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Rockwell publishing real estate law chapter 2
1.
Printable
Lesson Materials Print these materials as a study guide These printable materials allow you to study away from your computer, which many students find beneficial. These materials consist of two parts: graphic summaries of the content and a multiple choice quiz. Graphic Summaries This portion of your printable materials consists of dozens of frames that summarize the content in this lesson. The frames are arranged on the page to make it easy for you to study the material and add your own notes from your textbook or the online course. Quizzes Many students learn best from sets of questions, and this multiple choice quiz allows you to focus your review of the material to important topics. 13218 NE 20th Street Bellevue, WA 98005 425-747-7272 800-221-9347 www.rockwellinstitute.com © 2009 Rockwell Institute
2.
California Real Estate
Law Lesson 2: Resolving Legal Disputes © Copyright 2007 Rockwell Publishing, Inc. Introduction This lesson will discuss: l alternative dispute resolution l phases of litigation l enforcing judgments l appeal © Copyright 2007 Rockwell Publishing, Inc. Alternative Dispute Resolution Negotiated settlement Negotiated settlement: parties might compromise l Parties meet, present initial positions l Negotiations, rounds of offers and counteroffers l If parties reach agreement, lawyer drafts settlement agreement l Quick, final, cheap © Copyright 2007 Rockwell Publishing, Inc. 1
3.
Alternative Dispute Resolution Mediation If
negotiations ? compromise, then parties may try mediation or arbitration. Mediation: negotiation with help of neutral third party l Mediator helps negotiations move along l Not binding © Copyright 2007 Rockwell Publishing, Inc. Alternative Dispute Resolution Mediation costs Costs usually split by parties. l Volunteer mediators = free or cheap l Complex disputes need specialized mediators that cost more. © Copyright 2007 Rockwell Publishing, Inc. Alternative Dispute Resolution Arbitration Arbitration: formal hearing of case, lawyers on both sides l Like a mini-trial w/o jury l Voluntary or involuntary l Arbitrators more conservative than juries in awarding damages © Copyright 2007 Rockwell Publishing, Inc. 2
4.
Arbitration Involuntary arbitration Involuntary arbitration:
l required by statute or court order l nonbinding, parties can appeal © Copyright 2007 Rockwell Publishing, Inc. Arbitration Voluntary arbitration Voluntary arbitration: l agreed upon in contracts l also called mandatory arbitration l binding, can’t appeal unless misconduct © Copyright 2007 Rockwell Publishing, Inc. Arbitration Arbitrator misconduct Court overturns binding arbitrations if arbitrator’s decision caused by: l fraud l corruption l other misconduct Complaining party must show misconduct affected arbitration award. © Copyright 2007 Rockwell Publishing, Inc. 3
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Summary Alternative Dispute Resolution
l Negotiation l Mediation l Arbitration © Copyright 2007 Rockwell Publishing, Inc. Litigation Different phases of litigation: l determining jurisdiction l beginning the lawsuit l discovery l motions l trial l enforcement l appeal © Copyright 2007 Rockwell Publishing, Inc. Litigation: Pre-trial Jurisdiction Jurisdiction: court’s authority to make legally valid judgments on cases it hears. To hear a case, a court needs both personal and subject matter jurisdiction. © Copyright 2007 Rockwell Publishing, Inc. 4
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Litigation: Pre-trial Personal jurisdiction Personal
jurisdiction: court’s right to force defendant into court Court has personal jurisdiction only if defendant: l committed some act in the state, or l has some connection with the state © Copyright 2007 Rockwell Publishing, Inc. Litigation: Pre-trial Subject matter jurisdiction Subject matter jurisdiction: court’s right to issue judgment over the type of case Courts have either: l general jurisdiction l limited jurisdiction © Copyright 2007 Rockwell Publishing, Inc. Litigation: Pre-trial General and limited jurisdiction General jurisdiction: court can hear all types of cases l Example: Trial court hears civil and criminal cases Limited jurisdiction: court can hear only certain type of case l Example: U.S. Tax Court © Copyright 2007 Rockwell Publishing, Inc. 5
7.
Litigation: Pre-trial Federal court
jurisdiction Plaintiff’s choice between state or federal courts. Federal courts à subject matter jurisdiction if: l U.S. government is a party l question of federal law l diversity of citizenship © Copyright 2007 Rockwell Publishing, Inc. Litigation: Pre-trial Federal court jurisdiction U.S. government is a party l Example: prosecution of federal crime Question of federal law l Example: claim made under U.S. Constitution Diversity of citizenship l Example: plaintiffs/defendants from diff. states © Copyright 2007 Rockwell Publishing, Inc. Litigation: Pre-trial Small claims court Small claims court: l Plaintiff’s claim < $7,500 (unless business) l No jury l Simplified procedure l No lawyers present l Quicker, cheaper © Copyright 2007 Rockwell Publishing, Inc. 6
8.
Litigation: Pre-trial Beginning a
lawsuit l Complaint: document from plaintiff outlining case against defendant l Filing: plaintiff files complaint with clerk of the court l Service: plaintiff has copy of complaint served on defendant by nonparty Complaint, answer, and other similar documents are called pleadings . © Copyright 2007 Rockwell Publishing, Inc. Litigation: Pre-trial Beginning a lawsuit Defendant must answer plaintiff’s complaint. l Often a denial of plaintiff’s assertions l In CA, defendant 30 days to answer No answer à default judgment for plaintiff © Copyright 2007 Rockwell Publishing, Inc. Beginning a Lawsuit Answer Defendant’s answer is sometimes more than denial: l affirmative defenses: such as lack or jurisdiction, or the statute of limitations l counterclaims : defendant’s claims against plaintiff © Copyright 2007 Rockwell Publishing, Inc. 7
9.
Beginning a Lawsuit Statute
of limitations Statute of limitations: l limited time to bring lawsuit l too much time à hard for witnesses to remember what happened l delayed discovery rule: statute of limitations starts running after reasonable chance to discover injury l limit can be set in contract also © Copyright 2007 Rockwell Publishing, Inc. Beginning a Lawsuit Jury demand l Jury demand: both sides have limited time to request jury l If no jury, then bench trial (judge decides) © Copyright 2007 Rockwell Publishing, Inc. Beginning a Lawsuit Lis pendens Lis pendens: l plaintiff’s lawyer files notice warning that property involved in lawsuit l possible judgment may affect new buyer of that property l red flag scares off buyers © Copyright 2007 Rockwell Publishing, Inc. 8
10.
Beginning a Lawsuit Remedies Plaintiff
asks for remedies in complaint. Most commonly requested remedy: l compensatory damages © Copyright 2007 Rockwell Publishing, Inc. Remedies Compensatory damages Compensatory damages reimburse for actual financial losses from other party’s actions. Examples: l lost wages l damage to property l medical bills © Copyright 2007 Rockwell Publishing, Inc. Remedies Punitive damages Very flagrant or severe acts by defendant à punitive damages Punitive damages: l deter defendant and others from similar acts in the future l can be up to 10 times amount of compensatory damages © Copyright 2007 Rockwell Publishing, Inc. 9
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Remedies Specific performance Specific performance:
forces defendant to perform contract l when damages alone can’t satisfy plaintiff l only for unique subjects, like real estate © Copyright 2007 Rockwell Publishing, Inc. Litigation: Pre-trial Discovery Discovery: learning about opposing party’s case by: l interrogatories (written questions) l depositions (oral questions) l requests for production (document requests) © Copyright 2007 Rockwell Publishing, Inc. Discovery Interrogatories Interrogatories: written sets of questions l parties send to each other l gain useful information through written answers l parties answer as narrowly as possible © Copyright 2007 Rockwell Publishing, Inc. 10
12.
Discovery Depositions Depositions: scheduled meetings
for parties to ask questions in person l under oath l gauge personalities l sometimes more info is revealed in person than in written answers © Copyright 2007 Rockwell Publishing, Inc. Discovery Requests for production Requests for production: written request to other side asking for copies of documents relevant to case Examples: l medical bills l pay stubs © Copyright 2007 Rockwell Publishing, Inc. Litigation: Pre-trial Discovery Each party required by law to respond to other’s discovery requests. l Each side has realistic view of likely outcome l Encourages settlement © Copyright 2007 Rockwell Publishing, Inc. 11
13.
Litigation: Pre-trial Motions A party
can make a motion: a formal request for a particular order. l Both sides present arguments about request Most common: summary judgment motion l Asking court to rule on validity of legal issue or claim before trial © Copyright 2007 Rockwell Publishing, Inc. Litigation: Pre-trial Summary judgment Court won’t grant motion for summary judgment if factual issues exist (unanswered questions about the facts). l Factual issues require trial (witness testimony) © Copyright 2007 Rockwell Publishing, Inc. Summary Litigation: Pre-trial l Jurisdiction l Complaint l Answer l Remedies l Discovery l Motion © Copyright 2007 Rockwell Publishing, Inc. 12
14.
Litigation Trial Trial structure:
l jury selection (if not a bench trial) l opening statements l testimony l closing arguments l jury instructions l verdict © Copyright 2007 Rockwell Publishing, Inc. Trial Jury selection Judge/lawyers ask potential jurors questions, looking for any bias. Also called voir dire. l Judge may dismiss jurors (for cause) l Lawyers may dismiss limited number of jurors without cause (peremptory challenge) © Copyright 2007 Rockwell Publishing, Inc. Trial Opening statements Opening statement: begins trial, plaintiff’s lawyer describes argument intends to make Defendant’s lawyer gives separate opening statement against plaintiff’s statement. © Copyright 2007 Rockwell Publishing, Inc. 13
15.
Trial Testimony Witness on each
side: l fact witnesses testify on what they saw, can’t offer opinion l expert witnesses offer opinion based on education or experience (doctors, engineers, etc.) © Copyright 2007 Rockwell Publishing, Inc. Trial Closing arguments A lawyer’s closing argument: l sums up the evidence l emphasizes key points for the judge or jury to consider during deliberation © Copyright 2007 Rockwell Publishing, Inc. Trial Jury instructions After closing arguments, judge instructs jury (if there is one) about law relevant to case, such as degree of proof necessary to reach verdict. © Copyright 2007 Rockwell Publishing, Inc. 14
16.
Trial Verdict Verdicts differ, depending
what kind of case: l CA civil cases need at least ¾ of jurors to agree l criminal cases need unanimous verdicts Hung jury if the jurors can’t agree à forces new trial with different jury © Copyright 2007 Rockwell Publishing, Inc. Summary Litigation: Trial l Jury selection l Opening statements l Testimony l Closing statements l Jury instructions l Verdict © Copyright 2007 Rockwell Publishing, Inc. Enforcing Judgments Winning judgment ? automatic money l Plaintiff has 10 years to collect judgment Most common enforcement methods: l judgment liens (foreclosure) l garnishment (wage withholding) © Copyright 2007 Rockwell Publishing, Inc. 15
17.
Enforcing Judgments Judgment liens Judgment
creditor (plaintiff) can secure award with lien on real property owned by judgment debtor (defendant). l Judgment creditor can foreclose on property l Proceeds from sale satisfy judgment © Copyright 2007 Rockwell Publishing, Inc. Enforcing Judgments Garnishment Judgment creditor can collect judgment from debtor’s pay. l Earnings withholding order l Employer withholds and passes to creditor l Amount to survive can’t be garnished © Copyright 2007 Rockwell Publishing, Inc. Appeal Unhappy litigant can appeal (within 30 days): l first, to the appellate court l next, to the supreme court Appeals to supreme courts are typically discretionary: court can refuse to hear appeal. © Copyright 2007 Rockwell Publishing, Inc. 16
18.
Appeal Courts of review Proper
appellate court determined by geography zone. l Six appellate courts in CA l CA appellate courts handle appeals from superior courts in same district l U.S. appellate courts called circuit court of appeals: 11 federal appellate courts © Copyright 2007 Rockwell Publishing, Inc. Appeal Process Appellant: party filing appeal Respondent: party arguing against appeal (also called the appellee) Appellate court reviews written arguments and trial record (transcript of original trial). Lawyers for each side also present oral arguments and answer questions. © Copyright 2007 Rockwell Publishing, Inc. Appeal Issues on appeal Most appeals limited to trial court record. No new evidence or legal issues introduced. Rulings based on: l questions of fact à usually not overturned l questions of law à sometimes overturned © Copyright 2007 Rockwell Publishing, Inc. 17
19.
Appeal Issues on appeal Questions
of law : involves interpreting a statute or case law l Example: Were the required elements of fraud present? Questions of fact: no legal analysis involved l Example: Did the defendant sign the contract? © Copyright 2007 Rockwell Publishing, Inc. Appeal Prejudicial vs. harmless Appellate court overturns only if lower court’s ruling based on prejudicial error. l Prejudicial error: affected trial’s outcome in way that harmed appellant l Harmless error: error that didn’t affect outcome © Copyright 2007 Rockwell Publishing, Inc. Appeal Disposition of the appeal If reviewing court finds reversible error, it can: l issue new ruling/verdict l remand case back to lower court l order new trial © Copyright 2007 Rockwell Publishing, Inc. 18
20.
Summary Enforcement and Appeal
l Judgment liens l Garnishment l Issues on appeal l Prejudicial vs. harmless error © Copyright 2007 Rockwell Publishing, Inc. 19
21.
Legal Aspects of
Real Estate Lesson 2 Cumulative Quiz 1. Which of the following is the least expensive method of dispute resolution? A. Arbitration B. Mediation C. Negotiation D. Trial 2. A dispute resolution method in which a neutral third party facilitates discussion between parties, but does not impose a decision, is: A. arbitration B. defenestration C. mediation D. negotiation 3. A contract requires the parties to use binding arbitration for any disputes that arise in connection with the contract. This is known as: A. involuntary arbitration B. mandatory arbitration C. voluntary arbitration D. Both B and C 4. All of the following determine whether a court has jurisdiction, except: A. the amount of money at issue B. the type of claim at issue C. what state the parties reside in D. whether the parties want the case decided by a judge or jury 5. If a plaintiff brings suit in the federal court system, the case will first be heard in a: A. Circuit Court B. District Court C. Superior Court D. Supreme Court 6. A federal court always has jurisdiction over a case in all of these instances, except when: A. the amount in controversy is $7,500 or less B. the federal government is a party C. there is a question of federal law D. there is diversity of citizenship (and at least $75,000 at issue) © 2009 Rockwell Publishing 1
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7. The plaintiff
initiates a lawsuit by filing a/an _____, which describes the cause of action and makes a request for relief. A. answer B. complaint C. deposition D. lis pendens 8. A defendant in California superior court has this many days to file an answer to a complaint: A. 15 B. 30 C. 60 D. 180 9. A patient finds out three years after having surgery that her complications were caused by the surgeon's error. She would: A. be barred from filing suit because of the statute of limitations B. need to file suit within four years of finding out about the mistake C. need to file suit within four years of the surgery D. need to file suit within two years of finding out about the mistake 10. A document filed with the recorder's office that provides notice of a pending lawsuit that may affect title to a particular property is a: A. judgment lien B. lis pendens C. writ of attachment D. writ of execution 11. A plaintiff incurs $10,000 in medical expenses because of the defendant's negligence. At trial, the plaintiff is awarded $10,000. This would be considered: A. a civil penalty B. compensatory damages C. punitive damages D. specific performance 12. Once the complaint and answer have been filed, the parties will gather information during the _____ phase of the lawsuit. A. appellate B. discovery C. preliminary D. voir dire © 2009 Rockwell Publishing 2
23.
13. A defendant's
attorney interviews the plaintiff under oath prior to trial. This is a/an: A. deposition B. interrogatory C. request for production D. voir dire 14. A defendant moves that the judge rule, pre-trial, on one of the plaintiff's claims for which there is no factual dispute. This is known as a motion for: A. default judgment B. deficiency judgment C. judgment n.o.v. D. summary judgment 15. Who of the following would be limited to acting as a fact witness, rather than an expert witness, in a lawsuit concerning a real estate transaction? A. Appraiser B. Managing broker C. Neighbor D. Real estate lawyer 16. In California, which of the following is true? A. Both civil and criminal verdicts must be unanimous B. Both civil and criminal verdicts require three-fourths of the jurors to agree C. Civil case verdicts must be unanimous; criminal case verdicts require three-fourths of the jurors to agree D. Civil case verdicts require three-fourths of the jurors to agree; criminal case verdicts must be unanimous 17. A judgment creditor may do which of the following? A. File a judgment lien against the debtor's real property B. Garnish the debtor's bank account C. Garnish the debtor's wages D. All of the above 18. At an appellate hearing: A. a jury is seated B. evidence is heard C. lawyers argue questions of law D. witnesses are called © 2009 Rockwell Publishing 3
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19. A plaintiff
loses a case in U.S. District Court in San Diego. The plaintiff would appeal directly to the: A. California Court of Appeal for the Fourth District B. California Supreme Court C. U.S. Ninth Circuit Court of Appeals D. U.S. Supreme Court 20. If an appellate court finds prejudicial error, it may do all of the following, except: A. hear additional evidence prior to issuing a different verdict B. issue a new verdict C. order a new trial D. remand the case to the trial court for additional proceedings © 2009 Rockwell Publishing 4
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