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WCI facing federal class action lawsuit
Breaking Legal News | 2007/10/15 03:02

WCI Communities Inc. is the latest developer to be targeted by homebuyers trying to get out of deals now that prices have fallen drastically. A federal class action lawsuit filed recently claims there's a fatal flaw in the contracts used by the Bonita Springs-based developer to sell the 116 units in its luxury, 21-story condo tower Florencia — now some buyers want their deposits back. Attorneys for WCI say there's no problem with the contracts, just a typographical error that shouldn't be held against the builder.

The lawsuit is one more symptom of a softening housing market. The median price of an existing condo in Lee County has fallen 38 percent from February 2006, at $353,900, the highest on record, to $218,800 in August 2007, the last month available, according to the Florida Association of Realtors. For single-family homes, the price has fallen 22 percent from the all-time high of $322,300 in December 2005 to $250,800 in August 2007.

Builders in Southwest Florida are seeing such challenges more and more, said Christopher Shields, a real estate attorney with the Pavese law firm in Fort Myers.

"Potential purchasers are trying to get out of their contracts," he said. "Typically in a rising market, it doesn't matter whether or not a developer has committed violations at all, the buyer goes ahead and closes because he thinks the property is going to be worth more next year."

Now that prices are soft, however, "They look for reasons where perhaps the developer is in violation of federal and state disclosure requirements."

Some recent examples of similar suits by both buyers and builders trying to make the best of contracts signed in better times:

• A federal class action lawsuit brought by people who bought houses from First Home Builders alleges that they were defrauded by the developer and real estate brokerage D'Alessandro & Woodyard in a program to sell homes as an investment with a guaranteed rate of return.

• Advantage Builders of America in March sued 13 people for more than $15,000 in damages and attorneys' fees because they entered into contracts to buy houses in Lehigh Acres and Cape Coral but didn't make payments.

• The builders of Sail Harbour in February asked the court to force 29 people to close on their deals in the south Fort Myers development.

The suit against WCI was filed in federal court by David Berry and John Schrenkel, who signed up to buy Unit 1202 in the Florencia building at The Colony Golf & Bay Club in Estero.

They say WCI ran afoul of the Interstate Land Sale Act, which regulates the sale or lease of land from developers.

In this case, WCI violated the act by neglecting to include a provision in the contract giving a buyer 20 days to make things right after being notified that he's in default of the contract, said Miami-based attorney Robert Cooper, who filed the suit.

That means, he said, that "if some purchaser accidentally fails to do x, y or z, the builder can't just take the deposit."

In this case, Schrenkel and Berry want out of the contract and their $115,000 deposit returned.

But WCI attorney Thomas Roehn told Cooper in a July 2 letter that it's all just a misunderstanding. "Inadvertently, the 20 days notice of default and opportunity to cure was provided to the seller rather than the purchaser."

That means the buyers aren't entitled to their money back, the letter says. "WCI looks forward to Mr. Schrenkel and Mr. Berry closing upon their purchase of Unit 1202 at Florencia."

Cooper filed the case anyway, seeking damages for his clients and any other Florencia buyer in the same situation.

He said this is the first case he's seen in which the 20-day default protection for the buyer was left out. "I have not seen other developers screw this provision up."

If successful, the suit would be the latest bad news for WCI, which reported a $33 million loss for the quarter ending June 30 as condo tower sales all but dried up and traditional home sales were sluggish.

On Aug. 30, billionaire investor Carl Icahn gained influence on the company's board as he, two close associates, three incumbents and three jointly nominated members were elected to the board.



US Supreme Court refuses to hear rendition case
Breaking Legal News | 2007/10/12 08:12

The Supreme Court on Tuesday refused to hear an appeal filed on behalf of a German citizen of Lebanese descent who claims he was abducted by United States agents and then tortured by them while imprisoned in Afghanistan. Without comment, the justices let stand an appeals court ruling that the state secrets privilege, a judicially created doctrine that the Bush administration has invoked to win dismissal of lawsuits that touch on issues of national security, protected the government’s actions from court review. In refusing to take up the case, the justices declined a chance to elaborate on the privilege for the first time in more than 50 years.

The case involved Khaled el-Masri, who says he was detained while on vacation in Macedonia in late 2003, transported by the United States to Afghanistan and held there for five months in a secret prison before being taken to Albania and set free, evidently having been mistaken for a terrorism suspect with a similar name.

Mr. Masri says he was tortured while in the prison. After prosecutors in Germany investigated the case, a court there issued arrest warrants in January for 13 agents of the Central Intelligence Agency. The German Parliament is continuing to investigate the episode, which has become a very public example of the United States government’s program of "extraordinary rendition."

Mr. Masri, represented by the American Civil Liberties Union, brought a lawsuit in federal court against George J. Tenet, director of central intelligence from 1997 to 2004; three private airline companies; and 20 people identified only as John Doe. He sought damages for treatment that he said violated both the Constitution and international law.

Shortly after he filed the lawsuit in December 2005, the government intervened to seek its dismissal under the state secrets privilege, asserting that to have to provide evidence in the case would compromise national security. That argument succeeded in the Federal District Court in Alexandria, Va., which dismissed the case without permitting Mr. Masri’s lawyers to take discovery. The United States Court of Appeals for the Fourth Circuit, in Richmond, Va., upheld the dismissal in March.

In their Supreme Court appeal, El-Masri v. United States, No. 06-1613, Mr. Masri’s lawyers argued that these rulings allowed the state secrets doctrine to become "unmoored" from its origins as a rule to be invoked to shield specific evidence in a lawsuit against the government, rather than to dismiss an entire case before any evidence was produced.

The Supreme Court created the doctrine in a 1953 decision, United States v. Reynolds, which began as a lawsuit by survivors of three civilians who had died in the crash of a military aircraft. In pretrial discovery, the plaintiffs sought the official accident report.

But the government, asserting that the report included information about the plane’s secret mission and the equipment that it was testing, refused to reveal it. The Supreme Court upheld the government, ruling that evidence should not be disclosed when "there is a reasonable danger that compulsion of the evidence will expose military matters which, in the interest of national security, should not be divulged."

Mr. Masri’s lawyers argued that this decision, which the court has occasionally invoked but has not revisited, did not justify dismissing a case before any evidence was requested. Ben Wizner, Mr. Masri’s lawyer at the civil liberties union, said in an interview that the courts had permitted the doctrine to evolve from an evidentiary privilege to a broad grant of immunity, a way for the executive branch to shield itself from judicial scrutiny.

In this case, Solicitor General Paul D. Clement offered to let the justices see, "under appropriate security measures," the classified declaration that the government filed in the lower courts to support its claim of privilege. The court evidently did not think that step was necessary.

The court will soon have other opportunities to revisit the state secrets issue. Last week the A.C.L.U. filed an appeal that raises the issue as part of a challenge to the National Security Agency’s program of wiretapping without court warrants.



Law firm fears government is tapping phones
Breaking Legal News | 2007/10/12 03:21
A law firm that represents clients at Guantanamo Bay, Cuba, and in Afghanistan is warning its Vermont clients that it believes the federal government has been monitoring its phones and computer system. In a letter sent to clients of the St. Johnsbury firm of Gensburg, Atwell & Broderick, the three attorneys said they can't guarantee their communications were confidential. "Although our investigation is not complete, we are quite confident that it is the United States government that has been doing the phone tapping and computer hacking," said the letter, dated Oct. 2.

The attorney for Robert Gensburg, David Sleigh of St. Johnsbury, said Thursday that it could turn out there is an innocent, nongovernmental reason for the problems with the telephone and the firm's office computer system.

"Bob is an incredibly cautious and deliberate guy," Sleigh said. "We don't want to make allegations that are not supportable. We do have hard evidence that his phone was compromised and his computer was compromised."

U.S. Attorney Thomas D. Anderson, the federal government's top law enforcement official in Vermont, said Thursday that he couldn't comment. Verizon has consistently refused to comment on whether it is involved with national security issues, spokeswoman Beth Fastiggi said Thursday.

A Verizon Vermont technician who investigated problems with Gensburg's phone last month found crossed lines, but didn't explain what caused the problem, Sleigh said.

A forensic examination of Gensburg's computer found an application that disabled all security software and would have given someone access to all information on the computer, Sleigh said.

Sleigh said it could be a routine infection introduced into the machine by e-mail.

"Given the phone situation, a number of another anomalies we've observed over time ... we think we have legitimate cause for concern," Sleigh said.

Gensburg represents a client in Afghanistan and one of the prisoners held by the United States in Guantanamo Bay.

Sleigh said that under federal law, he thought the U.S. government could argue it was entitled to tap Gensburg's phone and computer without a warrant.

This summer, Congress passed a surveillance law that allows the government to eavesdrop without a court order on communications conducted by a person reasonably believed to be outside the United States, even when the communications flow through the U.S. communications network -- or if an American is on one end of the conversation -- so long as that person is not the intended focus or target of the surveillance.

The Bush administration said this was necessary because technological advances in communications had put U.S. officials at a disadvantage.

Congress is considering a bill to extend that law.

Last month, an American Civil Liberties Union attorney representing Gensburg complained to the Vermont Public Service Board, which oversees utilities in the state, about the alleged monitoring of Gensburg's phone lines.

The Public Service Board is trying to decide whether to investigate if Verizon Vermont and AT&T gave the federal government access to Vermont residents' phone records as part of an anti-terrorist surveillance program.

Sleigh said that to the best of his knowledge, none of the firm's clients has expressed concern that their legal communications could have been overheard.


Big L.A. law firms score low on diversity survey
Breaking Legal News | 2007/10/12 03:20
Large Los Angeles law firms have poor diversity records, with the numbers of female, black, Latino, Asian and gay partners and associates lagging significantly behind their representation in the city's population, according to a study released Wednesday.

The 17 Los Angeles-area firms in the report have three or fewer African American partners; all but one have three or fewer Latino partners, and half have three or fewer Asian American partners, placing the percentage of partners in those ethnic groups at less than 5%. In contrast, 2005 census data show that African Americans, Latinos and Asian Americans constitute 9.7%, 46.8% and 13.1% of the population in Los Angeles County.

Although more than half the county's residents are women, no firm has nearly that percentage of female partners; the firm with the highest female representation among partners has 27.7%. Moreover, at every firm surveyed, women are significantly less represented as partners than as associates. For example, fully 60% of the associates at one firm are women, but only 14.6% of its partners.

The highest percentage of African American partners at a firm in Los Angeles is 4.6%, while the top percentage of Latino partners is 8.2%. The highest percentage of Asian American partners is 11.1%, and the top percentage of partners who are openly lesbian, gay or bisexual is 7.4%.

Three firms have no African American partners, one has no Latino partners, one has no Asian American partners, and three firms have no publicly declared lesbian or gay partners.

The study was released by Law Students Building a Better Legal Profession at a news conference in Washington, D.C., and online.

The group took self-reported figures provided by the firms to the National Assn. of Law Placement and aggregated them. Detailed information on firms in Los Angeles, Northern California and New York can be found on the group's website, http://refirmation.wordpress.com

The report includes figures for the percentage of lawyers at the firms who do pro bono work and the average number of billable hours for associates at the firms. Those figures vary widely.

Similar percentages were found in other large metropolitan areas. Women make up less than 25% of the partners at all 74 firms surveyed in New York with 100 or more lawyers, while 27 of those firms have no Latino partner, 25 have no African American partner, and 21 have no Asian American partner.

Of 46 firms surveyed in Washington, 17 have no Latino partner, seven have no African American partner, and 13 have no Asian American partner. The picture is somewhat better in the San Francisco Bay Area. Still, only 7 of 31 firms have 25% or more female partners, with the highest figure 32.7%.

Andrew Bruck, co-president of the law student group, emphasized that all the information came from figures that the firms provided. The study deals only with law firms that employ 100 or more attorneys in each market.

"Most students think big firms are indistinguishable, but they're not," said Bruck, a third-year student at Stanford Law School. "Our report helps students see the difference between their potential employers. By providing this information . . . we're helping students make better-informed choices about where they want to work after graduation."

Katherine Reilly, vice president of the Harvard Women's Law Assn., said she thought the report could have broad ramifications. She said students at prestigious law schools "are in a powerful position to positively influence the legal profession by making educated choices early in their careers about the kinds of law firms for which they want to work."

Reilly, a second-year student, said she was not surprised by the figures showing a significant drop-off between the percentage of female associates at large law firms and the percentage who make partner, known as the "opportunity gap."

Those numbers "say something about the atmosphere at the firm regarding support for having a life and family outside the office," Reilly said.

Stanford law professor Michele L. Dauber, who supervised the students' research and compilation of the data, said the research "sends a message to America's law firms that is loud and clear: The best law students want to work at the firms where they have a fair chance at promotion and where it is possible to work hard and enjoy a family life. It's about time students collected this kind of basic information about law firms and began to vote with their feet."

Dauber said the students were preparing a book with all the data and rankings and planned to send the material to Fortune 500 companies who use the services of the big law firms, in the hope that this action also will stimulate change in hiring and promotion practices.

Bruck and Reilly said the students who organized the project are not advocating that law schools bar firms from recruiting at law schools because they have bad percentages in any particular category or in the aggregate. Still, they expressed hope that the data would have an effect.

"We are hoping firms don't want to be known as places where women don't make partner," Bruck said.

"We hope students will look at the data and start asking tough questions."


Supreme Court Upholds Tuition Ruling
Breaking Legal News | 2007/10/11 08:44

The Supreme Court on Wednesday let stand a ruling that the New York City school system must pay private school tuition for disabled children, even if the parents refuse to try public school programs first. But the justices are likely to take up the issue again soon, with nationwide implications. The justices split, 4 to 4, in the case of Tom Freston, the former chief executive for Viacom, and his son Gilbert, with Justice Anthony M. Kennedy taking no part. The tie meant that a 2006 ruling in Mr. Freston’s favor by the United States Court of Appeals for the Second Circuit, in Manhattan, stands for now. But it has no effect outside the circuit, which covers New York State, Connecticut and Vermont.

The case has been closely watched by educators. Almost seven million students nationwide receive special-education services, with 71,000 educated in private schools at public expense, according to the federal Education Department. Usually, districts agree to pay for those services after conceding that they cannot provide suitable ones.

New York City pays for private schools for more than 7,000 severely handicapped children because it agrees that it cannot properly instruct them. But, officials said, requests for tuition payments for special education students by parents who have placed their children in private school on their own have more than doubled in five years, to 3,675 in 2006 from 1,519 in 2002. And the cost of these payments grew to more than $57 million in the last school year.

“The trend has been increasing for several years,” said Michael Best, general counsel for the city’s Education Department.

Leonard Koerner, chief of the New York City Law Department’s appeals division, said: “We are very disappointed in the court’s ruling, because it does not require the parents to place their children initially in the public school system. This detracts from schools’ abilities to work with parents for the best possible educational outcomes for children with disabilities.”

But Mr. Koerner noted that the ruling did not set a precedent that would bind all schools in the country, and he expressed hope that the justices would soon consider the issues again. That seems likely. At least one other circuit court has come to a conclusion opposite from that of the Second Circuit.

Moreover, there is another Second Circuit case, from Hyde Park, N.Y., that is already available for review.

The justices last February decided to hear arguments in the New York City case and not the Hyde Park one, but Justice Kennedy’s decision to recuse himself only 12 days before the New York City case was argued created the possibility of the 4-4 tie and could make the court inclined to take up the issue again this winter. The court gave no reason for Mr. Kennedy’s lack of participation.

Both the New York and Hyde Park cases involve interpretations of a landmark 1975 special education law now known as the Individuals With Disabilities Education Act and amendments to it in 1997. The law requires school systems to provide a “free appropriate” public education to disabled students, with individually tailored programs.

The law permits parents to seek public financing for private schools if they can show that the public schools cannot meet their children’s needs.

Mr. Freston’s fight on behalf of his son began a decade ago, when his son, then 8, was found to have learning disabilities.

The city offered the child a coveted spot in the Lower Laboratory School for Gifted Education, on the Upper East Side, but Mr. Freston wanted a smaller setting and put his child in the private Stephen Gaynor School. He won tuition reimbursements through administrative hearings and an appeals board proceeding.

Then the Board of Education sued in federal court, where a district judge ruled that a family could not receive tuition reimbursement unless a child first attended public school. But the Second Circuit court found for Mr. Freston, sending the case to the Supreme Court.

Mr. Freston, who left Viacom with a separation package worth an estimated $85 million, has said he brought the case on principle and has donated his tuition reimbursement to tutoring for public school children.

The Hyde Park case involves a boy born in 1991 to a crack-addicted mother and suffering from learning disabilities. The child’s adoptive parents placed him in a private school after turning down the public school programs designed for him. A federal district judge ruled that the parents were entitled to tuition reimbursement, and the Second Circuit agreed.



Onondaga land claim to be argued in federal court
Breaking Legal News | 2007/10/11 06:48
The Onondaga Indian Nation's claim to 4,000 square miles of land running down the middle of the state and comprising some of the largest cities in upstate New York was to be argued in court Thursday.

The central New York tribe filed claim in 2005 to a swath of land up to 40 miles wide running north to south from the St. Lawrence River to the Pennsylvania state line. They argue that New York state illegally took the land from them centuries ago.

New York, among other things, claims the Iroquois tribe waited to long to sue. The state will ask U.S. District Court Judge Lawrence Kahn to dismiss the claim, which includes the cities of Binghamton, Oswego, Syracuse and Watertown.

The Onondagas are not seeking monetary damages and insist they do not want to evict the roughly 875,000 residents of the disputed area. They say they want to spur a cleanup of Onondaga Lake, a waterway sacred to the tribe, and other hazardous waste sites.

"There is no attempt to take people off their land and evict them," tribal attorney Joseph Heath said on the eve of arguments. "Our case is about healing."

Heath said that if tribal leaders get a judgment in their favor, they would hope to sit down with state officials to consider a range of options, such as a lease payment plan or a plan to help the Onondagas buy additional land from willing sellers.

While the Onondagas today maintain an 11-mile-square reservation south of Syracuse, they had been spread over much of what is now central New York centuries ago at the height of the Iroquois Confederacy.


Lawsuit accuses Mattel of insider trading
Breaking Legal News | 2007/10/10 16:49

Attorneys for a Michigan pension fund alleged in a shareholder lawsuit filed Wednesday that Mattel Inc. has misled investors by delaying the reporting of defects in its toys to federal regulators. The lawsuit, filed in Delaware's Court of Chancery, also accuses three current members and one former member of Mattel's board of directors of engaging in illegal insider trading by dumping more than $33 million in stock before the company's massive toy recalls this summer.

Since August, Mattel has announced three separate recalls of some 21 million toys because of dangers to children from lead paint or from tiny magnets that can be harmful if swallowed.

Attorneys representing the Sterling Heights, Mich., police and fire pension fund allege that Mattel knew about the defects for months but failed to report them to the Consumer Product Safety Commission, as required by federal law. They allege that the company has withheld information about its products from the commission for years in order to prop up sales and avoid fines, thereby artificially inflating the value of Mattel's shares and breaching their fiduciary duties to shareholders.

Officials with El Segundo, Calif.-based Mattel did not immediately respond to a telephone call and e-mail seeking comment on the lawsuit.



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Class action or a representative action is a form of lawsuit in which a large group of people collectively bring a claim to court and/or in which a class of defendants is being sued. This form of collective lawsuit originated in the United States and is still predominantly a U.S. phenomenon, at least the U.S. variant of it. In the United States federal courts, class actions are governed by Federal Rules of Civil Procedure Rule. Since 1938, many states have adopted rules similar to the FRCP. However, some states like California have civil procedure systems which deviate significantly from the federal rules; the California Codes provide for four separate types of class actions. As a result, there are two separate treatises devoted solely to the complex topic of California class actions. Some states, such as Virginia, do not provide for any class actions, while others, such as New York, limit the types of claims that may be brought as class actions. They can construct your law firm a brand new website, lawyer website templates and help you redesign your existing law firm site to secure your place in the internet.
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