself when you have other legal options may not be the best idea.  Remember that even seemingly simple situations can have far-reaching consequences.

Although I’m a bit biased, being an attorney myself and getting to see the advantages and disadvantages of hiring a lawyer from an up-close perspective, I’m a firm believer that at least in situations where a legal action (such as a lawsuit or criminal charge) is pending or may be filed in the future, it is wise to hire an attorney or at the very least to talk with one to get an opinion on whether legal services are needed.

Don’t EVER make the decision to represent yourself without carefully considering the potential outcome of that decision.  If you choose to represent yourself, the odds are that no matter how good your legal position may be (or how good you think it may be), you will be at a serious disadvantage in most situations.  Opposing parties who have hired lawyers will have access to trained professionals who understand the complex and challenging court system, who know how to try cases, who understand judges and juries, and who have access to research and resources that you may not even be aware of.  Even worse, legal professionals—whether they are opposing attorneys, court personnel, or even judges—will assume that you don’t have an understanding of “the way things work.”  They may view you as a burden on their time and energy and anticipate that you will struggle with doing things the “right way,” even if those assumptions are wrong.  While you technically have access to an equal playing field when it comes to representing yourself in a court of law, the reality is that the legal system tends to favor parties who hire attorneys.  You will need to be prepared to face these hurdles if you are to be successful in representing yourself.

My goal in this article and those that follow is not to provide you with a perfect plan in which you are guaranteed success if you represent yourself—there are no guarantees in the law. Every person’s situation is different, and every legal decision is the result of a lot of different factors; what works for one person might not be effective in another person’s case.  So, instead of looking for a foolproof strategy, please use this information as a resource to learn some steps you’ll need to take if you decide to act as your own lawyer.

Remember, no single approach to resolving a legal action is foolproof.  While you can’t guarantee success or even a good likelihood of success, you can improve your chances by using common sense and being well prepared.  Representing yourself in a legal matter is an intimidating thing to do, so you should only make the decision to do so if you’ve carefully considered your options and are prepared for the results.  Consider talking to an attorney to see whether hiring one will even be necessary; many attorneys will offer an initial consultation for this purpose without charging a fee.

Although the articles in this series will be written with those in mind who are actively involved in a legal matter, the concepts they will discuss can be applied to almost any aspect of the law.  If you’ve made it this far and you feel that representing yourself is the best course of action, hopefully the rest of the articles in this series can provide some useful guidance. 

Finally, and most importantly, remember that no article can provide a substitute for legal advice specifically tailored to your situation from a licensed attorney.  Consult a lawyer if you have any questions about the legal issues you are facing.

Adam is an associate attorney at Rohrbachers Cron Manahan Trimble & Zimmerman Co., L.P.A.  This article is intended to be the first in a multi-part series providing practical tips for pro se parties representing themselves in a legal action.

Since the recession began in 2008, The City of Toledo has experienced a level of suspected arson fires that are unprecedented in recent memory.  The prolonged recession has created a climate where “desperate people are doing desperate things.”  Homes are being destroyed, lives are being lost, and the risks of injury to occupants and firefighters are ever present.  The summer of 2011 is the second summer in a row that the city has had a significant increase the number of fires labeled “suspicious” by the Toledo Fire Department. 

There are a number of reasons why arson fires are set (i.e.  domestic issues, revenge, and thrill seeking), however, during these difficult economic times, setting fires for the purpose of procuring insurance benefits is the primary motivation.  While arson fires have been set in various areas of Toledo’s central city, the fires are primarily in areas of depressed property valuations. 

In order to establish that an individual intentionally set a fire, in ether a civil or criminal case, the prosecution or the insurance company must prove that someone had the opportunity and the means to have set the fire.  While not necessary as a matter of law, it is also important that the individual have some motivation to have set the fire.  Financial motivation (i.e.  the collection of insurance proceeds) is a strong indicator. 

In making a determination of whether the individual had the opportunity and the means to set an incendiary fire, an inspection of the scene by a certified fire investigator, following proper guidelines established by the Nation Fire Protection Association (NFPA), is critical in making that determination.  As City of Toledo Deputy Fire Chief Phil Cervantes told the Toledo (Ohio) Blade newspaper, “I’m sure there are a lot more out there that are arsons that we can’t determine,” he said.  “I just don’t have what I need to definitively say it’s an arson fire.  I know it is from experience.  I know what I’m looking at or what I’m reading is an arson fire, but if the house fell down or we had to tear it down, we’ve got to list it as ‘undetermined’.

Toledo Firefighters order a structure to be torn down when they believe the structure poses a risk to public safety and/or to the safety of firefighters.  This has become a source of frustration for insurance companies who are called; sometimes days after the fact, and must ask an expert to make a determination of the origin and cause of the fire and the security of the dwelling after the fire is extinguished.  Often, if the arsonist has properly performed his criminal act, the structure is an inferno by the time firefighters arrive and it is unstable and eventually torn down in the interest of safety.  The scene, as a result, is compromised, and often, critical evidence is lost.  While both the Toledo Fire Department and the insurance carrier have a stake in determining whether an incendiary fire occurred, many times, efforts to balance the interests of safety against making a determination of the origin and cause of the fire have been unsuccessful.  The Toledo Fire Department has erred on the side of safety on every occasion.  While public safety is their primary goal, an unintended result is that the suspected arsonist is often unable to be prosecuted or to have his insurance claim properly evaluated because the scene has been destroyed.  This situation makes it difficult for an expert to make an origin and cause determination.

Let’s hope that a solution can be found and a balance struck between these two oftentimes competing yet laudable goals. 

              “Medicaid is the single-largest program in the state budget, with funding across several agencies.  The Ohio Department of Job and Family Services has the largest Medicaid line item with recommended GRF (General Revenue Fund) appropriations in FY 2012 of $11.8 Billion and $13.2 billion in FY 2013.”  (Overview of Governor Kasich’s Budget/Budget Summary Book/FY 2012-2013 Biennium)

               As Medicaid is such a large part of Ohio’s budget it should be no surprise that, to the extent possible, the Attorney General of Ohio (AGO) is charged with obtaining repayment of Medicaid benefits once a Medicaid recipient has died.  All assets owned by a Medicaid recipient, at the time of their death, whether real property or personal property, are subject to collection.  This includes but is not limited to property that passes through probate. 

               The executor/fiduciary of the estate of a Medicaid recipient is responsible to notify the AGO of the death of the recipient, at which point the AGO will present a claim.  If the fiduciary does not notify the AGO then the time for presenting a claim (statute of limitations) does not run out.  If funds are distributed prior to informing the AGO or before the AGO finds out about the property, the heirs or family members may be ordered to repay the State.  Over the years many offspring of Medicaid recipients have expressed disappointment that the State has any claim to assets of their deceased parents; those same individuals typically did not have a problem utilizing the Medicaid program to take care of their parents while they were alive.  The law requires, and the other citizens of the State of Ohio need, the family members or heirs to repay those assets deceased recipients had in order for Medicaid to continue to be viable in Ohio.

               If you have a question as to whether a decedent was receiving benefits under the Medicaid Program the Medicaid Estate Recovery Unit of the AGO is located at 150 E. Gay Street, 21st Floor, Columbus, Ohio 43215-3130 or contact me and I will contact the AAG in charge of the program to make the inquiry.  It will often take a couple of months for all of the charges to be posted by ODJFS.

LEGISLATION:

H.B. 22 – Animal Liability – (effective September 23, 2011): 

The act requires the owner or keeper of horses, mules, cattle, bison, sheep, goats, swine, llamas, alpacas, or geese to have acted negligently in order to be liable in damages caused by the animal in specified public thoroughfares, on unenclosed land, or on another’s premises.  It essentially repealed the liability for an owner to be responsible for certain animals by them merely being out of their enclosure.  It also prohibits an owner from simply letting his animals to run at large on a public thoroughfare or unenclosed land.

 H.B. 54 – Gun Rights – (effective September 30, 2011):

Permits people with certain prior offenses (stated as “disabilities” in the legislation) to apply for relief from that “disability” thereby permitting them to own or possess a firearm.

S.B. 17 – Gun Rights – (effective September 30, 2011): 

1.     Expands the types of liquor permit premises in which a concealed carry license holder may legally possess a firearm to include those with a class D permit (carry outs, restaurants, nightclubs, clubs, hotels, shopping malls, museums etc.).  This exception applies only if the license holder is not consuming beer or liquor or under the influence of alcohol or a drug of abuse while in such an establishment.

2.     Allows a concealed carry license holder to transport or have a loaded handgun in a motor vehicle regardless of whether it is secured in a holster, case, bag, or box.  In turn it removes the prohibition of a license holder from removing such a gun from its secured area or touching it while the vehicle is being operated on a street, highway or public property.

3.     Authorizes the expungement for a prior conviction of something that would no longer be a crime under the act.

RECENT DECISIONS/JUDICIAL DEVELOPMENTS:

UNITED STATES COURT OF APPEALS – ELEVENTH CIRCUIT

State of Florida et al. v. U.S. Dept. of Health and Human Services et al., Case No: 3:10-cv-00091-RV-EMT (August 11, 2011):  The Eleventh Circuit Court of Appeals held the mandatory healthcare bill (Patient Protection and Affordable Care Act) was partially unconstitutional to the extent it required the purchase of health insurance.  The Court also held the unconstitutional portion was severable from the remainder of the act.

OHIO SUPREME COURT 

Dominish v. Nationwide Ins. Co. (August 23, 2011), 2011-Ohio-1818:  The Supreme Court upheld the limitation of action clause of a Nationwide policy as enforceable.  The case involved tree damage to the home of Mr. Dominish.  After investigation, Nationwide twice wrote Mr. Dominish a check for his damages and he in turn wrote void on the check, apparently disputing the sufficiency of the amount.  Almost two years after the tree fell, Mr. Dominish sued Nationwide.  Nationwide raised the defense that Mr. Dominish had failed to comply with the policy provision stating that no action could be brought against Nationwide unless there was full compliance with the policy provisions and any action must be commenced within one year after the loss or damage.  The Court held the clause was not ambiguous and that Nationwide did not waive its right to enforce the clause.  Nationwide had neither recognized further liability for the disputed portion of the claim nor held out hope of adjustment to Mr. Dominish.  

Ward et al. v. United Foundries Inc., et al.; Gulf Underwriters Ins. Co. (July 6, 2011), 129 Ohio St.3d 292:    The Supreme Court held that the stop-gap endorsement to a commercial liability insurance policy for a substantial-certain intentional tort language in a commercial liability insurance policy stating that insurance does not apply to bodily injury resulting from an act that is “determined” to have been committed by an insured with the belief that an injury is substantially certain to occur, does not require a final determination by a fact-finder before the insurer can refuse to defend a claim alleging a substantial-certainty employer intentional tort.  Thus, an insurer seemingly does not need to first have a judge or jury make the determination that an underlying injury was caused by a substantially certain tort prior to refusing or withdrawing a defense under the commercial liability policy.

Powers of Attorney need to have language in them regarding disability or they will not be effective after the grantor of the power becomes disabled.

Section 1337.09(A) of the Ohio Revised Code states in part,

Whenever a principal designates another as attorney in fact by a power of attorney in writing and the writing contains the words “This power of attorney shall not be affected by disability of the principal,” “this power of attorney shall not be affected by disability of the principal or lapse of time,” or words of similar import, the authority of the attorney in fact is exercisable by the attorney in fact as provided in the written instrument notwithstanding the later disability, incapacity, or adjudged incompetency of the principal…

In a recent matter handled in our office, our review of a power of attorney, prepared (not by our office)  out of state, failed to contain the above language.  The result requires a guardianship to be established to take care of the principal.  Going through the formality of the guardianship is much more expensive and time consuming than having a properly drafted power of attorney.  If you have a question contact our office to review the document.

During some recent reading, I came upon an article about additive manufacturing, which is the opposite of traditional manufacturing wherein material is removed during construction by milling, turning, carving, etc.  In the additive manufacturing, it has been said that they extract some 26 times less material out of the ground to make the same product.  The additive machines typically use a range of laser-based or advanced printing techniques to build up models layer-by-layer and have a number of compelling advantages over traditional manufacturing techniques.  (See The Engineer First for Technology and Innovation, www.theengineer.co.uk, May 24, 2010, John Excell and Stewart Nathan.)

The technique that is used builds a solid object from a series of layers, by placing each layer directly upon the previous layer.  These types of products can be made out of plastic, metal, stainless steel, and titanium with the printing chamber usually heated slightly below the melting point of the product being made.  This allows a range that would be used to heat the product to be melted quickly.  (To view a video example, follow this link: http://www.youtube.com/watch?v=ZboxMsSz5Aw.)  For metals, preheating eliminates residual stress in processing, which can then in turn result in warping when welding. 

A machine operating software cuts the computerized design model of the workplace into slices, with thicknesses being as small as 0.1 millimeter per polymer, and 30 microns in its metal.  Machines work at room temperature, again, speeding the process and producing pieces with a rougher service finish than required for further machining, thereby eliminating residual stress.

Interestingly, several of the products that are developed end up being used in the medical device sector, with such things as hip socket replacements, cranial implants, dental crowns, hearing aids, etc.  From the legal perspective, the technology creates a wonderful new world regarding warranties and whether an item is suitable for the next use that was never fully intended originally.  Ian Stewart and Terry Wohlers, writing in Litigation Management, Summer 2011, noted, “Additive manufacturing may also complicate the ability to prove the existence of a defect under traditional product liability principles.  For example, how can one prove the expectations of an “ordinary” consumer when the design can be modified to fit the needs of each consumer individually?” 

From a legal perspective it appears that the law will be chasing the engineers using this new form of manufacturing for the next several years as the products evolve at a faster pace than the laws presently enacted.

An Ounce of Prevention ……

I was recently thinking about the examinations under oath that I have taken, from insurance claim filers, on behalf of their insurance companies; and the common issues I have seen arise time after time.  As a result, I decided to put into writing a few simple steps that you can take, to save time and consternation, should you suffer the unthinkable; a home fire, theft or tornado loss and need to file an insurance claim.  In many of these claims the issue is not whether there was a legitimate fire, theft or tornado, but instead what you, as a claimant, really owned prior to the event.  In the insurance industry, this is referred to as your inventory.  Taking the following simple steps to document your inventory before a catastrophe will save time and frustration, both in making your insurance claim and in determining if you have the proper amount of insurance to begin with.

1. Make a list of the major items you own – Already, I can imagine your eyes glazing over with boredom, thinking this is a nice idea, but who really does it?  Well, the problem I’ve encountered repeatedly is that, once an insured has a claim, they really know very little about even the big things they own.  Was that 60” television a Sony, Vizio or store brand?  Was it a plasma or LCD?  When the television is sitting in front of you every night it seems like it would be impossible to forget the brand, but it happens all the time.  To help yourself, spend a quick half hour to an hour going through your house and listing, by room, the major items you own such as appliances, furniture and electronics.  To the extent possible list the manufacturer, make or model, the year you purchased it and even an approximate purchase price.  As you get something new, simply add it to the list.
2. Take a photo or video of the items you own – As you’ve repeatedly heard, a picture is worth a thousand words.  While a list is helpful, a photograph is more helpful in establishing you owned what you claim you owned.  With digital cameras these days the storage of multiple photos or video footage is relatively without cost and thus well worth taking more photos or footage.  One tip; while a close up photo is helpful in establishing the brand or model number, be sure to take a photo of your item(s) in the room(s) from a distance.  This will assist in showing the photos are of your items and in your house.
3. Keep receipts for major purchases – In my experience there are primarily two types of people with insurance claims; those who always keep a receipt for everything and those who never keep a receipt for anything.  Somewhere in the middle would be a good place for most people.  Make it a habit to keep your receipts for major items and perhaps anything else over a certain amount, such as $50 or $100.  
4. Get your valuable/unique items appraised – I am not suggesting you have your television set appraised, as its value is easily determinable.  I am saying that if you have something unique; such as art, a collection, antiques or jewelry that could be worth over $1,000, you have it appraised.  An appraisal generally costs very little and assists you in a claim in at least two ways:  First, it helps establish that you owned a particular item and it assists in establishing a value for that item.  While jewelry and art are two types of items that people routinely think of having appraised, take a minute to think of others you may own.  Items such as grandpa’s old gun collection or the antique crystal, silverware and china that have been in your family for ninety years may be worth getting a professional opinion on exact item descriptions and values.
5. Store your lists/receipts in a fireproof box or offsite – Perhaps most importantly, once you take the time to document your items, store the list, photos, receipts and appraisals in a place or location that will not be impacted by the possible catastrophe.  A list and photos are of little use if they burn in the very fire for which you are now making a claim.  Nor is your fireproof box much good if you keep it in your bedroom and a burglar steals it or a tornado carries it five miles away.  Thus, the best thing to do would be to scan your items and keep them on a flash drive or in some other form at a location other than your house (a parent or sibling’s home or a safety deposit box).  That way, in the unlikely event that you need them, they are still available and your road to normalcy after your claim, will hopefully, be a short one.

Before I go anywhere, I always make sure that I have three things with me: my wallet, my keys, and my cell phone.  I suspect that most people share this attachment with their phone.  In fact, I suspect that, as you are reading this blog, you have your cell phone within arm’s reach.  What you may not be aware of is that if you were to pick up your cell phone right now and make a call, your geographic location would immediately be recorded and stored by your cellular service provider.  Although a bit unnerving, this technology called, “cellular locating” can be a valuable tool when investigating suspicious insurance claims.

Most claim reps would agree that, when investigating suspicious claims, it is often important to determine the whereabouts of the insured(s) or key witnesses at the time of the loss.  Until recently, investigators usually relied on the statements of the insured when establishing their whereabouts.  With today’s technology, the physical location of an insured, or at least their cellular phone, can be scientifically verified using cellular locating.

In a nutshell; “cellular locating” is a technology which measures power levels and antenna patterns used by mobile phones.  Because cellular telephones communicate wirelessly with the closest base stations (i.e. cell tower,) it is possible to determine the general location of the cellular user when he or she places or receives a telephone call.  In other words, by determining which cell phone tower the phone communicates with, one can determine the geographic location of the phone itself.  This technology works, not only with “smart phones,” but with any cellular phone.

The good news is that you don’t have to understand how cellular locating works in order to make use of the technology.  Cellular locating records usually consist of a log of telephone calls made, including times and contact numbers, as well as precise GPS coordinates for each phone call.  Each coordinate represents the location of the nearest cellular telephone tower to the cellular user.  In urban areas, these coordinates are amazingly precise. In rural areas, where cellular towers are sparser, the coordinates may provide a less precise indication of the cell phone user’s location.

Now for the bad news, cellular locating records cannot be obtained without a subpoena or court order, even if an insured is willing to execute an authorization or release.  As a result, the use of cellular locating technology is usually reserved for those claims that become lawsuits.

I would be remiss if I didn’t remind you that strict ethical and security measures are required when employing technology to determine the geographic location of an insured’s cell phone.  In other words, this technology cannot, and should not be used, or even sought after without a proper court order, and/or subpoena, whether or not your insured consents to the release of this information.

As always, there is at least one exception to the rule that cellular locating must be reserved for post-suit discovery.  This exception deals with 911 call centers, almost all of which employ cellular locating technology to determine the general location of a caller.  Furthermore, because 911 call logs are a matter of public record, one can easily obtain a computer printout of the GPS coordinates of any person who calls 911.

Last, but not least is one very important piece of information concerning cellular locating records.  If at any time you believe that cellular locating records may be useful to your investigation, you must take steps to have these records preserved by the cellular service provider.  Although each cellular telephone service provider is different, most cellular locating records will be purged from the service provider’s system within months of the date the calls were made.  As a result, when a suspicious loss occurs, and the whereabouts of the insured is in question, one of the first things an investigator should do is send a preservation of records request letter to the cellular phone service provider.  This preservation letter should specifically identify the cellular customer, the cellular customer’s telephone number, and the specific date(s) for which cellular locating records will be sought. Please note that text messages and voice mail content are usually retained for no more than 72 hours, while cellular locating information is retained for several months.  

As you can imagine, there is much more to this technology than can be crammed into this blog.  However, if you have any questions, concerns, or if you require assistance and/or guidance in preserving and/or obtaining cellular locating records, please do not hesitate to contact me directly.

Early planning is key when addressing the issue of an owner(s) successfully exiting a business.  In 2003, it was estimated that within 20 years more than 90 million baby boomers will retire and more than $10 trillion will transfer to the next generation.  The largest generational transfer of personal wealth in history will occur during this time.  Seventy percent (70%) of the 12 million privately owned business will change hands.  (MassMutual & Raymond Institute’s American Family Business Survey 2003)

Most of these businesses are short on cash to fund a buyout.  Many of these business owners, because they do not have a family member(s) active in the business or a strong management team in place willing to take on the risk, will chose to sell their businesses because it is the only viable alternative available.  Many of those will have to sell at a price well below what they anticipated to be the fair market value of their business.  Some will find that they will have to operate the business well beyond the age at which they would have preferred to retire.  Others will find that simply closing the business and liquidating the assets is the most viable option.  These options frequently result in dissatisfaction on the part of the owner(s).  They are either unhappy with the net cash realized or the need to work well beyond their desired retirement date; consequently, these issues are often ignored by owners until it is too late for effective planning.

Sometimes, the highest dollar value can be achieved by selling the business to someone already involved in it.  This may also be the most risky.  For example, if the successor fails to operate successfully, the former owner may find he or she is right back in a business from which they thought they had retired.  A spouse of a deceased owner may find that he or she may have to step into a business they know little about when the new owner operator fails to meet payment obligations.  It is even more complicated if the new owner is a family member.  Achieving this higher dollar value means you are not really out of the risks associated with the business, such as the market generally, dependence on the business skills of the successor and the size of the burden assumed in relation to the businesses ability to meet the obligation.

Many of these issues can be effectively addressed if the parties have in place a buy sell agreement that covers the issues well before the event occurs that may trigger a buyout.  An agreement typically addresses value; provides a method of payment and addresses other issues such as divorce, personal bankruptcy, disability, future incompatibility of owners, retirement and death.  If the business owners are multiple generations of family members, the agreement can address the various issues among the members of the generations.  One of those issues often concerns the rights of the operating generation to reinvest in the business, versus the rights of non-operating family members who are looking for a stream of income from the business.  These issues are complex and the right answers change, based on the personal dynamics of the people involved and therefore one size does not fit all.  Because of these competing interests, multiple representatives of the various individuals involved may be required.  The process may be frustrating and expensive.  Discussions will often involve consideration of life insurance, disability insurance, deferred compensation and reasonable payment period and valuation.

However, if done properly, the issues that keep owners up at night can be successfully addressed resulting in a secure retirement from the business.

Thirty years ago, when I started my legal career, my first jury trial resulted in an award of roughly $3,500 for the plaintiff (I represented the defendant).  The trial had taken two days and involved the testimony of two physicians.  The settlement offer prior to the trial had been in the neighborhood of $5,000, with a demand of $10,000.  Recently, one of my cases settled with the agreement of the insurance carrier to pay $1,000.  The trial was expected to last two days.  The doctor had already been deposed and the net to the Plaintiff would be zero. 

Since I began practicing law, the philosophy of risk on many minimal cases has changed.  Rather than coming up with a number that represents what the insurance company would have paid in costs to try a case it expected to win and then save something off that, the burden appears to have shifted, so that what is being paid is something needed to cover costs the Plaintiff has incurred or less.  The medical bills do not always get covered and many offers are a fraction of the total of those medical bills.  We know the Plaintiffs will negotiate down the subrogated medical bills.  Plaintiff’s counsel argues to the health insurance carrier that the treatment they told us was related no longer seems to be related. 

This change has resulted in the carriers taking the position that they are better equipped to handle the costs and a possible verdict than the Plaintiff is equipped to handle the cost associated with a loss.  The insurance world has decided to limit the nuisance settlement to reflect the relative bargaining strength of the parties, and in so doing also reflect the lack of merit in the claim.

As many people know Michigan is a no-fault motor vehicle insurance state.  What many people in Ohio do not realize is that their auto insurance policy written in Ohio will comply with the laws of the state of Michigan.  This may have some unintended consequences when you have an accident in Michigan with your Ohio insured vehicle.  For instance my daughter, while a student in Michigan, was rear ended near campus.  She was driving an older vehicle and we had removed the collision and comprehensive coverage from the vehicle.  The accident was not her fault and under the laws of Ohio the wrongdoer would have been responsible to repair her car.  In Michigan such a claim is turned into your own insurance carrier, who settles it regardless of fault.  This results in having no recourse for the repair of the vehicle if you have Ohio “liability only” car insurance. 

Any Ohioan, who is going to be spending much time in Michigan, should raise coverage questions with their Ohio insurance agent, to make certain they have protected themselves from risks that are viewed much differently just one state north.

Almost every local newspaper has an online edition.  What does this mean to me?  In addition to getting a free newspaper every day, it means that some poor individual at the local newspaper types up every news article, before uploading it to the newspaper’s website.  The end result is that thousands of news articles, past and present, can be easily searched in a matter of seconds.

What you may not know is that many newspapers print “Daily Logs” of all criminal activity.  While some newspapers are more specific than others, my hometown newspaper provides the names and general addresses of the individuals who report property crimes.  Your local newspaper may be different.  For example, today’s edition of “The Toledo Blade” contains the following report:

Burglaries:

Shannon Banks*, 5700 block of Swan Creek, three video game systems, desk-top computers, and five flat-screen televisions.

(*Name has been changed.)

Pretend for a moment that Ms. Banks is a claimant, and has submitted a claim under her homeowners or renters policy.  As a SIU claim rep, you would like to know whether Ms. Banks reported any other burglaries or theft offenses in Toledo, within the past five years.

Here is how to answer that question in ten minutes or less.  

1. Go to www.toledoblade.com

2. In the search bar, type “Shannon Banks” (Using quotation marks will provide results with “Shannon” followed immediately by “Banks”.)

3. View the list of results;

4. Open all of the “Daily Log” results in separate tabs;

5. Go to the first tab,

6. Since you don’t have the time to search each article for the name in question, use the following search function: push the “Ctrl” key and the “F” key at the same time.

a. A box will appear in the upper right portion of the screen;

b. type “Banks” in the box, and press “Enter”;

c. Push the down arrow, next to the search box, at which time you will be taken directly to the portion of the news article which contains the highlighted name, “Shannon Banks.”

d. Within seconds, you should be able to determine if the reference to the insured is relevant.

7. Go to the next tab, and repeat step 6a-d until you have searched all of the tabs.

A word of warning, 9 out of 10 times, the articles that you view on a newspaper’s website will not be useful.  The tenth time however, could make it all worthwhile.

I promise not to bore you with too many “war stories,” but an example of a time when this technique paid off occurred just a few months ago.  Specifically, I searched the name of an insured who submitted a burglary claim in December of 2010.  After searching the Toledo Blade’s daily logs, I learned that the insured reported another burglary just four months earlier.  After learning of the prior burglary, I obtained the Crime Report from the Toledo Police Department.

From the Crime Report I was able to determine that the prior burglary was identical to the loss that I was currently investigating.  In fact, the exact same items were reported as being stolen four months earlier.  Moreover, attached to the Crime Report was a request of information form submitted by the claimant’s prior insurance carrier.  Finally, the Crime Report contained copies of several receipts that were identical to the receipts submitted by the insured in the subsequent claim.  In summary, a ten minute search of the local newspaper’s website led to a “smoking gun” Crime Report.

I realize that some of you may be wondering why we did not learn of the prior claim from the ISO Report.  Don’t get me wrong, ISO Reports have proven very useful in the past, but I know from experience that they often do not contain prior claims.  In the aforementioned scenario, the first claim submitted by the insured was actually paid by a well-known insurer.  Yet for reasons unknown, the prior claim was not listed on the ISO Report generated just four months later.  As a result, had I not searched the local newspaper’s archives, I would have never known about the prior identical claim.

Mitchell Kapor, the founder of Lotus 1-2-3 was quoted as saying, “Getting information off the Internet is like taking a drink from a fire hydrant.”  Ironically, anyone can use the internet to test this claim by simply typing the name “Mitchell Kapor” into Google’s search engine.  Within 0.11 seconds of pressing “Enter,” Google will retrieve 592,000 results, all of which contain the name “Mitchell Kapor.”

Undoubtedly, those 592,000 search results contain everything anyone would ever want to know about Kapor.  Yet the question remains, how can one find out what you want to know, in a timely fashion.  Put another way, how does one take a sip of useful information from a fire hydrant that is spewing mass quantities of information?

The goal of this blog, and my 10 blogs that will follow, is to share with SIU investigators a series of internet research techniques which, when used effectively, will provide useful information regarding a claim and claimant.  Most importantly, these techniques can be used to complete a thorough internet investigation in less than one hour.  I have personally fine-tuned these techniques, which have allowed me to provide additional relevant information to insurers.  With this information, insurers are then able to make more informed decisions about how to handle suspicious claims.

Last year, my oldest son graduated from high school.  During the prom and graduation season, I was surprised to learn how much alcohol was being consumed by the 18 year olds.  As anybody who knows me is aware, I am not adverse to kicking back and enjoying a few alcoholic beverages.  That being said, the amount of alcohol consumption by those high school seniors, was surprising to me not only as a parent, but also as an attorney. 

The Ohio law is very clear about these issues.  The law (Ohio Revised Code 4301.69) lets everyone know that they cannot buy alcoholic beverages for anyone under the age of 21, unless it is for religious purposes or consumed at home under the supervision of a parent or a spouse age 21 or over.  Further, you cannot knowingly allow anyone on your property or in your home to possess or consume alcohol, if they are under age 21, unless it is given to them by their parent or spouse who is at least 21 years old.  If you are 21 or over and you purchase alcohol for an underage person and they consume the alcohol then injure or kill someone, you can be held civilly liable under what is known as “the social host theory.”  If an underage person you provided alcohol to dies from alcohol poisoning, you could be held legally liable for their death. 

There are many articles written and available about “social host” claims for civil liability.  But, the bottom line is; if you, as an adult 21 or over, purchase alcohol for a person that is under 21 years old and they injure or kill someone else or they die as a result of consuming alcohol you provided, you can be held civilly liable.

We rarely see articles regarding the criminal aspect of supplying alcohol to a person under the age of 21.  But the fact remains; if you violate the Ohio law (R. C. 4301.69) and a person dies from alcohol poisoning or a person that consumed alcohol supplied by you causes a death, whether their own or that of another person, you could be convicted of involuntary manslaughter and sent to prison for supplying that alcohol. 

A case that I am currently involved with has that exact scenario; I am representing a young man in a civil lawsuit under “the social host theory.”  He, my client, was 21 years old at the time of the incident.  Friends of his, who were 18 and 19, contacted him to purchase beer for them to drink at a party.  The 19 year old picked up my client, drove him to a carry-out where my client purchased two cases of beer with money given to him by these friends.  After the purchase, the 19 year old dropped my client off at his girlfriend’s and took the beer to a party where he and other friends, including the 18 year old mutual friend, proceeded to consume the beer.  The 18 and 19 year olds then left the party in a car and drove out into the country.  The 18 year old was driving intoxicated with a blood alcohol level of 0.13.  He lost control of his car while travelling at an estimated speed of 94 to 101 miles per hour.  A fatal accident occurred in which that 18 year old driver was killed.  Because my client purchased the beer for these two friends, who then consumed the beer, he was convicted of involuntary manslaughter.  He was sentenced to serve 4 years in prison, where he remains today.

Before anyone, whether a parent, older sibling or friend, purchases alcohol for anyone under the age of 21 to consume at a graduation party or prom, I hope that they think twice and be aware that there can be significant and life-altering consequences when a serious mishap occurs.

I suggest that parents take this information to heart and share it with their children who are age 21 or over.  Tell them to think long and hard before they decide to be that “cool” older brother, sister or friend to anyone by buying them alcohol.  Making the wrong decision in a case like this could have a devastating affect upon the rest of their life and potentially end someone else’s.

When we started our blog, I made a commitment that I wouldn’t simply type words on a page every day to meet some requirement, but instead cover a multitude of topics and attempt to make it interesting.  While Ohio has plenty of dull and dreary statutes, perhaps my favorite in the “interesting” category, and one that has spurred three of my favorite cases is R.C. 2305.321 – Immunity from liability based on equine activity.

Even among very seasoned attorneys in the defense field, I find few are aware that in Ohio, you are immune from liability for actions taken by your “equine” when participating in an “equine activity.”  Both the definition of equine (horse, mule, donkey, zebra etc.) and equine activity are very broad.  The theory being that traditionally these animals served a critical role in farms and farming and we want to keep them around.  Thus while there are some inherent dangers to them and their perceived unpredictability, the dangers are obvious and anyone wishing to avoid such hazards need simply avoid equines.

One such case I had involved a man walking through the horse barn at a local county fair.  The man alleged that while walking through the barn, my client’s horse lunged forward from its stall and bit the tip of his pinky finger off.  While the facts demonstrated it would have been impossible for the horse to have lunged that far given the steel bars on the stall, the Court held that regardless, the owner would be immune from liability because showing horses at a county fair constituted an equine activity.  As a result, summary judgment was granted and the case was dismissed.  In another such case, an owner was immune from liability when his horse reared up and threw a potential purchaser that was riding the horse off its back, resulting in a broken arm.  Again summary judgment was granted in favor of the horse owner.

While one may argue that immunity from potential liability for equines is unfair, the counterargument is a simple one:  Avoid putting yourself around equines at equine activities.  Unlike dogs, one rarely encounters a rogue horse running lose and chasing the neighborhood children.  Thus, R.C. 2305.321 literally provides what many people have sought for a long time – immunity for the family jackass.

A well drafted buy sell agreement is a critical document for a closely held business.  It is useful in order to keep ownership within a family or limited group of owners, avoid termination of a Sub-S election or partnership, create a market for an owner’s interest and establish an orderly method for liquidation of an owner’s interest upon death, disability or retirement.

Any business where there is more than one owner should consider the advisability of such an agreement.  Unless registered as a publicly traded company there is generally no market for the ownership of an interest within a company whether it is a corporation, partnership or LLC unless the owners themselves create such a market.  This should be of particular concern if the owner is a minority owner.  A minority owner is one who generally owns less than voting control which in many states is 66 2/3% of the voting power of the company.

Many family businesses employ sons and daughters-in law in the business but are often concerned about other in-laws acquiring an interest who could later pass that interest on to even more distant relation or unknown owners.  The agreement should address these issues through restrictions on transfers, mandatory purchases upon divorce or death of the original owner and conversion of an ownership interest to a non-voting interest upon a triggering event.

The agreement can provide a mechanism for the patriarch to sell control to one or more business children, with payment made over a period of time, so as to treat fairly other non-business children.  More family business have been destroyed, from my observations of over 30 years in practice, by patriarchs dividing ownership evenly among all children whether involved in the business or not so that no one child has control of business decisions.

The agreement can also provide a mechanism for resolving business disputes.  This is especially important if ownership is divided so that no single owner has control.  While minority owners have certain protected rights by law (see my January 2, 2011 blog) enforcing those rights can be expensive and can ultimately harm the business of the company if the majority owners have to be constantly looking over their shoulders to gauge the reaction of a well-heeled minority owner prepared to fight.

A buy sell agreement is a document not easily discussed in one article and has permutations that need to be discussed in detail.  Therefore, over the coming months I will explore the various common provisions of business buy sell agreements on an individual basis through a series of articles.

In a recent case that I tried, the issue of alcohol became very prevalent.  In the State of Ohio, the use of alcohol can now be a strict liability issue.  The Ohio Revised Code Section 4511.19 sets forth that nobody shall operate an automobile with a blood alcohol concentration of eight hundredths of one percent or more (.08).  If a person is under 21 years of age, the blood alcohol concentration is only two one-hundredths of one percent (.02).

The standard Ohio Jury Instruction 411.25 states:

1. A person must not operate a vehicle while:      (A)(2) having a concentration of eight hundredths of one percent or more a rate of alcohol in his blood.
2. There is a second section that states if there is:     evidence introduced of a blood test, that is used to determine the concentration of alcohol in their system that this could be used by the jury to determine the amount of alcohol in a person’s system.

But, the key thing is, if the jury finds that by the greater weight of the evidence that a party was operating a vehicle while under the influence of alcohol or they find by the greater weight of the evidence, that they were operating a vehicle by a concentration greater than 0.08%, then that person is deemed negligent.

This issue was key, as my trial was a disputed liability matter and it was the Plaintiff that had a blood alcohol level of 0.20.

Over the past few months, I have been approached by a number of clients inquiring about the advantages of a revocable living trust.  Based on information received at various seminars or perhaps advertising pieces received in the mail, some of these folks have developed the erroneous impression that their estate plan would not be complete without the inclusion of a living trust.  Under the right set of circumstances, a living trust may well be the proper estate planning vehicle for the disposition of a client’s assets at death, but there may be other, less costly alternatives for achieving the same result.

 
Generally speaking, legal fees tend to be greater for an estate plan that includes any kind of trust and the fees will vary, depending on whether there are tax issues to address, the overall complexity of the trust, as well as the attorney’s degree of expertise in estate planning.  Other related fees may be incurred in connection with the creation of a trust, including appraisal costs with respect to the assets being transferred, accountant’s fees, and the fees associated with re-titling real estate or other business interests.  Once the trust has been created, trustee fees may be incurred, which may vary widely, depending on whether the grantor has delegated responsibility for the ongoing operation of the trust to a family member, friend or corporate trustee.

 
Notwithstanding the costs associated with the creation and ongoing operation of a trust, there are certain situations where a revocable living trust may serve as the optimal tool for meeting certain client needs during his/her life and for the disposition of client assets at death.  During life, clients may rely upon a trust and the trustee to handle day-to-day finances and the management of trust assets where the client is facing physical and/or mental health issues or where the client’s occupation or extensive travel schedule prevent the client from handling his/her own personal affairs.  Moreover, privacy issues may predispose clients toward using trusts, since items deposited into trusts not only avoid probate, but also avoid becoming matters of public record.  Many times clients in second-marriage situations, where one or both spouses have children from a prior marriage, consider using a trust which, at the client’s death, is managed by an impartial trustee to balance the competing financial interests of the surviving spouse and children from the prior marriage. 

These are but a few reasons why a client may be interested in having a revocable living trust; keep in mind, however, if a client’s primary reason for establishing a living trust is to avoid probate, there are many other devices or techniques available.

Having been licensed to practice law in Florida since 1999 and having worked with Ohio residents who own real estate in Florida, usually when administering an estate; I have been amazed at how many Ohio residents own real estate in the state of Florida.  Many do so because after a short two hour flight you can be in the tropics.  A great break from the harsh Ohio winters.  Others want to spend their retirement years in a place that is warm, income tax free and estate tax free.  Ohio is one of 17 states that still has an estate tax; and now, real estate is relatively cheap in Florida.

Florida has a unique homestead law.  Florida’s homestead law is found in its constitution and was first enacted in 1843.  Because it is in the constitution the state legislature can not change it unless by a constitutional amendment which requires a favorable vote of the citizenry of Florida. It affects three different aspects of real estate ownership in Florida.

• Exemption from creditor’s claims
• Restrictions on alienation
• Tax exemptions and benefits

To qualify for the homestead exemption, the real estate must be owned by a natural person who claims the real estate as their primary residence.  How you own the property or what type of property ownership is usually not an issue.  For example ownership can be in a trust, life estate, leasehold interest, mobile home, condominium, cooperative or boat, but does not apply to any portion of real estate used for a commercial business. Homestead is established by submitting a homestead application (Florida Department of Revenue Form DR-501) to the appropriate Property Appraiser’s office on or before March 1^st of the year for which the exemption is sought.

From a local tax perspective a person claiming homestead has the first $50,000 deducted from the assessed value of a primary residence before taxes are assessed.

Creditors, other than the taxing authority for assessed taxes and the lender with a mortgage on the property, can not force the sale of the real estate or lien the property.  This applies to qualified homestead property for up to one-half acre of contiguous land in a municipality and 160 acres outside a municipality.  Bankruptcy law exemptions and Federal tax liens supersede Florida’s law.

In a like manner, creditors of a decedent can also be forestalled from claiming a decedent’s qualified Homestead, especially if there is a surviving spouse and minor children.

Florida’s favorable homestead laws are certainly one item to consider if you are considering changing your primary residence to Florida.

In December of 2010 a former partner and friend of mine died unexpectedly.  He was only 56 years of age at the time, had gotten divorced a couple of years before his death and had not made the necessary plans for the hard times that faced his parents and children in dealing with the last week of his life.  The fact that he was an accomplished attorney, estate planner, CPA and college business professor, makes this a lesson that all of us should learn from.

I will not hold myself out as an accomplished elder lawyer or estate planner, I have other partners and associates who possess those skills.  While I have written lots of wills and powers of attorney over the years, what life has taught me is that planning should not be put off.  Here is a link to blank Ohio health care power of attorney that I believe almost anyone could fill out.  You should consult an attorney if you have legal questions about the form or for the preparation of wills and trusts, which I believe laymen should not attempt.  In tribute to my friend and former partner please feel free to contact me with your questions and if I can’t answer your questions, I will forward them on to others in my office who can.

Recently the Ohio Supreme Court issued its decision in the case of Kincaid v. Erie Ins. Co., 2010-Ohio-6036. In 2001, Don Kincaid was involved in a motor vehicle accident and was provided a defense under his auto policy with Erie Insurance. That case was settled and dismissed. Apparently following the old adage “No good deed goes unpunished” in 2008, Kincaid filed a class action complaint against his insurer, Erie, alleging that Erie had failed to compensate and reimburse him and all others similarly situated for travel expense, lost wages incurred during the defense of him and other incidental expenses. The only problem was that Kincaid had never requested to be paid by Erie for the expenses.

The Supreme Court held that there was no actual case or controversy because Erie had not refused to pay Kincaid for the expenses that may have been covered by the ‘additional payments’ clause of the policy. The Supreme Court further stated that the Courts cannot render advisory opinions and therefore was without authority to weigh in on whether the expenses would be covered or not.

While the case was decided appropriately and entrenched in the principles of common sense, it hopefully is the reaffirmation of a bigger trend that Ohio has enjoyed in the last few years. No longer is Ohio a state that will bend over backward to figure out how to take money out of the corporate pocket of an insurance company only to give it to an insured who received what he asked for. In a state that indulges the theory of bad faith, there still remains some obligation on the part of the insured. In Kincaid, the lesson is perhaps even a simpler one, before filing suit, ask and you never know what you might receive.

In starting the New Year, launching our revamped website and refocusing some of our marketing efforts, we at Rohrbachers Cron Manahan Trimble & Zimmerman Co., L.P.A. (“RCMTZ” …. I promise that will be the last time I use the entire firm name) decided to add blogging to the website’s capabilities. With that decision behind us, we soon realized that for blogging to be a successful component of a website, you actually need to blog. So here it is, the first of what I hope will be regular blogging contributions. I thought it perhaps appropriate for those that care to follow my blogs, to give a brief introduction of what you can expect in the weeks and years to come.

As my firm profile says so much more formally than my blog, I am a civil litigator. The bulk of my practice has been in insurance liability defense and coverage, special investigations and insurance fraud, commercial defense and appellate work, though I certainly handle other matters. That said, I believe that a blog should be anything but dull, as dull reading seems to find its way into the field of law without the need to turn to me for your periodic dose. As a result, while I will try and regularly include pertinent entries on recent decisions, trends and developments and pertinent legislation (primarily focusing on litigation), I will also at times share my thoughts on (or links to) the odd and interesting that makes us scratch our heads and laugh. I also have a passion for politics and while not intending to turn my blog space into the everyman’s American Spectator, I am certain that from time to time there will be entries pertaining to the latest developments in political matters. Finally, at times I am certain that I will provide my thoughts on items of interest to most, but having absolutely nothing to do with the law. I mean, isn’t everyone truly wondering why I still to this day think McDonald’s is one of the world’s greatest restaurants?

Finally, if I am anything, it’s willing to have a good discussion or debate. As such, I welcome comments whether kind, harsh, in agreement or diametrically opposed to what I have said. I hope to make this a fun blog site and provide some levity while also passing on something of interest. So here it is … the blog to begin all blogs!

As a business attorney representing closely held business I am often approached by clients who desire to make a key employee, a spouse, family member or an investor an owner. This usually prompts a discussion of their reasons. Typical responses include a belief that if the employee has a stake in the future of the company they will be less likely to quite; will maybe be more willing to stick it out when times are tough; the owner feels a sense loyalty to a key employee or spouse, a desire to reward past performance that has helped to make the company successful, this is a family business, to avoid paying interest on a loan or because it is a requirement of the investor.

The owner usually desires to maintain control which normally includes the ability to sell the business, control compensation and make all the important decisions concerning the business. This results in a discussion concerning what control means. Many owners believe that if they own 51% that they have control. Under Ohio law that is not necessarily true. Corporations normally require a 2/3 vote of the shareholders to approve many transactions unless the articles of incorporation provide a lesser amount but in no event may the vote be less than a majority. ORC 1701.76 (A)(1)(b) (asset sale) ORC 1701.83 (A) (stock sale) ORC 1701.78 (F) (merger) ORC 1701.71(A)(1) (amendment of articles of incorporation) In a limited liability company any action taken by a member that is not in the ordinary course of business requires the unanimous consent of all the members unless there is an operating agreement in place specifying a different ratio. ORC 1705.25 (A)(3).

Another common issue is whether there should be any restrictions on the transfer of ownership. While an owner is usually comfortable with an employee or investor owning stock the same does not follow for maybe their spouse, creditors, children or other heirs. It is for this reason and others that most often such ownership usually result in the implementation of a shareholders agreement, closed corporation agreement or operating agreement. Such agreements usually address a myriad of issues including restrictions on transfer, management control, covenants not to compete, purchase of ownership interest upon death, termination of employment, divorce, bankruptcy and disability.

Owners who are used to total control should also be mindful of the duties and restrictions Ohio courts have placed on majority owners of businesses. In 1989 the Ohio Supreme Court in Crosby v Beam 47 Ohio St. 3rd.105 created a fiduciary duty on the part of the majority owners of a closely held company to their minority owners. The minority has a right to have an equal opportunity to benefit from the business as the majority. On the face of it this only sounds fair. However, when you consider that as long as the owner owns all of the company he had no such duty. He or she is free to sell the business, hire or fire employees within the confines of employment law or simply close the business and open a similar business.

In larger businesses and in particular corporations if the majority or management take actions that advantage themselves or disadvantage the corporation the disadvantaged shareholders may only bring suit on behalf of the corporation to recover damages which if they are successful are paid to the corporation.. The individual shareholders have no independent right of recovery except possibly for attorney fees. This is commonly referred to as derivative shareholders suit. In a closely held corporation minority shareholders have a right to recover personally for any harm they may have suffered at the hands of the majority. Below are examples of issues courts have considered.

Two of three shareholders formed a new company to conduct a similar but unrelated business. Court held it was a question of fact for the jury to decide if they had breached their heightened fiduciary duty to the third shareholder who was not included. Medina v Perumbeti (1994 WL 716539)

An officer and shareholder of a company were not allowed to enter into new business that the minority believed would compete with the business of the company. Morad v Task (1994 WL 78157)

A shareholders employment could not be terminated unless there was a legitimate business reason. Morrison v Gugle (2001) 142 Ohio App. 3rd 244.

Minority shareholders may question the compensation paid to the majority shareholder. Soulas v Troy Donut University, Inc. (1983) 9 Ohio App 3rd 339.

Minority shareholders may force the payment of dividends. Ohio Jurisprudence 3rd Business Relations 721.