Claims and Bad Faith Law Blog

Insurance Claims and Bad Faith Law -- Author's Note: Commercial Advertising Not Authorized; Unseal the Evidence.

    **Florida Insurance Bad Faith Expert - Author's Note:  If you have reached this blog through a list that carries advertising, your computer may or may not be put at risk either through the list or through the advertising.  I do not accept or authorize any commercial advertising of any kind on any list or post.  Placing commercial advertisements with or near any of my web log posts is prohibited.  Further, I do not recommend any products or services advertised with or near any of my posts or any list of my posts.** 

    It has been a long time since the testimony of many witnesses remain under seal from hearings held by the majority in the last previous Congress.  It is time to unwrap the transcripts and make them public to the people who paid for it all:  The taxpayers of the United States.

    Unseal the testimony.  Reveal the evidence.  As was said by Mr. Justice Brandeis long ago and remains true today, "Sunlight is the best disinfectant."

Dennis Wall is currently at work on his fifth book.  Based on his investigations into publicly available evidence in actual court files, it will address how concealed evidence and secret settlements take our money, foreclose on our homes, and change our lives.

 

PRESUMPTION OF PUBLIC ACCESS TO COURT FILES: ALIVE IN 2019?

There is a strong presumption of public access to Court files.  The origins of the presumption are both the common law and the First Amendment to the United States Constitution.[1]  The Constitutional presumption of public access to Court files is independent of the common law.[2]  This presumption is or should be at work in catastsrophe claims in particular, but nowhere does it face greater challenges.

            Both presumptions of public access to Court files, whether based upon the common law or upon the First Amendment, apply with particular strength in the case of judicial records.  For example, the presumption is very strong that judicial records relating to summary judgment should remain open and accessible to the public.  This is because these proceedings adjudicate the relative rights of the parties and, in the case of summary judgment proceedings in particular, often serve as substitutes for trials.[3] 

            The idea that the public pays for judicial proceedings is central to both presumptions of public access to the records of judicial proceedings.  "The parties are hereby advised that '[a]s an undertaking funded by the people of the United States, [this court's] decision will be publicly published to decide both the matter at hand, and also guide other entities on the law.'"[4]  To put it another way:

    The court is aware of the cost to the parties and in some ways the cost to the truth-finding process that comes with proceeding in an open forum.  But the public nature of [the] forum in which the parties have chosen to air their dispute and the manner of operation needed for the forum to maintain its legitimacy and integrity extract certain costs from the litigants that come before it.  But for very limited circumstances, the publicity of an adjudication is one of those costs.  The parties have not met the heavy burdens needed to permit this court to operate in secret.[5]

          Whether based on the common law or on the First Amendment, the presumption of public access to Court files is not absolute.[6]  "The presumption of public access may be rebutted."[7]

          Properly rebutting the presumption of public access may depend largely on whether a given case involves issues important to the public.  An example is a case presenting "information bearing on defects and safety concerns with products."[8]  Cases involving claims for damages allegedly caused by catastrophes and disasters, whether the disasters are natural or man-made, clearly contain within them issues important to the public.

          So do cases involving insurance coverage for natural and man-made disasters, because it has been held that many issues present in ordinary insurance cases, while not perhaps "garden-variety," involve "claims-handling" practices and often involve claims of insurance bad faith as well.  "Public importance" has effectively been equated with "the potential to impact concretely the legal rights of other carriers and/or insureds not before the court."[9]

          This is the overall standard that one court has applied to an insurance case to determine whether that case contains issues of such importance to the public, that the public should be allowed to know them and the documents, testimony, and information that relate to those issues.  The insurance carrier sought to seal and to keep a seal on its files and deposition testimony of its representatives.  The insured involved in the case manufactured and sold clothing that protected coal miners including their ability to breathe.  The insured sued its umbrella commercial CGL carrier in that case for alleged wrongful denial of coverage and bad-faith claims handling practices, among other things.

The District Court denied the insurance company's motion to seal, holding under the circumstances of that case as follows:

    Finally, the information plaintiff seeks to maintain under seal is of public importance to defendant, its fellow carriers, the underlying claimants with unresolved claims and future claimants. The parties' dispute encompasses numerous issues of public importance, including plaintiff's claims-handling role, what constitutes proper exhaustion, the burden of proving the judgments or settled claims fall within the grant of coverage, the trigger of coverage for each type of dust/substance exposure involved, whether general administrative expenses in coordinating a national defense may be apportioned and proportionally allocated as a form of ultimate net loss covered under the policy and so forth. Other carriers and all current and future claimants have a significant interest in knowing (1) the types of litigation and settlement practices that will be deemed to be acceptable and give rise to indemnification under the standard terms in the policy and (2) the range and type of evidence and information as well as the legal arguments and precedents that a court will consider and find important in resolving these disputes. These entities and individuals are members of the public and have the potential to have their rights affected by the resolution of the issues forming the parties' dispute. That interest cannot be summarily discounted in the name of protecting the plaintiff's ability to minimize its financial exposure from the debacle created by its past products.[10]

            The burden is on the party seeking to overcome the presumption of access to show the interests in secrecy at stake that arguably outweigh the presumption.  It has been held that showing "a clearly defined and serious injury" equals the showing of "good cause" needed to overcome the presumption.[11]  The burden is to show that disclosure will cause "a clearly defined and serious injury" and to show it with specificity.  The showing cannot succeed, it has been held, if it is "bereft of specific examples."[12]

            In general terms, the presumption of access is not ordinarily overcome regarding "information that is used by a party to shelter itself from additional liability and litigation[.]"[13]  In other words, the possibility or even likelihood that documents, testimony, and information revealed in one lawsuit may be shared with lawyers and parties in other lawsuits is not a good reason to conceal them from the public:

 With increasing frequency, defendants, as well as other insurers, are finding themselves embroiled in litigation over whether there is coverage for property damage as a result of environmental harm. The courts have emphatically held that a protective order cannot be issued simply because it may be detrimental to the movant in other lawsuits.[14]

 

[1] E.g., Publicker Indus., Inc. v. Cohen, 733 F.2d 1059, 1066, 1070 (3d Cir. 1984); Mine Safety Appliances Co. v. North River Ins. Co., 73 F. Supp. 3d 544, 559 (W.D. Pa. 2014).

[2] E.g., In re Cendant Corp. (Goldstein v. Forbes), 260 F.3d 183, 198 n.13 (3d Cir. 2001);  Republic of Philippines v. Westinghouse Elec. Corp., 949 F.2d 653, 659 (3d Cir. 1991) (dicta; Third Circuit's analysis in this case was expressly confined to the common law).

[3]  E.g., Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1122, 1135-36 (9th Cir. 2003); Rushford v. New Yorker Mag., 846 F.2d 249, 252 (4th Cir. 1998).

[4] Carnegie Mellon Univ. v. Marvell Tech. Grp., Ltd., No. 09-290, 2013 WL 1336204, at *11 (W.D. Pa. March 29, 2013).  Accord, Mine Safety Appliances Co. v. North River Ins. Co., 73 F. Supp. 3d 544, 587 (W.D. Pa. 2014).  Cf. Newman v. Graddick, 696 F.2d 796, 801 (11th Cir. 1986) ("In addition, open proceedings may be imperative if the public is to learn about the crucial legal issues that help shape modern society.  Informed public opinion is critical to effective self-governance.").

[5] Mine Safety Appliances Co. v. North River Ins. Co., 73 F. Supp. 3d 544, 587 (W.D. Pa. 2014).

[6] E.g., Bank of America Nat'l Trust & Sav's Ass'n v. Hotel Rittenhouse Assoc's, 800 F.2d 339, 344 (3d Cir. 1986); Mine Safety Appliances Co. v. North River Ins. Co., 73 F. Supp. 3d 544, 560 (W.D. Pa. 2014).

[7] In re Cendant (Goldstein v. Forbes), 260 F.3d 183, 194 (3d Cir. 2001).

[8] Mine Safety Appliances Co. v. North River Ins. Co., 73 F. Supp. 3d 544, 561 (W.D. Pa. 2014).

[9] Mine Safety Appliances Co. v. North River Ins. Co., 73 F. Supp. 3d 544, 566-67 (W.D. Pa. 2014) (emphasis added).                                                   

[10] Mine Safety Appliances Co. v. North River Ins. Co., 73 F. Supp. 3d 544, 581 (W.D. Pa. 2014).

[11] E.g., Publicker Indus., Inc. v. Cohen, 733 F.2d 1059, 1071 (3d Cir. 1984) (emphasis added); Mine Safety Appliances Co. v. North River Ins. Co., 73 F. Supp. 3d 544, 560 (W.D. Pa. 2014).

[12] In re Cendant (Goldstein v. Forbes), 260 F.3d 183, 194 (3d Cir. 2001).

[13] Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1122, 1137 (9th Cir. 2003).  To the same effect, e.g. :  Wauchop v. Domino's Pizza, Inc., 138 F.R.D. 539, 547 (N.D. Ind. 1991) ("The risk—or in this case, the certainty—that the party receiving the discovery will share it with others does not alone constitute good cause for a protective order."); Nestle Foods Corp. v. Aetna Cas. & Sur. Co., 129 F.R.D. 483, 486 (D.N.J. 1990) (stating that "if the basis for defendants' motion is to prevent information from being disseminated to other potential litigants, then defendants' application [for a Rule 26(c) protective order] must fail").

[14] Nestle Foods Corp. v. Aetna Cas. & Sur. Co., 129 F.R.D. 483, 486 (D.N.J. 1990).

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MORTGAGE FRAUD CONTINUES. OTHERWISE FEDERAL LAYOFFS CONTINUE TOO. SOMETIMES.

Photograph Courtesy of New York Public Library Collection.

The secretary of the treasury has forced a fraction of the Internal Revenue Service employees, who had been laid off, to return to work and process papers for the mortgage industry.

So as not to actually break the law in plain sight, the Federal Government is paying these people with so-called "user fees," i.e., donations paid by the mortgage industry to do the work.

This was arranged by the Mortgage Bankers Association.  The MBA worked with the treasury department by asking the current Federal Government to recall the Federal employees to process the papers which the MBA needed to process mortgage money, er, mortgage applications.

The head of the Mortgage Bankers Association and de facto treasury secretary honestly declared that "I'd like to take some credit.  Our direct request got rapid results."  Quoted in Lisa Rein and Jeff Stein, "Could You Make These Guys Essential?":  Mortgage Industry Gets Shutdown Relief After Appeal to Senior Treasury Officials, Washington Post Online, Friday, January 11, 2019.

This is no surprise.  The current occupier of the title of Secretary of the Treasury made much of his money from mortgages and foreclosures before entering the current Administration.

Reportedly, some observers of these arrangements question how it is legal to use Federal employees to benefit not the American public but one discrete group of private businesses.  Other observers despair that no-one who has standing to object, will object and therefore they see no remedy to the situation.

Well, let's take a look at that.

The situation as you might call it is bad faith.  A few people are forced to give up their labor, because through no fault of their own they are employed by the Federal Government during the current Administration, which calls them back to work in order to help a few businesses continue to make money (and prolong the shutdown because the shutdown will not feel so bad, obviously).   These IRS employees are being instructed to serve the interests of a few in the name of public service. 

This is happening while other people are told not to come back to work and in some cases they will not be paid.  Ever.

Is a mandatory injunction available?  Would their unions have standing to represent thousands of what we are told is the current laid off Federal workforce of 800,000 people?  (A figure that will soon grow even higher.)  The idea of a mandatory injunction might be that the rest of the hundreds of thousands of Federal workers who are not getting paid and who have also been told not to report for work, should also be brought back to work and paid.

If arrangements are made by the Federal Government that benefit some furloughed Federal workers but not others who are in the same boat, shouldn't the Federal Government lawfully be required to also arrange for these other people to be recalled back to work by the same Federal Government that told them not to come to work in the first place?  And arrange to pay them also?

That brings in another idea.  The Federal Government of all people is supposed to provide equal protection of the laws.  Equal protection clearly demands that people be treated equally.  Federal workers are people and as such, they too deserve to be treated equally.

Regardless of whether their work does or does not make money for private interests.

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PROPOSED ORDERS ONCE WERE GOOD ... AND CAN BE AGAIN continued.

Continued from Tuesday, January 8, 2019.

The idea behind the law is simple in this regard.  Every court so far as is known recognizes that before a judge can allow evidence to be concealed, the party asking to conceal that evidence should show good cause to conceal it.  Without a showing of good cause, concealment is not allowed during discovery of the evidence, or afterward.  Sometimes good cause is shown for concealing a part of the evidence, or displaying it publicly in a way that minimizes harm to someone if it were completely, nakedly exposed to public view.[1]

    This way of dealing with confidentiality or secrecy, however, requires the lawyers and their clients to clearly identify each piece of evidence that they want to conceal, document by document.  Or, in very large cases, the lawyers and their clients are required to clearly identify the categories or sets of information that they want to conceal, and show why.  That is what a showing of good cause has required in lawsuits in the United States, and it is what a showing of good cause should require in lawsuits now.

    The idea is that not a single piece of evidence should be left to concealment by chance, and judges should be enabled to review the claim to concealment and compare the claim to each piece or set of evidence to see if good cause has been shown to conceal it.

    This way of doing things can make it expensive and time-consuming to discover evidence unless the parties truly have good cause that they can show to a judge.  Many large businesses and wealthy individuals have an incentive to keep some or all of their dealings a secret.  This is an incentive that most other people do not have, or if they do have the incentive to conceal evidence, it is too expensive to contest all but a relative handful of evidence being concealed if they actually have to show good cause to keep evidence secret.

    Some say that it can even be expensive in very large cases to group evidence in categories and submit or contest good cause for keeping broad categories of secret evidence protected and concealed.

    The solution?  I suggest one right here, right now.  Enforce the law.

    The cure is close at hand.  It is for judges and lawyers to follow the law as it exists right now.  To say again, the law requires that good cause must be shown in order to keep information in court files secret.  Judges and lawyers should not be able to change the law by their agreements.  If they were required to follow the law instead, and show good cause for concealing evidence, then judges and lawyers would profit from the results.  So would the public.

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[1] See Federal Rule of Civil Procedure 26(c), which provides in part:

The court may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense, including one or more of the following:

(A) forbidding the disclosure or discovery;

(B) specifying terms, including time and place or the allocation of expenses, for the disclosure or discovery;

(C) prescribing a discovery method other than the one selected by the party seeking discovery;

(D) forbidding inquiry into certain matters, or limiting the scope of disclosure or discovery to certain matters;

(E) designating the persons who may be present while the discovery is conducted;

(F) requiring that a deposition be sealed and opened only on court order;

(G) requiring that a trade secret or other confidential research, development, or commercial information not be revealed or be revealed only in a specified way; and

(H) requiring that the parties simultaneously file specified documents or information in sealed envelopes, to be opened as the court directs.

[Boldface added.]

HOW PROPOSED ORDERS USED TO BE, AND CAN BE AGAIN.

Continued from Claims and Issues Blog, Monday, January 7, 2019.

How proposed orders have worked in the past.  In all systems of justice in the United States, whether in the federal system or in any one of the State or other systems, judges have made rulings and lawyers have written proposed orders which are supposed to correctly reflect those rulings.  The lawyers send their proposed orders to the judge, who reviews them to see if they accurately reflect her rulings.  This historical model works when the ruling is already made by the judge and the proposed order is written to reflect the judge's ruling.

    The long-standing judicial system of lawyers writing proposed orders and sending them to the judge to sign, has always worked efficiently only if the judge made an earlier ruling that the proposed order is supposed to reflect.  The judge is then in a good position to review the proposed order and compare it to her earlier ruling.

    A system in which parties and their lawyers propose orders tends to break down whenever the proposed orders do not reflect the judge's ruling but instead reflect what the parties and their lawyers want.

    In the case of secrecy stipulations with proposed orders, judges are presented with a proposed order which turns their stipulation into a judge's ruling, as if by magic.  These are proposed orders mandating secrecy, concealing evidence and settlements without any mention of good cause for the concealment.

    Judges then often take a proposed secrecy order and sign it as it was written, just as in the case of People of California v. Wells Fargo.  Sometimes, as happened with the February Proposed Order in this case, a judge merely crosses out the word, "proposed," before signing the secrecy order.[1]

    That relatively new use of an old system of proposed orders written by lawyers and supposedly reviewed by judges now serves the purposes of secrecy in court and agency proceedings alike.  The public will generally not know what was actually done, or by whom.  The public will know only that some uncertain number of people were hurt.  It is unlikely that there will be an uproar or any public demands for change.  And the evidence will be kept as secret as possible or perhaps not even offered.  If no lawsuit is filed and no enforcement action is taken at all, then secret harmful conduct will be kept secret and will not stop.

    And people who might be able to avoid harm if they knew the full story, cannot take action to protect themselves because they do not know the harm that may await them.

 

[1] Stipulation and Protective Order entered and filed on February 2, 2016 in People v. Wells Fargo & Co., Case No. BC 580778 (Los Angeles County Superior Court).  See generally Dennis J. Wall, Lender Force-Placed Insurance Practices § 3.1, "Secrecy First, and Then Settle" (American Bar Association Publishing 2015).

 

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YOUR JUDGE IS SIGNALLING LIKELIHOOD OF SIGNING STIPULATED SECRECY ORDERS.

 Continued from article posted here on New Year's Day, 2019.

 

    It is important to note also that there is a pretty reliable sign that a judge is more likely than not to sign an umbrella secrecy order in any given case:  The judge adopts the secrecy order proposed by the parties and their lawyers in the case because the court's budget does not permit the hiring of all the people that it would take to review all the documents which the parties in a large case want to keep secret.  Signing an umbrella secrecy order minimizes any need to spend time and money reviewing each and every document or set of documents that one party or another wants the judge to mark "confidential."  Instead, the parties and their lawyers mark each document "confidential."  In some cases, an umbrella secrecy order totally eliminates the need to review documents for confidentiality purposes.

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UMBRELLA PROTECTIVE ORDERS CONCEAL REQUIREMENT OF GOOD CAUSE FOR CONCEALMENT.

    Umbrella orders are written for many purposes, but only one purpose is central to their existence.  Putting their selling points to one side, umbrella orders are written and proposed to conceal evidence without having a judge determine good cause for the nondisclosure.  Stipulated blanket secrecy orders are written and proposed by parties, it is crucial to recall.  If and when the judge signs off on those stipulated blanket secrecy orders in a lawsuit, the parties replace the judges in making decisions about concealing discovery and other evidence.  "These orders are often blanket in nature, and allow the parties to determine in the first instance whether particular materials fall within the order's protection."[1]

 

[1] Shane Grp., Inc. v. Blue Cross Blue Shield of Mich., 825 F.3d 299, 305 (6th Cir. 2016).  See generally 8 Jay E. Grenig & Jeffrey S. Kinsler, Wis. Practice Civ. Discovery § 1:42, Procedure for Obtaining [Protective Orders], (2d ed., July 2018 Update); 8A Charles Alan Wright & Arthur R. Miller, et al., Fed. Practice & Proc. Civ.  §§ 2035 Procedure for Obtaining Protective Orders & 2044.1 Modification of Protective Orders (3d ed. April & August 2018 Updates). 

MORE TO COME.

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FILED RATE DOCTRINE DID NOT BAR STATUTORY UNFAIR PRACTICE CLAIMS.

 

In Washington State as elsewhere, the filed rate doctrine is a defense under certain circumstances.  In basic and general terms as laid out by a federal court in the case of Harvey v. Centene Mgt. Co. LLC, No. 2:18-CV-00012-SMJ, 2018 WL 6112407, at *5 n.1 (E.D. Wash. Nov. 21, 2018), it is Washington State law that the "filed rate doctrine" was made by courts to cover cases involving regulated utilities.  The effect is to shelter the appropriately filed rate from attack, whether directly or indirectly.  In other words, the reasonableness of a rate filed with a governing regulatory administrative agency and approved by that agency is a settled issue, not subject to dispute.

The Harvey case is an insurance case.  Specifically, that case involves health insurance policies.

In the Harvey case, the plaintiff alleged that the defendants breached contracts and violated Washington's Unfair Business Practices and Consumer Protection Statutes by failing to deliver the benefits of their "Ambetter health insurance policy" which they allegedly promised and represented that they would deliver.  The plaintiff alleged these claims on behalf of a putative class of Ambetter policyholders.  Harvey v. Centene Mgt. Co. LLC, No. 2:18-CV-00012-SMJ, 2018 WL 6112407, at *1 (E.D. Wash. Nov. 21, 2018).

In part here pertinent, the federal judge in Washington held in accordance with the concisely phrased headings of his rulings that "1.  The filed rate doctrine does not apply to claims that are merely incidental to and do not directly attack Insurance Commissioner-approved health insurance premiums," Harvey v. Centene Mgt. Co. LLC, No. 2:18-CV-00012-SMJ, 2018 WL 6112407, at *5 (E.D. Wash. Nov. 21, 2018), and "2.  Harvey's claims are merely incidental to and do not directly attack Insurance Commissioner-approved health insurance premiums."  Harvey v. Centene Mgt. Co. LLC, No. 2:18-CV-00012-SMJ, 2018 WL 6112407, at *6 (E.D. Wash. Nov. 21, 2018).  In short, claims based on allegations that the defendants did not deliver the insurance benefits they sold were not barred by the filed rate doctrine.

Even if the Court had not been completely convinced of this ruling, the Court went further in Harvey and stated that this decision was based on a motion to dismiss and "'the better practice'" in any case is to address the filed rate doctrine either on a motion or motions for summary judgment, or at trial.  Harvey v. Centene Mgt. Co. LLC, No. 2:18-CV-00012-SMJ, 2018 WL 6112407, at *7 (E.D. Wash. Nov. 21, 2018).

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POSTSCRIPT TO A CHILD'S DEATH IN THE CUSTODY OF THE UNITED STATES: ....

The Death of Another Child in the Custody of the United States.

The current caretakers of the Federal Government are setting records.  More children have died in the custody of the United States at the border on their watch in a month, than died in the custody of the United States in all the years before taken all together.  Ever.

Most recently, an eight-year-old boy in Federal custody at the border died on Christmas Day.  See Laura King, An 8-Year-Old Guatemalan Child Dies in U.S. Custody on Christmas Day After Being Treated For a Cold, Los Angeles Times Online December 25, 2018.

A seven-year-old girl died in Federal custody at the border a week ago.  See The U.S. Border is a Dangerous Place.  Not by Mistake, Claims and Bad Faith Law Blog December 18, 2018.  This is a postscript to that earlier death of a child in the custody of the United States.

See also the article posted on Claims and Issues Blog, ANOTHER CHILD DIES IN FEDERAL CUSTODY AT THE BORDER:  How Many Deaths Will It Take Till We Know That Too Many Children Have Died?, posing a few of the questions that Members of Congress, and reporters, and you and I should be asking now.  The ultimate questions posed in the article are these:

If they do not gain entry to these places, then the answer to the next question is pretty clear:   Is the death of children the latest anti-immigrant policy?

And if the answer to that question is "yes," then what in the name of Christmas are you going to do?

Please Read The Disclaimer.  ©2018 Dennis J. Wall.  All Rights Reserved.

WHAT IT TAKES TO MODIFY A STIPULATED PROTECTIVE ORDER.

The federal courts have analyzed stipulated protective orders like contracts between the parties, which they are.  Only they are contracts between parties to litigation usually signed by counsel although binding on the clients.

If a party did not negotiate a provision of the stipulation/contract which it could have negotiated but did not, then she, he or it faces a very high burden to overcome if that party wants a federal judge to change the contract, i.e., modify the stipulated protective order.

A party that requests a judge to change a protective order to which that same party previously stipulated, i.e., contracted, must show the Court good cause to change the contract that is "more substantial than the good cause needed to obtain a sealing order in the first instance."  Hallmark Licensing LLC v. Dickens Inc., No. 17-CV-2149 (SJF)(AYS), 2018 WL 6573435, at *7 (E.D.N.Y. December 13, 2018) (Shields, USMJ, denying a motion to change a stipulated protective order on the ground that there was an insufficient showing of good cause required to "modify" the stipulated protective order; the moving party requested that a new provision be added by the Court to the party's previously stipulated protective order, "an attorneys' eyes only designation" category to conceal evidence, where the party could have requested it during negotiations with other parties but did not, even though the parties "specifically negotiated about and agreed to the addition of two [other] categories of individuals to whom 'confidential' information may be disclosed").

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THE U.S. BORDER IS A DANGEROUS PLACE. NOT BY MISTAKE.

Initial reports of a 7-year-old girl's death in Federal custody were that the Federal agents of the Customs and Border Protection (CBP), a part of the Department of Homeland Security or DHS, were told by the girl's father that she was fine.  He even filled out a Federal form that told the Federal agents the girl was healthy when she was taken into custody.

On the other hand, the initial reports of the little girl's death in Federal custody also were that her father told CBP that she "had nothing to eat or drink for days[.]"

These initial reports were from Washington, D.C. in the Washington Post.  They were "based on reports and interviews with consular officers as well as Homeland Security and Customs and Border Protection officials[.]"

In other words, the initial reports came from the Federal Government and from whatever was added by unknown, unnamed "consular officials" presumably familiar with Guatemala which is where this girl and her father came from.  See Nick Miroff, Hours Before Her Collapse in U.S. Custody, a Dying Migrant Child's Condition Went Unnoticed, Washington Post Online Friday, Dec. 14, 2018 at  10:38 PM.

These initial reports of information provided by the Federal Government raise a few questions.

How could the child have been healthy if she had nothing to eat or drink for days?

How could the girl's father have told the Federal agents and filled out their form in English when he did not speak English?  His "primary language" we are told is "a pre-Columbian Mayan tongue."  Hours Before Collapse in U.S. Custody, supra.  It is a pretty good bet that none of the people employed by the Federal Government at the border in the desert speak pre-Columbian Mayan.  So they must have communicated with the father, not in English or in Mayan, but in what may have been obvious was his second language, Spanish.

Next question:  The 7-year-old girl just crossed a desert with her father before CBP took them into custody.  Normal people would expect that she was or might have been dehydrated.  Even Little League Umpires make sure that the children playing baseball and softball stay hydrated during games in the spring and summer, whether or not the games are played in the desert.

The CBP itself is not unfamiliar with people crossing the desert.  The CBP agents that took the girl and her father into custody are in the desert themselves so they can be reasonably expected to be familiar with the idea that being in the desert can be dehydrating if a person is not careful.  Why did the CBP not notice that this little girl in the desert was dehydrated?

We are told that the CBP checked her out and found no signs.  Yet we know that she was dehydrated because that is why she died after all.  So why did the Federal Government not notice after they arrested her?

Next question:  Why were the agents of the Federal Government apparently not equipped for this dehydrated, apparently hungry and certainly tired 7-year-old, who was one among thousands of people turned away from more urban ports of entry by the current Federal Government and forced to seek asylum by crossing a desert?

If this is intentional cruelty, then among other things it isn't even efficient.

The people just keep coming.  Like this little girl and her father who were seeking asylum.

The current Federal Government apparently justifies this change in immigration policy at the border, as the CBP head told Congress three days after the child's death, to discourage people from crossing a desert to get into the United States who hope to avoid detection.  With a seven-year-old?  Not one of the reporters on this story seems to have asked that question, yet.

But to the contrary, all of the reporting about asylum seekers is in agreement on at least one thing:  Asylum seekers like this little girl and her father "were not seeking to evade capture but to turn themselves in."  Hours Before Collapse in U.S. Custody, supra (emphasis added).  The Federal Government's justification does not even seem real.  In any case, it is not suited to the situation faced by the thousands of people seeking asylum.

Next questions, both related to one another:  Why did it take a week for the Federal Government to admit that the girl had died despite a legal requirement to report deaths within 24 hours, and why did the head of the CBP not say a word about this girl's death when he already knew that she had died by the time he, the head, testified to Congress about immigration?

The current Federal Government's current CBP head "did not mention the girl's death, which was disclosed by CBP only after The Washington Post inquired about it Thursday evening."  Hours Before Collapse in U.S. Custody, supra (emphasis added).  That answers that question.

A seven-year-old girl died in Federal custody.  The current Federal Government has stepped up ... and blamed her father for her death.

More questions to come.  These are enough questions to ask for now.  But the questions will continue.

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CONCEALING EVIDENCE FROM GENERAL COUNSEL A PROTECTIVE ORDER TOO FAR.

At least without evidence to support an untimely request, the District Judge ruled in TrueNorth Cos., LC v. TruNorth Warranty Plans of N. Am., LLC, No. C17-31-LTS, 2018 WL 6438370 (N.D. Iowa December 7, 2018).  The case involved substantive claims of trademark infringement, mark dilution, false designation of origin, mark infringement under Iowa law, false advertising, and unfair competition.   TrueNorth Cos., LC v. TruNorth Warranty Plans of N. Am., LLC, No. C17-31-LTS, 2018 WL 6438370, at *1 (N.D. Iowa December 7, 2018). 

In TrueNorth v. TruNorth, the parties entered into a Stipulated Protective Order.  We know very little about the stipulated protective order from the District Judge's opinion except that it "describes two levels of confidentiality -- 'confidential' and 'highly confidential,' which is limited to review by counsel, including in-house counsel."  TrueNorth Cos., LC v. TruNorth Warranty Plans of N. Am., LLC, No. C17-31-LTS, 2018 WL 6438370, at *12 n.9 (N.D. Iowa December 7, 2018).

Although it was not otherwise summarized in the District Judge's opinion, a review of the court file on PACER shows that the stipulated protective order in this case is a pretty standard stipulated secrecy order.  You can read it for yourself here from the court file:  Download TrueNorth Cos. LC v. TruNorth Waranty Plans of N. Am. LLC Stipulated Protective Order Doc. NO.. 36 filed 08.16.17 (N.D. Iowa Case No. 17.31.LTS; order s by Chief USMJ 08.16.17).

As the District Court informed us in its opinion, the stipulated secrecy order already concealed information that was marked "confidential and "highly confidential" by counsel in the case. The defendant belatedly filed a motion to amend the previously stipulated protective order to add another category of concealed information which it called "Highly Confidential Plus Material."  (Emphasis added.)

This category would allow disclosure only to litigating counsel of evidence produced under this proposal and prohibit "disclosure to the non-producing party and in-house counsel of the non-producing party."  To put it differently, under the defendant's proposal to amend the secrecy order "certain information could be designated in such a manner as to prevent its disclosure to the receiving party's in-house counsel."  TrueNorth Cos., LC v. TruNorth Warranty Plans of N. Am., LLC, No. C17-31-LTS, 2018 WL 6438370, at *13 (N.D. Iowa December 7, 2018) (emphasis added). 

This was a secrecy order gone too far, at least in the TrueNorth v. TruNorth case.  The District Judge rejected this proposal and denied the defendant's motion to amend the stipulated protective order accordingly.

The Court pointed out that the defendant's motion was untimely, but the fact that the defendant failed to support its request with evidence was more likely what determined the outcome in this case (i.e., that the defendant failed to support its request for further protection with a showing of good cause for its request, although the Court itself apparently never mentioned "good cause" or a lack of it in its decision denying the defendant's request in this case).  See TrueNorth Cos., LC v. TruNorth Warranty Plans of N. Am., LLC, No. C17-31-LTS, 2018 WL 6438370, at *16 (N.D. Iowa December 7, 2018) ("Instead, TN Warranty engaged in extra-judicial self-help, taking it upon itself to decide what information to disclose while holding other evidence hostage in an effort to force TrueNorth to agree to its terms.").

Whether and to what degree this decision will influence the development of stipulated secrecy orders along the lines proposed by the defendant in this case, remains to be seen.

Please Read The Disclaimer.  ©2018 Dennis J. Wall.  All Rights Reserved.

WE WERE NEVER SUPPOSED TO KNOW.

News outlets report that there were many attempts by Russian nationals to contact American nationals about and during the 2016 campaign for President of the United States.  Reports put the contacts together to identify at least 14 individuals.

So much reporting that there is really no surprise there.  Current reports are useful in putting them all together however.

Some people have remarked that it is important to keep in mind that these contacts were not about bilateral US-Russia relations.

They were about making a buck at a time when it did not look like the preferred candidate of these people would win the election.

Something else is important to keep in mind.

It may be even more important.

It is this:  We were never supposed to know.

We were not supposed to know about any one of these contacts, let alone know what we know about all of them.

There are undoubtedly even more contacts that we don't yet know about.

We were never supposed to know.

Please Read The Disclaimer.  ©2018 Dennis J. Wall.  All Rights Reserved.

EVEN EINSTEIN WOULDN'T GET IN NOW.

TODAY is the deadline, Monday, December 10, 2018, for leaving Comments on the Department of Security's proposed re-write of rules surrounding "who is likely to become a public charge" because they are "likely to receive public benefits" and should, the DHS says, be excluded from living in the United States.  Because of that, this article will be published as widely as possible including  both on Claims and Issues Blog at https://claimsissues.typepad.com/ and Claims and Bad Faith Law Blog at https://insuranceclaimsbadfaith.typepad.com/. 

 

"USCIS [U.S. Citizenship and Immigration Services] Evidentiary Requirements" proposals are set out by the "parent" of USCIS, the Department of Homeland Security in new proposed rules changes.  One of these proposed changes, published at 83 FR at 51196, mandates "[e]vidence of the alien's most recent history of employment" in any consideration of "education and skills."  The proposed rule is 8 CFR § 212.22(b)(5)(ii)(A), in 83 FR at 51291.  This mandated evidence simply does not relate to a consideration of education and skills.  If it did, the DHS would have put on evidence in its rationale to support this, but the DHS did not support this mandate with any evidence linking these separate concepts.

             A good example -- evidence if you will -- of how education and skills simply do not depend on the four factors mechanically proposed on 83 FR at 51196 -- "the alien's most recent history of employment;" her or his "academic degree or certifications[;]" "occupational" skills or certificates, and "proficiency in English" -- was provided by the real-life experience of Albert Einstein.  He famously failed mathematics, not because he was dull, but to the contrary he was too intelligent for the teacher.  The DHS's rigid rules for considering the statutorily mandated evidence of "education and skills" do not allow for considering the actual circumstances of experience.

             In particular, Congress's word, "skills," would be transformed by the DHS proposed rules into "occupational skills."  (Emphasis added.)  The proposed rule is 8 CFR § 212.22(b)(5)(ii)(C), in 83 FR at 51291.

             The DHS's proposed rules refashioning Congress's words, here, refashioning both "education" and "skills," are unauthorized, contrary to Congressional intent, unsupported by any evidence, and to the contrary the available evidence militates against adoption of such proposed rules.

 

----------------------------------------------------------------------------------------------------This is reproduced from a Comment on the DHS proposed rules changes, titled IT ALL COMES BACK TO MONEY.  BUT THAT'S NOT WHAT CONGRESS SAID:  Comments to DHS Proposed Public Charge Rules 12.04.18.  The complete Comment is available here as a pdf:  Download IT ALL COMES BACK TO MONEY. BUT THAT'S NOT WHAT CONGRESS SAID. Comments to Proposed DHS Public Charge Rules. 12.04.18..

 

Leave your own Comments on the changes through the preferred submission Federal eRulemaking Portal:  www.regulations.gov.  The federal government has assigned the following numbers to these proposed rules changes to identify your Comments on these particular rules:  DHS Docket No. USCIS-2010-0012; RIN 1615-AA22.

 

Please Read The Disclaimer.  ©2018 Dennis J. Wall.  All Rights Reserved.

THE IMMIGRANT'S TALE. A TRUE STORY.

The deadline is tomorrow, Monday, December 10, 2018 for leaving Comments on the Department of Security's proposed re-write of rules surrounding "who is likely to become a public charge" because they are "likely to receive public benefits" and should, the DHS says, be excluded from living in the United States.  Because the deadline of December 10 is so close, this article will be published as widely as possible including  both on Claims and Issues Blog at https://claimsissues.typepad.com/ and Claims and Bad Faith Law Blog at https://insuranceclaimsbadfaith.typepad.com/. 

 

          The unnatural effect of the changes proposed by the DHS to who is "likely at any time to become a public charge," including imposing new burdens of proof and re-defining "education and skills" to be taken into account in making the determination, would if they were in effect have required the exclusion of immigrant Mary Anne MacLeod.  She arrived in the United States from Scotland with the skills of a domestic and several hundred dollars in currency at present-day values.

           However, she was allowed to come into the United States and eventually married one Fred Trump with whom she had several children.  One of those children became President of the United States.

           In sum, the changes proposed by the DHS to who is "likely at any time to become a public charge," including imposing new burdens of proof and re-defining "education and skills" to be taken into account in making the determination, are unauthorized by Congress.  In addition, they are contrary to Congress's statutory intent.  Finally, they are not supported with evidence provided by the DHS, but to the contrary, the available evidence proves them to be invalid.

 They are in short the product of still another Federal administrative agency's regulatory overreach. 

---------------------------------------------------------------------------This is the Conclusion of a Comment on December 4, 2018 on the DHS proposed rules changes, titled IT ALL COMES BACK TO MONEY.  BUT THAT'S NOT WHAT CONGRESS SAID:  Comments to DHS Proposed Public Charge Rules 12.04.18.  The complete Comment is available here as a pdf:  Download IT ALL COMES BACK TO MONEY. BUT THAT'S NOT WHAT CONGRESS SAID. Comments to Proposed DHS Public Charge Rules. 12.04.18..

Leave your own Comments on the proposed changes through the preferred submission Federal eRulemaking Portal:  www.regulations.gov.  The federal government has assigned the following numbers to these proposed rules changes to identify your Comments on these particular rules:  DHS Docket No. USCIS-2010-0012; RIN 1615-AA22.

Please Read The Disclaimer.  ©2018 Dennis J. Wall.  All Rights Reserved.

SNEAK ATTACKS AND REMEMBER PEARL HARBOR!

The deadline is this coming Monday, December 10, 2018 for leaving Comments on the Department of Security's proposed re-write of rules surrounding "who is likely to become a public charge" because they are "likely to receive public benefits" and should, the DHS says, be excluded from living in the United States.  Because the deadline of December 10 is approaching, this article will be published as widely as possible including  both on Claims and Issues Blog at https://claimsissues.typepad.com/ and Claims and Bad Faith Law Blog at https://insuranceclaimsbadfaith.typepad.com/. 

At the end of a week of leaving Comments, and following weeks of reading and researching 183 pages of DHS statements about its proposed "Public Charge" rules changes to exclude immigrants, I have come away with many definite impressions.  One of them is that the proposed rules changes and what the DHS says about them are really a manual for customs agents.

The DHS says that they wanted to "clarify" and standardize immigration determinations of who should be excluded from the U.S. because a person is likely to become a public charge if she or he is admitted, but that is not what these proposed changes do.  They make it much more complicated for customs agents and officers at the border to do their job if they admit people into the United States but easier if they default to excluding them.

All because the DHS equates "likely to become a public charge" with "likely to receive public benefits."  The DHS has invented many formulas which would have confused Einstein, let alone be confusing to officers at the border.  Here are the 183 pages of what DHS says about its proposed "Public Charge" changes:  Download DHS Proposed Public Charge Rule.101018..

It turns out that a manual is exactly what is being provided to other Federal bureaucracies including the State Department back in January.  I found this out in November from reporting about a lawsuit filed by the City of Baltimore in Federal Court:

The lawsuit, filed in U.S. District Court for the District of Maryland, challenges a change to the State Department’s Foreign Affairs Manual that took effect in January. The shift tells State Department workers evaluating visa applications abroad to consider whether applicants, their families or their sponsors have used a public benefit in the United States or might in the future.

Erin Cox, Baltimore Sues Trump Administration Over Legal Immigrants' Access to Public Benefits, The Washington Post Online (November 28, 2018).

Rewriting manuals and statutes.  Changing rules and regulations.  What is happening may sometimes appear in the light but it is done in the dark.

Lawsuits.  Comments.  We should not go quietly into their darkness.

There is no such thing as a free lunch, as they say.

It is December 7th.  Remember Pearl Harbor!

Leave your Comments on the changes through the preferred submission Federal eRulemaking Portal:  www.regulations.gov.  The federal government has assigned the following numbers to these proposed rules changes to identify your Comments on these particular rules:  DHS Docket No. USCIS-2010-0012; RIN 1615-AA22.

Please Read The Disclaimer.  ©2018 Dennis J. Wall.  All Rights Reserved.

PREDETERMINING PUBLIC CHARGE INADMISSIBILITY:

Comments to the DHS Proposed Rules Changes 12.05.18.

The deadline for leaving Comments is December 10, 2018.  Because the deadline of December 10 is approaching, my Comments of 12.05.18 will be published both on Claims and Issues Blog at https://claimsissues.typepad.com/ and Claims and Bad Faith Law Blog at https://insuranceclaimsbadfaith.typepad.com/.  As a result, this blog article may be longer than is usually the case here.

 The following are my full Comments of December 5, 2018 in response to the DHS Proposed Public Charge Rules:  PREDETERMINING PUBLIC CHARGE INADMISSIBILITY.  In the Comments below, I am providing the addresses for you to be able to send your own Comments, and the DHS Docket Number etc. that the federal government agency requires in order to process Comments on or before December 10, 2018. 

December 5, 2018

BY POSTING TO FEDERAL eRULEMAKING PORTAL

AND BY U.S. MAIL

  Federal eRulemaking Portal:  www.regulations.gov.

 BY U.S. MAIL:

Ms. Samantha Deshommes

Chief, Regulatory Coordination Division

Office of Policy and Strategy

U.S. Citizenship and Immigration Services

Department of Homeland Security

20 Massachusetts Avenue NW

Washington, DC  20529-2140

 

Re:       DHS Docket No. USCIS-2010-0012.  RIN 1615-AA22.

To the Department of Homeland Security:

            These Comments concern changes to Public Charge Rules proposed by the DHS.  The previously filed Comments, UNAUTHORIZED AND MISDIRECTED filed on 12.01.18, are expressly incorporated herein by reference.

            DHS's proposal for a radically altered so-called "Public Charge Inadmissibility Determination" is unauthorized, contrary to law and experience, and in particular but without limitation redefines the discretion of considering a discretionary affidavit of support to transform it into a mandatory demerit if there is no affidavit of support contrary to the will of Congress expressed in 8 USCA § 1182(a)(4)(B)(ii).

            Proposed rule change to new "Public Charge Inadmissibility Determination" regarding an "affidavit of support," 8 CFR § 212.22(b)(7), 83 FR at 51292, is unauthorized and contrary to law and experience.  The DHS testifies falsely when it says that "[t]he absence of a statutorily required affidavit of support" under "8 U.S.C. 1183a, conclusively establishes an alien's inadmissibility on public charge grounds."  83 FR at 51178.  And again the DHS testifies to "an absent or insufficient required affidavit of support" again citing Section 1183a.  83 FR at 51178 & n.406.

            Section 1183a never requires an affidavit of support.  Other statutes may require an affidavit of support, but Section 1183a does not.  More to the point, the "public charge" determination set forth in 8 USCA § 1182(a)(4)(A)&(B) does not require an affidavit of support.

            It is the "public charge inadmissibility" determination in those provisions of Section 1182(a)(4) that this portion of the DHS rationale directly addresses and which are directly addressed by the DHS proposed rule changes.  To say again, the "public charge" determination set forth in 8 USCA § 1182(a)(4)(A)&(B) makes consideration of an affidavit of public support in making that determination a matter of discretion, it does not make it mandatory.  In basic and simple terms, subparagraph (B)(ii) of Section 1182(a)(4) declares that the public charge inadmissibility determination "may also consider any affidavit of support under section 1183a of this title[.]"  [Emphasis added.]  In the law and in this statute, "may" conveys discretion, not a command.  As used in this statute, it gives permission, it does not authorize punishment.

            In this context, "may" has a settled meaning in experience and in the law which is, at best, ignored in the DHS proposed rules changes and which is, at worst, a re-definition of "discretionary" to mean "mandatory" because that is the DHS's desired result here.

            In the specific case of "Family-sponsored immigrants" under the statutory framework established by Congress, an alien can successfully produce evidence on any of the factors enumerated for consideration by Section 1182(a)(4)(C)(i)(I), (II), or (III) without any affidavit of support at all.

            Therefore the apparently contrary interpretation by the DHS of the statute is both unreasonable and unauthorized.

            Moreover, to the extent that the language of the proposed rule change in 8 CFR § 212.22(b)(7) does not clearly convey the DHS's interpretation, DHS clearly stated its orientation toward the statutory provisions which address affidavits of support.  As a result, the proposed rule change is not authorized and not a rational means to establish who is "likely to become a public charge" as required by Section 1182(a)(4).

            Thank you for your consideration.

Now go and please leave your own Comments.  Please Read The Disclaimer.  ©2018 Dennis J. Wall.  All Rights Reserved.

 

IT ALL COMES BACK TO MONEY. BUT THAT'S NOT WHAT CONGRESS SAID:

Comments to Proposed DHS Public Charge Rules. 12.04.18.

The deadline for leaving Comments is December 10, 2018.  Because the deadline of December 10 is approaching, my Comments of 12.04.18 will be published both on Claims and Issues Blog at https://claimsissues.typepad.com/ and Claims and Bad Faith Law Blog at https://insuranceclaimsbadfaith.typepad.com/.  As a result, this blog article may be longer than is usually the case here.

 The following are my full Comments of December 4, 2018 in response to the DHS Proposed Public Charge Rules:  IT ALL COMES BACK TO MONEY.  BUT THAT'S NOT WHAT CONGRESS SAID.  In the Comments below, I am providing the addresses for you to be able to send your own Comments, and the DHS Docket Number etc. that the federal government agency requires in order to process Comments on or  before December 10, 2018. 

 

December 4, 2018

BY POSTING TO FEDERAL eRULEMAKING PORTAL

AND BY U.S. MAIL

 

Federal eRulemaking Portal:  www.regulations.gov.

 

BY U.S. MAIL:

Ms. Samantha Deshommes

Chief, Regulatory Coordination Division

Office of Policy and Strategy

U.S. Citizenship and Immigration Services

Department of Homeland Security

20 Massachusetts Avenue NW

Washington, DC  20529-2140

 

Re:       DHS Docket No. USCIS-2010-0012.  RIN 1615-AA22.

 

To the Department of Homeland Security:

            These Comments concern changes to Public Charge Rules proposed by the DHS.  The previously filed Comments, UNAUTHORIZED AND MISDIRECTED filed on 12.01.18, are expressly incorporated herein by reference.

            DHS's proposal to redefine Congress' statutory standard, "likely to become a public charge," is unauthorized by Congress.  Instead of a permissible interpretation, the DHS proposed rules changes which set forth an impermissible re-write of the statute enacted by Congress.  The DHS's proposed rules changes are also invalid with regard to who is "likely to become a public charge" because DHS's proposed rules changes are not supported by evidence.  Further, they do not take account of catastrophic circumstances that can cause people to apply for admission to the United States.  For all these reasons, whether taken separately or together, the DHS's proposed rules are an invalid attempt to change the Congressional standard for excluding a person on the ground that she or he is "likely to become a public charge." 

            Likely to become a public charge does not mean what the DHS says it means.  The starting point for Courts and for administrative agencies interpreting a statute is the statute itself.  Here, the task of determining who is "likely to become a public charge" is principally set forth as one among many potential grounds for excluding people from the United States, in 8 USCA § 1182(a)(4)(A) & (B):

(4) Public charge

(A) In general

Any alien who, in the opinion of the consular officer at the time of application for a visa, or in the opinion of the Attorney General at the time of application for admission or adjustment of status, is likely at any time to become a public charge is inadmissible.

(B) Factors to be taken into account

(i) In determining whether an alien is inadmissible under this paragraph, the consular officer or the Attorney General shall at a minimum consider the alien's--

(I) age;

(II) health;

(III) family status;

(IV) assets, resources, and financial status; and

(V) education and skills.

(ii) In addition to the factors under clause (i), the consular officer or the Attorney General may also consider any affidavit of support under section 1183a of this title for purposes of exclusion under this paragraph.

            The DHS's proposed rules changes, including proposed 8 CFR § 212.21(c) at 83 FR 51290, attempt to re-write the determination required by Congress to say that "likely at any time to become a public charge" instead "means likely at any time in the future to receive one or more public benefits[.]"   The Congressional statute has been transformed from considering the totality of the circumstances of who is "likely to become a public charge" to the totality of the circumstances of who is "likely to receive public benefits."   The difference between the two is illustrated by the fact that the Congressional determination would take natural and man-made catastrophes into account; the re-written standard proposed by DHS would ignore disasters entirely even though catastrophes are a time when want is most keenly felt to paraphrase Charles Dickens.  Experience teaches -- the evidence shows beyond dispute -- that disasters frequently require people to turn to receiving public benefits, and yet the DHS would allow no discretion to consider the circumstances.

            Moreover, the DHS's proposed rules changes would place a burden of proof on applicants for admission which applicants currently do not face.  Evidence under existing law is not the same as the DHS's proposed changes.  It is irrational to impose a burden to prove a negative.  This would render the Congressional statute meaningless.  The proposed rules changes in this regard are therefore not a valid interpretation of the Congressional statute.

            For example, the DHS proposes by defining an "alien's household" such that an alien "would have to demonstrate that his or her own assets, resources and financial status and his or her parent's or legal guardian's assets, resources and financial status are sufficient to support the alien and the rest of the household."  83 FR at 51184, with the proposed rules change in 8 CFR § 212.21(d) at 83 FR 51290-51291.  It bears constant repetition apparently that under existing law whether a person is "likely to become a public charge" is determined by a consular officer or the Attorney General under the above-quoted statute.  "In determining whether an alien is inadmissible under this paragraph [8 USCA § 1182(a)(4)(A)] the consular officer or the Attorney General shall at a minimum consider" factors to be taken into account.  This is not a burden of proof on the applicant for admission but a requirement that the consular officer or the Attorney General -- or in this case the AG's designate,  the DHS -- must make a determination, that the FEDERAL GOVERNMENT'S representative must consider certain things including "at a minimum" those factors which Congress ordered to be taken into account.

             In law, the determination of whether a party has met its burden of proof, whether she or he has for example "demonstrated" certain things, is different from whether there is enough evidence to support the claim at bar.  In the case of a person applying for admission into the United States, Congress set the standard at whether there is enough evidence to support the application at issue.  DHS may not impose a burden that Congress itself chose not to impose.

            Another illustration of the DHS imposing burdens that Congress itself chose not to impose is in the DHS's proposed consideration of Congressionally mandated consideration of "education and skills."  The DHS proposals apparently conflate them with education and skills "if authorized for employment," to quote the DHS rationale for this proposal, 83 FR at 51189.  The proposed rule is 8 CFR § 212.22(b)(5), at 83 FR at 51291. 

            Labor certification is a separate and distinct ground for exclusion.  It is set out in 8 USCA § 1182(a)(5), not 1182(a)(4) which is the stated subject of DHS's proposals.  Subsection 1182(a)(5) governs both skilled and unskilled labor, which is a different consideration entirely.

            "USCIS Evidentiary Requirements" set out by the DHS at 83 FR at 51196 mandate "[e]vidence of the alien's most recent history of employment" in any consideration of "education and skills."  The proposed rule is 8 CFR § 212.22(b)(5)(ii)(A), in 83 FR at 51291.  This mandated evidence simply does not relate to a consideration of education and skills.  If it did, the DHS would have put on evidence in its rationale to support this, but the DHS did not support this mandate with any evidence linking these separate concepts.

             A good example -- evidence if you will -- of how education and skills simply do not depend on the four factors listed on 83 FR at 51196 -- "the alien's most recent history of employment;" her or his "academic degree or certifications[;]" "occupational" skills or certificates, and "proficiency in English" -- was provided by the real-life experience of Albert Einstein.  He famously failed mathematics, not because he was dull, but to the contrary he was too intelligent for the teacher.  The DHS's rigid rules for considering the statutorily mandated evidence of "education and skills" do not allow for considering the actual circumstances of experience.

            In particular, Congress's word, "skills," would be transformed by the DHS proposed rules into "occupational skills."  (Emphasis added.)  The proposed rule is 8 CFR § 212.22(b)(5)(ii)(C), in 83 FR at 51291.

            The DHS's proposed rules refashioning Congress's words, here, refashioning both "education" and "skills," are unauthorized, contrary to Congressional intent, unsupported by any evidence, and to the contrary the available evidence militates against adoption of such proposed rules.

Conclusion.

            The unnatural effect of the changes proposed by the DHS to who is "likely at any time to become a public charge," including imposing new burdens of proof and re-defining "education and skills" to be taken into account in making the determination, would if they were in effect have required the exclusion of immigrant Mary Anne MacLeod.  She arrived in the United States from Scotland with the skills of a domestic and several hundred dollars in currency at present-day values.

            However, she was allowed to come into the United States and eventually married one Fred Trump with whom she had several children.  One of those children became President of the United States.

            In sum, the changes proposed by the DHS to who is "likely at any time to become a public charge," including imposing new burdens of proof and re-defining "education and skills" to be taken into account in making the determination, are unauthorized by Congress.  In addition, they are contrary to Congress's statutory intent.  Finally, they are not supported with evidence provided by the DHS, but to the contrary, the available evidence proves them to be invalid.

            They are in short the product of still another Federal administrative agency's regulatory overreach. 

            Thank you for your consideration.

Now go and please leave your own Comments.  Please Read The Disclaimer.  ©2018 Dennis J. Wall.  All Rights Reserved.

 

PENALIZING THE DISABLED, monetizing PREJUDICE: Comments to the DHS Proposed "Public Charge" Rules Changes 12.03.18.

The following are my full Comments of December 3, 2018 in response to the DHS Proposed Public Charge Rules:  PENALIZING THE DISABLED, monetizing PREJUDICE.  In the Comments below, I am providing the addresses for you to be able to send your own Comments, and the DHS Docket Number etc. that the federal government agency requires in order to process Comments. 

 

December 3, 2018

BY POSTING TO FEDERAL eRULEMAKING PORTAL

AND BY U.S. MAIL

 

Federal eRulemaking Portal:  www.regulations.gov.

BY U.S. MAIL:

Ms. Samantha Deshommes

Chief, Regulatory Coordination Division

Office of Policy and Strategy

U.S. Citizenship and Immigration Services

Department of Homeland Security

20 Massachusetts Avenue NW

Washington, DC  20529-2140

Re:       DHS Docket No. USCIS-2010-0012.  RIN 1615-AA22.

To the Department of Homeland Security:

            These Comments concern changes to Public Charge Rules proposed by the DHS.  The previously filed Comments, UNAUTHORIZED AND MISDIRECTED filed on 12.01.18, are expressly incorporated herein by reference.

            DHS's proposal to so-called "monetize" the receipt of public benefits and in particular the receipt of SSI or Social Security Insurance benefits is an attempt to penalize the disabled and put a money value on prejudice. 

            The DHS rationalizes that the Department of Health and Human Services "in some respects" equated "dependence" with the receipt of public benefits.  Specifically, the DHS claims that HHS has put a money value on, or "monetized," indicators of a "lack [of] self-sufficiency and [so] be dependent on the public for support."  83 FR at 51164.  That is not true.

            The HHS did not say that.

            Further, the DHS changes in this regard depend themselves on a claim that "it is possible and likely probable" that putting a money value on receiving many kinds of public benefits will successfully predict a "public charge" that should be excluded from the United States.  The DHS claim fails not only because it is disingenuous, equating "possible" with "likely probable" and in the same sentence no less, but because it has no evidentiary support.  Certainly the DHS provided no evidentiary support for this assertion, as it was required to do.  Rather than providing evidence, the DHS stated that the Department of Health and Human Services is responsible for a claim that HHS has yet to make.    

            Further, in making this claim and in writing these proposals the DHS has neglected to provide any definition of what the new changes mean by making benefits "monetizable."  You and I may think that we know what "monetizable" probably means, but the DHS has not told us what the DHS has in mind with that term over all.  There is no evidence to support that standard, and the DHS is in addition not authorized to declare that an excludable "public charge" includes a person who has received undefined "monetizable" benefits as a general presumption of law.

            The proposed rule change is 8 CFR 212.21(b), 83 FR at 51289-51291.  But to say again there is no overall definition either in DHS's own rationale or in the rules changes proposed by the DHS of "monetizable," no guidance to or reflection of proper interpretation of this newly invented federal regulatory word.  The changes proposed by DHS fail for these reasons alone.

            The DHS proposes to exclude people who receive SSI benefits by "monetizing" them in particular.  "According to one analysis," says the DHS, "SSI expenditures totaled approximately $54.7 billion in fiscal year 2017, and represented one of the largest Federal expenditures for low-income people."  83 FR at 51166.  Carried to its logical conclusion, this would be a reason to remove everyone who receives or has received SSI regardless of where they were born.

            Once again the DHS does not tell the full story.  SSI benefits represented 1.4% of the Federal Budget in fiscal year 2012.  "Introduction to the Supplemental Security Income (SSI) Program" at 5 (Center on Budget and Policy Priorities, Revised Feb. 27, 2014).  There is no reason to believe that the complete data recited in the "one analysis" relied on by the DHS for 2017 would be any different.  SSI was 0.33% of Gross Domestic Product in the years 2011-2012 and "expected to decline to 0.23 percent of GDP in 2037."  Id.

            Finally and most important of all, 86% of SSI benefits are paid to the disabled.  Those were the numbers as of December 2012.  Id. at 4.  There is little reason to expect the numbers to be any different in December 2018.

            It is irrational and insupportable to exclude disabled people by claiming that disabled people are "likely to become a public charge."  One human illustration will suffice here.  The DHS proposals would have excluded Dr. Stephen Hawking, perhaps the greatest theoretical physicist of his generation, because he was in a wheelchair and spoke with the aid of a machine.

Conclusion

            Courts are reasonably unlikely to accept this proposed definition of "likely to become a public charge" because of "monetized" "public benefits" including but not limited to SSI.  Judges are unlikely to accept this for many reasons:  These definitions are not authorized, they are not supported either by evidence or experience, and they rely on putting words in other people's mouths that they did not say.

            Moreover, the reliance on SSI benefits in particular to exclude people from admission to the United States is an illustration of how unconscionable the DHS's announced conception of "monetizable public benefits means likely to become a public charge" really is:  It is nothing less than an attempt to penalize the disabled and to put a profit on prejudice.

            Thank you for your consideration.

 

Now go and please leave your own Comments.  Please Read The Disclaimer.  ©2018 Dennis J. Wall.  All Rights Reserved.

PUBLIC CHARGE NOT PUBLIC PARIAH. Comments to DHS Proposed "Public Charge" Rules Changes 12.02.18.

The following are my full Comments of December 2, 2018 in response to the DHS Proposed Public Charge Rules:  PUBLIC CHARGE NOT PUBLIC PARIAH.  In the Comments below, I am providing the addresses for you to be able to send your own Comments, and the DHS Docket Number etc. that the federal government agency requires in order to process Comments. 

December 2, 2018

BY POSTING TO FEDERAL eRULEMAKING PORTAL

AND BY U.S. MAIL

Federal eRulemaking Portal:  www.regulations.gov.

BY U.S. MAIL:

Ms. Samantha Deshommes

Chief, Regulatory Coordination Division

Office of Policy and Strategy

U.S. Citizenship and Immigration Services

Department of Homeland Security

20 Massachusetts Avenue NW

Washington, DC  20529-2140

Re:       DHS Docket No. USCIS-2010-0012.  RIN 1615-AA22.

To the Department of Homeland Security:

            These Comments concern changes to Public Charge Rules proposed by the DHS.  The Department's proposed addition of a "public charge" definition and of a "public benefits" definition are not authorized by Congress and are not the result of experience.

            Any interpretation of a statute, whether it is an administrative interpretation like that proposed by the DHS in 83 FR 51114-51296, or by a Court, begins of course with the language of the statute itself.  With regard to excluding aliens as "likely at any time to become a public charge" the starting point is paragraph A of subsection 1182(a)(4), which reads in full as follows:

(4) Public charge

(A) In general

Any alien who, in the opinion of the consular officer at the time of application for a visa, or in the opinion of the Attorney General at the time of application for admission or adjustment of status, is likely at any time to become a public charge is inadmissible.

            As was pointed out in an earlier comment, which is expressly incorporated herein by reference, Congress chose not to give a definition of "public charge" in the statute.  Moreover, interpretation of any statute requires a look at the entire statute in which the provision to be interpreted is found.  These defects render the proposed rules changes invalid, unlawful, and unauthorized.   UNAUTHORIZED AND MISDIRECTED:  Comments to DHS Proposed Changes to Public Charge Rules 12.01.18, which to say again, is expressly incorporated herein by reference.

The DHS interpretation in its proposed rules changes is contrary to the intent of Congress, which left the determination of "likely to become a public charge" to be established by the evidence provided to a hearing officer and ultimately to a judge.  Congress clearly provided for a determination based on the characteristics of individuals as they actually present themselves, and not determined by detailed 'tests' contrived in advance.  Congress simply did not intend for admission into the United States to rest merely on the arithmetical results of arbitrary numbers put into a contrived formula.

That is why Congress did not give a definition of "public charge."  The DHS proposes, to the contrary, to define who is a "public charge" before any evidence can be introduced.  DHS's proposed definition of a "public charge" excludable from admission to the United States is "an alien who receives one or more public benefits[.]"  83 FR at 51157.   The DHS proposes to introduce a previously unknown definition of "public benefits," in turn, "to include a specific list of cash aid and noncash medical care, housing, and food benefit programs."  83 FR at 51158.  The "public benefit" proposed rule in particular is set out as proposed 8 CFR § 212.21(a) & (b), 83 FR at 51289-51291.

For nearly a century, Federal case law has required evidence that aliens are "likely to become public charges" before they can lawfully be excluded from entry into the United States on that ground.  The definitions of "public charge" and "public benefits" which the DHS proposes to introduce reflect the opposite of the clear intent of Congress.  Congress clearly required a case-by-case determination of "likely to become a public charge" within the meaning of Section 1182(a)(4)(A), quoted above, and the Federal Courts have added that this determination must be based on evidence not opinions.  The DHS proposals are not supported with so much as an attempt at evidence to support these definitions.  The DHS simply proposes these definitions because it wants to, apparently.  That is not good enough for them to become law.

Conclusion

The "public charge" and "public benefits" definitions written by DHS do not "clarify" the meaning and application of Section 1182(a)(4)(A) as the DHS says they do, they rewrite it.  This the DHS may not do.

Thank you for your consideration.

Now go and please leave your own Comments.  Please Read The Disclaimer.  ©2018 Dennis J. Wall.  All Rights Reserved.

HIDING WITH THE LIGHTS OFF: DHS'S PROPOSED "PUBLIC CHARGE" RULES.

You have probably heard that the Department of Homeland Security (DHS) has proposed a re-write of the laws governing who is a "public charge" and therefore an inadmissible alien who cannot be admitted to the United States.

            The proposed rules and the explanations offered by DHS are set out in 183 pages of single-spaced small print in 83 Federal Register 51114-511196 (Wed., Oct. 10, 2018).  The 183 pages of changes proposed by DHS are also accessible here:  Download DHS Proposed Public Charge Rule.101018.

          To put these proposed changes in context so as to understand them better, here is the current law as it exists right now.  These are the factors to be taken into account right now -- and which have been taken into account for a very long time -- for making a determination that an alien "is likely at any time to become a public charge" and so be ineligible for admission into the United States:

(B) Factors to be taken into account

(i) In determining whether an alien is inadmissible under this paragraph, the consular officer or the Attorney General shall at a minimum consider the alien's--

(I) age;

(II) health;

(III) family status;

(IV) assets, resources, and financial status; and

(V) education and skills.

(ii) In addition to the factors under clause (i), the consular officer or the Attorney General may also consider any affidavit of support under section 1183a of this title for purposes of exclusion under this paragraph.

8 U.S.C.A. § 1182(a)(4)(B) (emphasis added in italics; boldfaced emphasis in title by Congress).  To say again, these are the factors to be taken into account right now, five of them mandatory and "at a minimum," and one, considering an affidavit of support, discretionary.

             It is also important to know that these factors have not been perceived as a problem by anyone for decades.

            Until now.

            DHS's stated purpose for all of its changes was "to provide clarity for the public and immigration officers[.]"  83 F.R. at 51134, second unnumbered paragraph under "V.  Discussion of Proposed Rule."  Parenthetically, although the DHS often referred to "proposed rule" in the singular, it proposed many changes that would affect several rules.

           The public and immigration officers are both unlikely to see the DHS's efforts as "clarity."

           For example, at one point the DHS proposes that absence of a statutorily required affidavit of support under a certain statute "conclusively establishes an alien's inadmissibility on public charge grounds."  83 F.R. at 51178.  An immediate problem is that the statute relied on by the DHS, 8 U.S.C.A. Section 1183a, does not require any affidavit of support.

           Rather, Section 1183a prescribes the things required to be in an affidavit of support when there is one.  That is very different, and heaven help the public and the immigration officers who search Section 1183a in vain for what is not there, namely, a statutory requirement for an affidavit of support. 

           After the DHS identifies this non-existent "conclusive presumption" in its heading number "1" under "Public Charge Inadmissibility Determinations," the DHS next says in effect "never mind," and announces secondly that "2" the determinations are based on the totality of the circumstances.

           Which is it?

           How is the public and how is an immigration officer to be expected to reconcile the DHS hierarchy of, first, a conclusive presumption based on a statutory requirement that doesn't exist and, second, in any case the totality of the circumstances?

           Good questions.  I think that in these proposed rules the DHS clearly expects too much from the public and expects too much from immigration officers processing immigrants standing in lines at the U.S. borders.

           A second example of how the DHS's proposed rules do not really shine a light on "clarity" but instead, if they do anything it is to turn out the lights, comes from its new proposed requirement that immigration officials are told to calculate the "Fifteen percent [15%] of Federal Poverty Guidelines (FPG) Standard for Monetizable Benefits[.]"

           Seriously.  See 83 F.R. at 51164-51165.

           The proposed new additions are in the proposed subsection (b) of Section 212.21, titled "Public benefit."  In that new subsection, the DHS first proposes a calculation of what it calls "monetizable" benefits, by which it means benefits that can be readily calculated into money, more or less.  These things include cash assistance, Supplemental Security Income (SSI), and so-called "General Assistance." 

            But -- remember that the DHS wants the public and immigration officers to clearly understand that a "public charge" is a person who gets any public benefits at all -- the DHS wants to tell immigration officers to also calculate benefits which the DHS thinks cannot be readily calculated into money, but which it wants immigration officers to try to do according to formulas it proposes for such things as food stamps, housing vouchers, and rental assistance.

           Not done yet!  The DHS also wants immigration officers to apply this formula:

(2)  Any of one or more of the following non-monetizable benefits if received for more than 12 months in the aggregate within a 36 month period (such that, for instance, receipt of two non-monetizable benefits in one month counts as two months)[.]

Proposed 8 CFR § 212.21(b)(2), published in 83 F.R. at 51290.

          What does that even mean?

          And how is an immigration officer at the border expected to figure that out?

          Last but not least is this third example of snatching "clarity" from the laws of immigration, which appears in the DHS's proposed Section 212.21(b)(3):

          (3)  The receipt of a combination of monetizable benefits under paragraph (b)(1) of this section where the cumulative value of such benefits is equal to or less than 15 percent of the Federal Poverty Guidelines for a household size of one within any period of 12 consecutive [sic; the missing word the DHS is still searching for is apparently the word "months"] based on the per-month FPG for the months during which the benefits are received, together with one or more non-monetizable benefits under paragraph (b)(2) of this section if such non-monetizable benefits are received for more than 9 months in the aggregate within a 36 month period (such that, for instance, receipt of two non-monetizable benefits in one month counts as two months)[.]"

I do not know if this passage passes for "clarity" in the language of a federal bureaucrat, but after over 40 years as a lawyer I can say without hesitation that no other person, no jury, and no judge would ever confuse this with "clarity."

          In the end, if the purpose of these changes proposed by the DHS is to cover up an intent to stop immigrants from entering the U.S., then perhaps that purpose has been achieved here, however foreign and unlawful that purpose may be.

          But the DHS's stated purpose in proposing these changes is to achieve "clarity."  In that, the DHS clearly and totally fails.

 

Leave your Comments on the changes through the preferred submission Federal eRulemaking Portal:  www.regulations.gov.  The federal government has assigned the following numbers to these proposed rules changes to identify your Comments on these particular rules:  DHS Docket No. USCIS-2010-0012; RIN 1615-AA22.

See also Claims and Issues Blog, at https://claimsissues.typepad.com/insurance_claims_and_issu/2018/11/hiding-with-the-lights-off-dhss-proposed-public-charge-rules-you-have-probably-heard-that-the-department-of-homeland-sec.html

 

Please Read The Disclaimer.  ©2018 Dennis J. Wall.  All Rights Reserved.

"THE INFLICTION OF STIPULATIONS ON LITIGATION OF FACTS AND ON SETTLEMENTS"

PART TWO OF TWO PARTS COMPLETED WITH ALL FOOTNOTES REPRINTED HERE ON THURSDAY, NOVEMBER 29, 2018.

The following reprint from the book, Catastrophe Claims:  Insurance Coverage for Natural and Man-Made Disasters, is with the permission of Thomson Reuters West, the publisher, and Dennis J. Wall, the author of the reprinted selection.  This selection, Section 2:19 (2018, Thomson Reuters), is reprinted here with permission of Thomson Reuters.  Any further reproduction without the consent of the publisher is expressly prohibited.

Note:  Access to hyperlinked citations are restricted by Thomson Reuters West in this publication; subscription may be required by Thomson Reuters West to access the hyperlinked citations that appear below.

Continued from the end of Part One on Tuesday, November 27, 2018:

    In addition to the Ursomano case, there are as noted two other decisions which have been found to be on point at this time. In one of the two other available decisions which have been located on point in addition to Ursomano, a Federal Court in Oklahoma stayed an alleged lender force-placed insurance class action because the Court in Oklahoma was advised by the defendants that the defendants were negotiating settlement with the parties in the Florida case. On the strength of that representation alone, and without requiring any proof or a written order or even a briefing on the res judicata affirmative defense, the Federal Court in Oklahoma swiftly entered its order staying the proceedings in Utah unless the plaintiffs in Oklahoma could prove that their claims are not barred by the Fladell proceedings in Florida, proceedings to which the Oklahoma plaintiffs are not parties. The Oklahoma Federal Court's decision is in the case of Ali v. Wells Fargo Bank, N.A.¹⁷

    In the other case which has been located as being on point here, a Federal Court in the State of Washington conditionally enjoined a foreclosure proceeding and refused to immediately dismiss an alleged LFPI class action. However, the Federal Court in Washington State required the plaintiffs in that case, none of whom it seems are plaintiffs in the Fladell case in Florida, to prove that their claims are not barred by the settlement to which they are not parties. The Federal Court's decision in Washington State is in the case of Keller v. Wells Fargo Bank, N.A.¹⁸

    Beyond the three cases which have just been discussed, each decision coming from a different Federal Court and a different jurisdiction, Ursomano from California, Ali from Oklahoma, and Keller from Washington State, there are many other lender force-placed insurance class action cases and many other types of cases which are pending and others which are likely to be filed in the future. Some of those class actions will involve the same defendants as in cases which have settled and in which a “class” has been “certified for settlement purposes,” as in the Fladell case. Orders in those cases will be used in defense in other cases, whether or not they contain expressions of res judicata, preclusive effect as does the stipulated settlement order in Fladell.

    Although the Fladell case was ultimately settled by a stipulated agreement which the Court approved in that case, it is interesting to note the several objections which the Fladell defendants raised to class certification when they were against it and before they were for it.

    The Court never addressed any of the defendants' objections, and it did not adjudicate them, either. What follows is taken mainly from the defendants' own Response in Opposition to Plaintiff's' Motion for Class Certification in Fladell, which the defendants filed in December 2013.¹⁹

    In the Fladell case, the defendants pointed out in their opposition that the plaintiffs were seeking limited certification. According to the Fladell defendants, the plaintiffs requested certification of a national class on three Federal claims but not of their Florida law claims, for which the plaintiffs requested certification “of a Florida-only class.”²⁰ That statement obviously contradicts the position taken afterward by the same defendants in other legal proceedings, that the Fladell class settlement bars all lender force-placed insurance claims in all other cases in the nation.

    In approving the Fladell parties' settlement agreement, the parties and the Federal Judge said that the Florida class action settlement complied with Federal Rules 23(a) and 23(b). Rule 23 requires among other things that the proposed class action procedure be a superior means of adjudicating the alleged claims and that the current named plaintiffs are adequate to represent the alleged classes in pursuing those claims.

    When the defendants opposed the class certification motion, and before they were in favor of it, they objected that the proposed class action was an inferior means by which to adjudicate the plaintiffs' claims:

Plaintiffs are not adequately representing borrowers in every state other than Florida, and this action is an inferior way for them to litigate.²¹

    Of even greater significance here, however, the defendants objected to certification in Fladell because of the potential danger that other Courts might preclude the potential claims of other people in other lawsuits who did not participate in the Fladell settlement agreement:

Plaintiffs seek national certification only on federal-law claims, which are, at best, highly dubious. If those claims are certified but fail on the merits, res judicata may prevent borrowers residing in 49 other states from bringing the more substantial state-law claims that Plaintiffs assert only for the proposed class of Florida borrowers. This is not a superior method of adjudication, nor adequate representation of those absent borrowers.²²

    In this same vein, it bears repeating that, as the Fladell defendants pointed out, the Fladell plaintiffs requested certification “of a Florida-only class” of Florida claims, and those Florida claims were four in number: “contract, implied covenant, unjust enrichment, and fiduciary duty.”²³ Yet, the defendants argue now, in other cases, that they tried to settle and the Federal Court purportedly approved their settlement in the Fladell case in Florida of every claim in every State in the nation involving also allegations of “alleged tortious interference,” alleged compliance with “disclosure” laws, “the receipt or non-disclosure of any benefit,” the making or failure to make any “communications” concerning LFPI insurance anywhere, and last but not least, “the regulatory approval or non-approval of any insurance policy, or the premium thereon, placed or charged by the Wells Fargo Defendants.”²⁴

    It is noteworthy but perhaps not entirely surprising that District Judges often make their secrecy decisions in unreported Orders. Being unreported, they are much harder to find than reported decisions. In one such secrecy Order, captioned “ORDER RE: ADMINISTRATIVE MOTIONS TO SEAL,”²⁵ a District Court treated a motion for class certification as a nondispositive motion even though disposition of the motion for class certification was at the heart of the plaintiffs' collective claims. The parties once again stipulated to secrecy, in this instance, to request that exhibits filed in connection with the motion for class certification should be kept secret. Applying an explicitly lesser standard for sealing documents and parts of documents when they are exhibits concerning “nondispositive” motions as opposed to dispositive motions, the District Court entered its Order granting the parties' stipulation to “file all documents sought to be sealed in redacted form consistent with their joint submission.”²⁶ In other words, the holding that a motion to certify a class in a case in which the reason for the lawsuit's existence lies in class certification -- and few if any putative class action lawsuits fit into any other category -- drove the decision to keep documents secret which probably and almost certainly would support the plaintiffs' substantive claims in the case.

    In sum, stipulations have recently taken over much of litigation both in lieu of discovery which keep the evidence secret, and in settlement stipulations in which parties try to provide by agreement what they could not obtain by litigation. The most glaring example of the latter conduct is in the recent attempts by defendants to write and propose settlement stipulations for class actions that attempt to dispense with the requirements of class actions, and which will stand as res judicata determinations of those requirements if the same allegations are raised in other cases against the defendants. The effects of all of these stipulations remain to be worked out in each individual case, but until then, practitioners and their clients should be aware of the possibilities which they may face in presenting their catastrophic claims. In particular, these stipulations have not confronted the public policy sometimes embodied in statutes tending to prohibit public harm caused by secret agreements.²⁷

© 2018 Thomson Reuters. No Claim to Orig. U.S. Govt. Works.

Footnotes

1

Houston Cas. Co. v. Charter Oak Fire Ins. Co., No. 1:16-cv-535-LJO-EPG, 2017 WL 35500 at *1 (E.D. Cal. January 3, 2017).

2

Cabrera v. Government Emp's Ins. Co., 2014 WL 2999206 (S.D. Fla. July 3, 2014) (Seltzer, Chief U.S.M.J.).

3

Cabrera v. Government Emp's Ins. Co., 2014 WL 2999206 *9 (S.D. Fla. July 3, 2014) (Seltzer, Chief U.S.M.J.).

4

See Cabrera v. Government Emp's Ins. Co., 2014 WL 2999206 *9 (S.D. Fla. July 3, 2014) (Seltzer, Chief U.S.M.J.).

5

See generally Dennis J. Wall, “Conditional and Other ‘Nonspecific’ Objections to Discovery Are No Objections at All in an Insurance (or in Any Other Case),” 33 Ins. Lit. Rptr. 437 (2011).

6

Floyd Norris, “High & Low Finance / Failed Bank's Broken Vows Mean Little” p. B1, col. 1 (New York Times Nat'l ed., “Business Day” Section, Friday, September 19, 2014). The order of the Federal Court in North Carolina can be found in FDIC v. Rippy, Order of September 10, 2014 granting defendants' summary judgment motion, Dkt. No. 124 (E.D.N.C. Case No. 7-11-cv-00165-BO).

7

FDIC v. Rippy, Dkt. No. 124, Order of September 10, 2014 granting defendants’ summary judgment motion, at p. 3 (E.D.N.C. Case No. 7-11-cv-00165-BO).

8

FDIC v. Rippy, Dkt. No. 71, May 21, 2013 Amended Stipulated Protected Order and Non-Waiver Agreement, at p. 2 (E.D.N.C. Case No. 7-11-cv-00165-BO).

9

Fed. R. Civ. P. 26.

10

In addition to the clear language of Rule 26, the Advisory Committee Notes to the present enactment of Rule 26(c) in 1970, provide:

The new reference to trade secrets and other confidential commercial information reflects existing law. The courts have not given trade secrets automatic and complete immunity against disclosure, but have in each case weighed their claim to privacy against the need for disclosure.

    An alternative to secrecy stipulations pursued in the cases, is to settle the class action case and provide for secrecy in the settlement agreement which the Court is then requested to approve. This method of obtaining secrecy is at work in the class action lawsuit filed against the high-profile corporations of Silicon Valley who allegedly conspired to limit their workers' “mobility and incomes.” David Streitfeld, “New Accord is Expected in Hiring Ban,” p. B1, col. 5 (New York Times Nat'l ed., “Business Day” Section, Thursday, January 15, 2015). As explained in this Times report, a second settlement agreement was reached in the case and presented to the Court for approval “[t]o head off a trial and the exposure of reams of incriminating emails.” The Federal District Judge already rejected one settlement because the amount was too low to be “‘within the range of reasonableness,'” i.e., the original settlement amount presented for the Court's approval was unreasonably low. Although the second attempt at a settlement agreement contains more money, “[t]he settlement money is pocket change to the companies, which include some of the world's wealthiest. If they let the case go to trial, however, it might corrode their image as forward-thinking, worker-friendly benevolent empires.” David Streitfeld, “New Accord is Expected in Hiring Ban,” p. B1, col. 5 (New York Times Nat'l ed., “Business Day” Section, Thursday, January 15, 2015).

11

Fladell, et al., Plaintiffs v. Wells Fargo Bank, N.A., et al., Defendants (S.D. Fla. Case No. 13-cv-60721), app. dismissed (unreported) (11th Cir. August 4, 2015).

12

Ursomano v. Wells Fargo Bank, N.A., No. C-13-4381, 2014 WL 644340 *1-*2 (N.D. Cal. February 19, 2014).

13

Ursomano v. Wells Fargo Bank, N.A., No. C-13-4381, 2014 WL 644340 *2 (N.D. Cal. February 19, 2014).

14

Ursomano v. Wells Fargo Bank, N.A., No. C-13-4381, 2014 WL 644340 *2 (N.D. Cal. February 19, 2014). [Emphasis added.]

15

Fladell v. Wells Fargo Bank, N.A., No. 13-cv-60721-FAM, 2014 WL 5488167 (S.D. Fla. October 29, 2014), app. dismissed (unreported) (11th Cir. August 4, 2015). The appeal to the Eleventh Circuit Court of Appeals was filed in Fladell after several plaintiffs objected to the attorney's fees award in that case of $19 Million “payable pursuant to the terms of the settlement agreement.”

16

Ursomano v. Wells Fargo Bank, N.A., No. C-13-4381, Dkt. No. 74 filed on Nov. 12, 2014 (N.D. Cal. Case No. C-13-4381).

17

Ali v. Wells Fargo Bank, N.A., No. CIV-13-876-D, 2014 WL 819385, at *2 (W.D. Okla. March 3, 2014) (granting defendants' motion to stay lender force-placed insurance claims of plaintiffs who were not parties in the Florida case, unless those plaintiffs could prove that their claims were not settled in Fladell). The Ali case was distinguished when the same issue was raised, with a different result, in the case of Valdez v. Saxon Mort. Serv's, Inc., No. 2:14-cv-03595-CAS(MANx), 2015 WL 93387, at *2 (C.D. Cal. January 6, 2015): “Here, in contrast, the Lee settlement [the asserted fact of which was relied on in Ali] will not resolve all of plaintiffs' claims; rather, as moving defendants argue, the Lee settlement ‘if approved, will resolve claims against Ocwen [] and Deutsche Bank [] ….’ Mot. Stay at 1.”]

18

See, e.g., Keller v. Wells Fargo Bank, N.A., No. C14-422, 2014 WL 6684895 *2-*3 (W.D. Wash. November 25, 2014) (“limited injunction” ultimately granted against defendants foreclosing on plaintiffs' home so as to allow the plaintiffs to prove that their case is not included in the Fladell settlement).

19

Fladell v. Wells Fargo Bank, N.A., No. 13-cv-60721-FAM, Dkt. No. 108 [hereinafter “DE 108”], filed December, 2013 (S.D. Fla. Case No. 13-cv-60721-FAM), app. dismissed (unreported) (11th Cir. August 4, 2015).

20

DE 108 at page 1.

21

DE 108 at page 19.

22

DE 108 at pages 2-3. [Emphasis added.]

23

DE 108 at page 1.

24

Fladell v. Wells Fargo Bank, N.A., 2014 WL 5488167 *7 (S.D. Fla. Oct. 29, 2014), app. dismissed (unreported)(11th Cir. August 4, 2015).

25

Stitt v. Citibank, N.A., ORDER RE: ADMINISTRATIVE MOTIONS TO SEAL, Dkt. No. 152 Filed December 17, 2015 (N.D. Cal. No. 4:12-cv-032892-YGR).

26

Stitt v. Citibank, N.A., ORDER RE: ADMINISTRATIVE MOTIONS TO SEAL, Dkt. No. 152, at p.2, Filed December 17, 2015 (N.D. Cal. No. 4:12-cv-032892-YGR).

27

See, e.g., 1 Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith § 3:107, “Settlement of third-party bad faith claims: Confidentiality (protected) or concealment (void)” (3d Edition and 2017 Supplement, Thomson Reuters West); 2 Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith § 9:28, “Settlement of first party bad faith claims: Confidentiality (protected) or concealment (void)” (3d Edition and 2017 Supplement, Thomson Reuters West), examining among other things, Florida Statute Section 69.081.

End of Document

© 2018 Thomson Reuters. No claim to original U.S. Government Works

 

The above reprint from the book, Catastrophe Claims:  Insurance Coverage for Natural and Man-Made Disasters, is with the permission of Thomson Reuters West, the publisher, and Dennis J. Wall, the author.  This selection, Section 2:19 (2018, Thomson Reuters), is reprinted here in its entirety with permission of Thomson Reuters.  Any further reproduction without the consent of the publisher is expressly prohibited.

 

"THE INFLICTION OF STIPULATIONS ON LITIGATION OF FACTS AND ON SETTLEMENTS": PART ONE OF TWO PARTS.

PART ONE OF TWO PARTS:  TO BE COMPLETED HERE ON THURSDAY, NOVEMBER 29, 2018.

The following reprint from the book, Catastrophe Claims:  Insurance Coverage for Natural and Man-Made Disasters, is with the permission of Thomson Reuters West, the publisher, and Dennis J. Wall, the author of the reprinted selection.  This selection, Section 2:19 (2018, Thomson Reuters), is reprinted here with permission of Thomson Reuters.  Any further reproduction without the consent of the publisher is expressly prohibited.

Note:  Access to hyperlinked citations are restricted by Thomson Reuters West in this publication; subscription may be required by Thomson Reuters West to access the hyperlinked citations that appear below.

Cat Claims: Insurance Coverage for Natural and Man-Made Disasters § 2:19

Catastrophe Claims: Insurance Coverage for Natural and Man-Made Disasters

 | 

November 2018 Update

Chapter 2. Claim Handling Issues

by Dennis J. Wall, Esquire

• 2:19. The infliction of stipulations on litigation of facts and on settlements

Stipulations have recently taken over much of litigation. Agreements are reached in lieu of discovery which keep the evidence secret. In some cases, secrecy stipulations even provide that documents and testimony in other cases will remain secret if filed in the current litigation.

    The truthful cause of this situation has become public. At last, a Federal Judge has laid bare the catastrophe in the Federal Courts: Cases cannot be handled the way that they should be because there are not enough resources. For decades, Federal Courts have struggled with too few personnel and too little money to spend on administering what we euphemistically still call a system of justice.

    This is the way that things are. Not only in Federal Courts, not only in State Courts, not only in one part of the country, but throughout the nation's judicial systems in every place, in every court.

    Constitutional guarantees of access to courts are nothing but words without access to courts.

    Statutes enacting new rights are hollow without the judges to declare what the statutes mean.

    Procedural rules are worse than meaningless unless meaning is given to them by judicial conduct. They are misleading without judicial attention.

    Judges cannot pay attention if they have so many things to do with so few capacities to do them that no judge can accomplish them in a single lifetime.

    For a long time, individual judges have heroically tried to keep the judicial system performing, or on the whole at least give a convincing appearance of performing, even when a relatively small cohort of litigants game the system for advantage over the parties who oppose them.

    That is where things stand in the 21st Century in the United States. It is the end of delusion. Now the veil of secrecy has been lifted, now the impossibility of administering justice using existing and even diminishing resources has been unveiled. Those who have eyes to see, let them see. And something more -- seeing, let them do something to make the judicial system better even as the judicial system is about to crash.

    This is what the Federal Judge had to say. This is what the Chief Judge of the Eastern District of California had to say. His words were written in an insurance case, but they apply to all cases:

Lawrence J. O'Neill, UNITED STATES CHIEF DISTRICT JUDGE

1. PRELIMINARY STATEMENT TO PARTIES AND COUNSEL

Judges in the Eastern District of California carry the heaviest caseloads in the nation, and this Court is unable to devote inordinate time and resources to individual cases and matters. Given the shortage of district judges and staff, this Court addresses only the arguments, evidence, and matters necessary to reach the decision in this order. The parties and counsel are encouraged to contact the offices of United States Senators Feinstein and Harris to address this Court's inability to accommodate the parties and this action. The parties are required to reconsider consent to conduct all further proceedings before a Magistrate Judge, whose schedules are far more realistic and accommodating to parties than that of Chief U.S. District Judge Lawrence J. O'Neill, who must prioritize criminal and older civil cases.

Civil trials set before Chief Judge O'Neill trail until he becomes available and [sic] are subject to suspension mid-trial to accommodate criminal matters. Civil trials are no longer reset to a later date if Chief Judge O'Neill is unavailable on the original date set for trial. Moreover, this Court's Fresno Division randomly and without advance notice reassigns civil actions to U.S. District Judges throughout the nation to serve as visiting judges. In the absence of Magistrate Judge consent, this action is subject to reassignment to a U.S. District Judge from inside or outside the Eastern District of California.¹

 

Secrecy Stipulations

One decision which illustrates the point came in the non-catastrophic claims case of Cabrera v. Government Employees Insurance Co.² That case involved an alleged class action against Government Employees Insurance Co. (“GEICO”) and Bell, LLC (“Bell”). The substantive claims consisted of alleged violations of the Telephone Consumer Protection Act.

    The defendant Bell objected to certain discovery with this trade secrets objection:

    Defendant's processes are proprietary processes that have independent commercial value and are not generally known. They are trade secrets.³

    The Court overruled these “summary statements.” These objections were held insufficient both to establish confidentiality and to demonstrate that disclosure would be harmful, which are the twin burdens of proof in successfully establishing a trade secrets objection.⁴

    Even though this ruling is squarely in the mainstream of discovery law which requires trade secrets and other objections to be stated with particularity,⁵ and when necessary to be established by proof such as the trade secrets objection, this is not the norm of legal rulings followed by courts in cases with secrecy stipulations filed by the parties.

    This set of cases is illustrated by the decision of a Federal Court in North Carolina in a case in which the Federal Deposit Insurance Corporation sued former executives of one Cooperative Bank for making bad loans. In that case, the Court sealed the evidence against the executives. This prompted much commentary on the Court's actions in that case, including this observation:

    The F.D.I.C. complaint made accusations that certainly sounded as if there were some bad faith. It said officers of the bank regularly ignored the bank's own lending rules and ignored repeated warnings from state and federal bank examiners. It said the board made no effort to force the bank officers to abide by the bank's own rules, let alone comply with the examiner's recommendations.

    So what facts indicated there was no bad faith? That is hard to tell. The judge sealed many documents, including the F.D.I.C.'s arguments against the summary judgment.⁶

    The Court in this case based its secrecy order, first, on the fact that the several motions under consideration filed by the parties requesting that the records be sealed, were each and all unopposed in that case and, second, on “the May 21, 2013 Amended Stipulated Protective Order and Non-Waiver Agreement [DE 71].”⁷Remarkably, the order does not refer to Federal Rule of Civil Procedure 26 which governs requests for a protective order including requests to seal things on file from disclosure to non-parties.

    Although the amended stipulation referenced in the order does refer to Rule 26,⁸ the Rule contains no provision for parties to a lawsuit to alter its requirements. The record of this case reveals that the procedures of Rule 26 were simply not followed in this case when it came time to seal the evidence. The available record does not reflect “good cause” shown by any party “to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense.”⁹ Rule 26 does not provide that a party or person who might be annoyed, embarrassed, oppressed, or burdened by discovery or disclosure in Federal civil litigation is entitled to a protective order sealing the proceedings just because the party or person says so. They have to prove it. That is their burden.¹⁰

    Except in cases involving secrecy stipulations, it appears.

 

Settlement Stipulations

In other cases, parties try to provide by agreement what they could not obtain by litigation. The most glaring example is in the recent attempts by defendants to write and propose settlement stipulations for class actions that attempt to dispense with the requirements of class actions, and which will stand as res judicata determinations of those requirements if the same allegations are raised in other cases against the defendants.

    Class action settlement stipulations of this kind are often found, for example, in lender force-placed insurance cases. These are a class of catastrophic claims unto themselves, more or less, or so it appears to defendants confronted by these alleged class actions.

    In one such case in 2014, the defendants in Fladell, et al., Plaintiffs v. Wells Fargo Bank, N.A., et al., Defendants¹¹ argued against class certification before they were in favor of it.

Within two months after the defendants filed their objections to class certification, the defendants settled the Fladell case. The defendants successfully urged the Federal Judge in that case to approve the settlement agreement and thereby approve, ostensibly for “settlement purposes” but in reality for res judicata purposes, more claims classes than the plaintiffs themselves asked the Court in that case to certify.

    The fact of settlement negotiations was used in defense in other cases by the Fladell defendants before their settlement stipulation was executed and approved in that case. The defendants argued in these other cases that the plaintiffs in those other lender force-placed insurance cases should have to prove that their cases are not included in the settlement in Florida.

    Apparently the parties in Fladell began talking about a national class action settlement as early as February, 2014. “On February 3, 2014 the parties in Fladell reached a settlement in principle,” anticipating a motion for preliminary approval of their class action settlement in March. A little over two weeks later, a Federal Court stayed an alleged LFPI class action involving California homeowners. The ground for the California Court's Order was that a settlement in Florida in Fladell might preclude the LFPI class action alleged in the complaint which was filed in California in October, 2013.¹²

    To date, this is the third of three known cases involving a defense that lender force-placed insurance claims are precluded by a class action settlement of LFPI practices in Florida in Fladell. The proceedings in the Ursomano case in California paralleled the developments in both of these other cases. Ursomano contained both a request for a stay and, later, a dismissal.

    The proceedings are instructive. First, as noted, the California Court granted the defendants' motion to stay because the Court was informed that the issues and allegations may be the same in Ursomano as in Fladell.(They arguably were not the same at all, but the Court was informed that they were. “It appears undisputed that the issues and putative classes are effectively the same in Fladell and Ursomano.”¹³)

    Even though the Court was under the impression that the issues were the same in both cases, the Court nonetheless stated that it recognized its duty, if and when a settlement agreement was actually written in Fladell, to “determine whether the terms release Defendants from liability from claims asserted herein and whether Plaintiffs and the putative classes are covered by the Fladell class.”¹⁴

    That review does not appear to have happened.

    The Fladell case was settled, but a close review of the Ursomano Court File on PACER (“Public Access to Court Electronic Records”) does not show that anyone reviewed the terms of the Florida settlement agreement to see whether the terms release the same defendants from liability from claims asserted in California and whether the California plaintiffs and the Ursomano putative classes are covered by the Fladell case.

    The District Judge who wrote the February opinion in Ursomano was reassigned and another District Judge took his place. The new Judge ordered all parties to notify him if and when the Fladell case was settled. On October 29, 2014—the same date on which the Florida Court gave its final approval to the Fladell settlement¹⁵—the parties in California filed their joint “Statement Regarding Settlement” informing the Federal Court in California that the parties in Florida “have drafted a settlement agreement” and were then having it signed.

    The parties in Ursomano filed something other than a certification concerning the Florida settlement, however. Within two weeks, they filed their joint Stipulation of Voluntary Dismissal on November 12, 2014. They did not address whether the claims or classes alleged in California were the same or similar as those alleged in Florida. However, they did point out to the Federal Court that their alleged classes were never certified in Ursomano. The plaintiffs were careful to obtain the defendants' agreement that “the parties have reached a settlement of Plaintiffs' individual claims against Defendants in which the Plaintiffs' individual claims will be dismissed with prejudice and the members of any putative class will be dismissed without prejudice,” and, moreover, that while all of the individual claims were settled and should be dismissed with prejudice, under this stipulation “[a]ll claims and allegations of any putative class members are hereby dismissed without prejudice.” [Emphases added.]¹⁶

    The Ursomano Court approved this Stipulation in a text-only entry on November 13, 2014, available only on PACER:

Order by Hon. James Donato granting 74 Stipulation of Voluntary Dismissal. Pursuant to the parties' stipulation, the Court dismisses this action with prejudice as to Mr. Canonico, Ms. Canonico and Mr. Ursomano and without prejudice as to the putative class. The putative class members retain all claims and causes of action, if any, against defendants. (This is a text-only entry. There is no document associated with this entry.) (jdlc1S, COURT STAFF) (Filed on 11/13/2014) (Entered: 11/13/2014)

To be continued on Thursday, November 29, 2018.  All the footnote citations will be reprinted in that final installment.

The above reprint from the book, Catastrophe Claims:  Insurance Coverage for Natural and Man-Made Disasters, is with the permission of Thomson Reuters West, the publisher, and Dennis J. Wall, the author of this selection.  This selection, Section 2:19 (2018, Thomson Reuters), is reprinted here in its entirety with permission of Thomson Reuters.  Any further reproduction without the consent of the publisher is expressly prohibited.

WEDNESDAY: BORDER PATROL FACES MINIMAL RISKS. THURSDAY: "DEADLY FORCE" AUTHORIZED.

On Wednesday morning, November 21, newspapers reported on a "border intelligence analysis" conducted by the United States Customs and Border Protection agency.  The analysis is dated November 17.  In it, the CBP concluded that the border patrol faces "minimal" risks at the border.  See, e.g., Ron Nixon, Helen Cooper, and Thomas Gibbons-Neff, Homeland Security Finds Risk to Border Agents is "Minimal", N.Y. TIMES, Nov. 21, 2018 (subscription may be required by The New York Times).

    The next day, November 22, was Thanksgiving.  Newspapers reported that earlier in the week John Kelly authorized James Mattis to authorize the Army to use deadly force.  And also to "detain" and to search people.  (This is not what law enforcement does, Mr. Mattis said.  If this is law enforcement, the Army could not do it.  Also, it would be against the law to order the Army to do it.)  See, e.g., Robert Burns, Mattis Says He Has Extra Authority to Use Military on Border, AP, report by the Associated Press dated November 21, 2018.

    Seems contradictory, doesn't it?  That's because it is contradictory.

    Remember the context here.  Remembering the context can be hard especially when the corporate media transcribes press releases and prints them as news.

    A long time ago -- say a couple of weeks -- the current administration wanted to show force on the border as a way to assist their candidates before the recent midterm election.  Mr. Mattis famously said that the Defense Department does not "do stunts."

    Then came the November 17 Customs and Border Protection border intelligence analysis that its own border agents faced what the CBP called minimal risk.  (Regardless of when the CBP's analysis was reported out to us, the administration knew then of course.)

    Obviously aware of the CBP analysis, a "memo" was signed by former marine four-star general John Kelly on Tuesday, November 20.  Mr. Kelly is now this administration's chief of staff.  (We did not know he was still somewhere in the military's chain of command, but obviously he is and we can count on him staying in the chain of command in the future.)  As noted, Mr. Kelly's memo authorized Mr. Mattis, another former marine four-star general, to authorize the Army to search people, take them into custody, and even to kill them.  Inside the United States.

    These things are actually not contradictory when you put them in context.  The Nov. 20 memo came about because of the Nov. 17 border intelligence analysis.

    Back to the reports, not the newspaper reports from the corporate media, but the reports written by the administration's own people.  CBP says there's a minimal risk to its own agents.  Who carry guns, by the way.  Seems like there is no security necessity for the Army to do any of the things ranging from searching people to taking people into custody to killing people.  (None of which is a law enforcement activity according to their commanding ex-general.)

    You might say that we are supposed to believe "fake news," not what the newspapers said but what the federal government wrote in a memo.  Between the memo and the border intelligence analysis conducted by the agency responsible for border intelligence, I go with the analysis, don't you?

Please Read The Disclaimer.  ©2018 Dennis J. Wall.  All Rights Reserved.

"CLAIMS HANDLING PRACTICES ISSUES BY MORTGAGEES IN CATASTROPHE CLAIMS"

HAPPY THANKSGIVING!  GIVE THANKS THIS YEAR BY GIVING!

The following reprint from the book, Catastrophe Claims:  Insurance Coverage for Natural and Man-Made Disasters, is with the permission of Thomson Reuters West, the publisher, and Dennis J. Wall, the author.  This selection, Section 2:18 (2018, Thomson Reuters), is reprinted here with permission of Thomson Reuters.  Any further reproduction without the consent of the publisher is expressly prohibited.

Note:  Access to hyperlinked citations are restricted by Thomson Reuters West in this publication; subscription may be required by Thomson Reuters West to access the hyperlinked citations that appear below.

Cat Claims: Insurance Coverage for Natural and Man-Made Disasters § 2:18

Catastrophe Claims: Insurance Coverage for Natural and Man-Made Disasters

 | 

November 2018 Update

Chapter 2. Claim Handling Issues

by Dennis J. Wall, Esquire

• 2:18. Claims handling practices issues by mortgagees in catastrophe claims

There is a constant issue in the current handling of catastrophe claims: Whether the loss proceeds paid by a first-party insurance carrier can be deposited by the mortgagee for any reason it deems sufficient, or whether the loss proceeds should be applied to restoration or repair of the property? Resolving this issue depends on whether restoration or repair of the mortgaged property “is economically feasible and Lender's security is not lessened.”

    The standard language of the UNIFORM INSTRUMENT approved by Fannie Mae and Freddie Mac for Single-Family homes in Florida is representative of the same standard language found in mortgages across the United States. Paragraph 5 of the Florida uniform mortgage form addresses this issue. The language generally relied on by Lenders to support their right to hold the insurance proceeds for use as they deem appropriate, whether or not the property is restored or repaired, is as follows:

Unless Lender and Borrower otherwise agree in writing, any insurance proceeds, whether or not the underlying insurance was required by Lender, shall be applied to restoration or repair of the Property, if the restoration or repair is economically feasible and Lender's security is not lessened.¹

Exactly the same language was at issue in Alvarez-Mejia v. Bellissimo Properties, LLC, a 2016 2-to-1 decision by a panel of Florida's Third District Court of Appeal in an appeal from the entry of summary judgment for Bellissimo, a defendant and a mortgagee.²

    The legal issue was whether repair of Ms. Alvarez-Mejia's home was or was not “economically feasible” using the proceeds of her homeowner's policy after a loss from fire. The term, “economically feasible,” is not defined in the Uniform Mortgage Instrument, and of course it was not defined in the mortgage at bar, either. That was the key to the outcome.

    The plaintiff homeowner put on evidence through her affidavit “that it is economically feasible to repair the property because the value of the property with repairs will be significantly greater than the outstanding balance of the mortgage.”³ The mortgagee-movant Bellissimo did not put on any proof otherwise at or after it filed its motion for summary judgment. It “did not provide an estimate of the value of the property after repairs, and therefore did not meet its burden of proof that no genuine issue of material fact exists.”⁴

    On this record, where the plaintiff homeowner put on evidence but the defendant did not, it is open to question whether there would have been a different result if the plaintiff had been the one who filed the motion for summary judgment, all other things being equal.⁵

    The Alvarez-Mejia case was seen in a significantly different way by the dissenting judge. He expressed his own opinion on whether it was “economically feasible” to restore or repair Ms. Alvarez-Mejia's home, which was that “I believe it is not ‘economically reasonable’ or ‘practicable’ to do so.”⁶ To say again, the legal issue was whether the restoration or repair was “economically feasible” under the quoted mortgage provision; the words, “economically reasonable” or “practicable” reflect the interpretation that the dissenting judge substituted for that term.

    On the law of what is “economically feasible” as used in paragraph 5 of this standard mortgage, the dissenting judge honestly reported that “[e]lectronically assisted research of all federal and state case law discloses just one case where a court has attempted to define the phrase.” That was the case of Vongohren v. Citimortgage, Inc., an unreported decision by a federal judge in Maryland, also decided in 2016.⁷ It has been cited by only one judge since then, and that is the dissenting judge in Alvarez-Mejia.⁸

    Both the dissenting state court judge and the federal judge were impressed with the fact that the borrowers before them were in default on their mortgage loans. The dissenting state court judge wrote that he “would find this alone is sufficient, as a matter of law, to make repair economically unfeasible in this case.”⁹ Although the federal judge observed for his part that being in default may standing alone be sufficient “as a matter of law, to make repair economically infeasible,”¹⁰ he ruled instead on the facts in his case. Those facts involved a flood loss “as a result of a recent hurricane” after the borrowers abandoned the Maryland property and moved to Texas, then moved back to Maryland “on the advice of a lawyer litigating class action claims against Citi,” leaving the property unsecured and so susceptible to vandals and squatters (apparently while they were in Texas, but the opinion is not entirely clear on this point), cancelling property insurance on the property, and telling Citimortgage that they were waiting to be foreclosed “so they could ‘sue the company'[.]”¹¹

    On the facts in Alvarez-Mejia, the dissenting judge would have held the homeowner's affidavit inadmissible as to the value of her home after repairs.¹² The dissenting judge did not address it, but there is long-standing case law in Florida that a homeowner's opinion as to the value of her property is admissible.¹³

    The question of whether the Lender's security is lessened, which is the second element if you will of the above-quoted Uniform Instrument paragraph 5, was not addressed by the majority but it was addressed by the dissent in Alvarez-Mejia. The dissenting judge was of the view that not only was it “economically infeasible” to restore or repair Ms. Alvarez-Mejia's home, but to repair it would also lessen Bellissimo's security. As the dissenting judge put it:

As to the second ground, we only need to acknowledge that the insurance proceeds, when granted by the insurer, become part of the security for the loan. Accordingly, an expenditure for restoration or repair of a property which ends with a property value less than the amount expended constitutes, a fortiori, a “lessening” of the lender's security.¹⁴

Assuming that it is legally correct that insurance proceeds become part of the security for the loan,¹⁵ the mortgage loan document itself provides what happens when the Lender's security is lessened and when repairs are not economically feasible.

    In another part of paragraph 5 of the Uniform Instrument which was quoted both by the majority and the dissent, but which was not addressed by either, the mortgage agreement expressly provides for what is supposed to happen to insurance proceeds after a loss, i.e., how insurance proceeds paid on account of a loss to the mortgage property are to be applied:

If the restoration or repair is not economically feasible or Lender's security would be lessened, the insurance proceeds shall be applied to the sums secured by this Security Instrument, whether or not then due, with the excess, if any, paid to Borrower.¹⁶

Under this language found later on in the same paragraph 5, after the previously quoted language from that paragraph that Lenders tend to rely on, whether it is the case that restoration or repair is not economically feasible or that the Lender's security would be lessened, then the insurance proceeds shall be applied to the sums secured by the mortgage, i.e., to the mortgagor's payment obligations under the mortgage. If there is any excess, then by the same express terms of the mortgage any excess is to be paid to the Borrower. This language is not hard to understand.

    But to say again, it was not addressed either by the majority or by the dissent in Alvarez-Mejia.

    In sum of both decisions, Alvarez-Mejia and Vongohren, there is one issue that divides the decisions in both cases. It is the question of whether restoration or repair that increases the value of a property after a loss, but increases the value to a point that is less than the amount of the repairs, can ever be restoration or repair that is “economically feasible.” In both cases, the courts viewed this as a matter open to summary judgment, as a question of material fact. The difference between the majority opinion in Alvarez-Mejia and the federal judge's opinion in Vongohren, may ultimately turn on whether they would allow juries to decide if it is “economically feasible” to restore or repair property when the costs of the repair exceed the resulting value of the property.

    The majority in the state court case was willing to allow the possibility that a jury could determine that repair of the property that increases “the value of the property with repairs will be significantly greater than the outstanding balance of the mortgage.”¹⁷

    The federal judge, on the other hand, equated the position of the property as the Lender's collateral, as “security” for the mortgage loan, with “Citi's security interest” in the property. Citi won the day because it commissioned a Broker's Price Opinion or “BPO” that “shows that the economic loss of repairs to Citi's collateral” was within a range of several thousand dollars, an estimate which the borrowers did not dispute. “Therefore, forcing Citi to repair the property would lessen the value of Citi's security interest in the property[.]”¹⁸

    So, there you have it. Is a home collateral to protect a lender's right to be repaid under the terms of the mortgage loan? Or is a home instead a springboard for the lender to be paid amounts that are not set forth in the mortgage contract, like the increase in value of a home after repairs rather than simply the balance remaining on the mortgage? The different answers to those two questions go a long way toward explaining the difference between the Alvarez-Mejia decision and the Vongorhen decision.

Westlaw. © 2018 Thomson Reuters. No Claim to Orig. U.S. Govt. Works.

Footnotes

1

Paragraph 5 of Fannie Mae/Freddie Mac Form 3010 01/01 FLORIDA--Single Family at page 7 (emphasis added).

2

Alvarez-Mejia v. Bellissimo Prop's, LLC, 208 So. 3d 797 (Fla. 3d DCA 2016). Paragraph 5 of Ms. Lily Alvarez-Mejia's mortgage is identical to paragraph 5 of the Uniform Mortgage Instrument quoted in the text. See Alvarez-Mejia, 208 So. 3d at 798.

    Belissimo also “withheld the insurance proceeds” pursuant to section 11 of the mortgage. The majority mentioned this once, as a fact, and then never mentioned it again, nor did they ever quote it. Alvarez-Mejia, 208 So. 3d at 798. The dissenting judge neither quoted nor mentioned paragraph 11 of the mortgage, at all.

    Paragraph 11 of the UNIFORM INSTRUMENT relates to “Assignment of Miscellaneous Proceeds; Forfeiture.” Paragraph 11 of Fannie Mae/Freddie Mac Form 3010 01/01 FLORIDA--Single Family at page 10 (boldface in original). Paragraph 5 of the UNIFORM INSTRUMENT, titled “Property Insurance,” was the provision which contained the language at issue in the case.

3

Alvarez-Mejia, 208 So. 3d at 799.

4

Alvarez-Mejia, 208 So. 3d at 799.

5

But in this case “a genuine issue of material fact exists as to the cost of repairs to the property.” Alvarez-Mejia,208 So. 3d at 799.

6

Alvarez-Mejia, 208 So. 3d at 800 (Shepherd, J., dissenting).

7

Vongohoren v. Citimortgage, Inc., No. JFM-14-3549, 2016 WL 739070 (D. Md. February 25, 2016).

8

Alvarez-Mejia, 208 So. 3d at 800 (Shepherd, J., dissenting).

9

Alvarez-Mejia, 208 So. 3d at 802 (Shepherd, J., dissenting).

10

Vongohoren v. Citimortgage, Inc., 2016 WL 739070, at *4.

11

Vongohoren v. Citimortgage, Inc., 2016 WL 739070, at *2, *5.

12

Alvarez-Mejia, 208 So. 3d at 801 (Shepherd, J., dissenting).

13

See 1 Dennis J. Wall, Litigation and Prevention of Insurer Bad Faith § 8:17, tiled “Experts in third-party insurance bad faith cases: Specific cases and general rules,” at page 289 of 2018 Supplement (Thomson Reuters 3d edition 2011, 2019 Supplement in progress).

14

Alvarez-Mejia, 208 So. 3d at 802 (Shepherd, J., dissenting).

15

There may be good authority for that proposition. The dissent, however, did not cite any and none has yet been found independently. On the contrary, a part of paragraph 5 of the UNIFORM INSTRUMENT and of Ms. Alvarez-Mejia's mortgage reflects clearly that insurance proceeds never become part of the Lender's “security” if it is not economically feasible to restore or repair the property and the Lender's security is not lessened:

If the restoration or repair is not economically feasible or Lender's security would be lessened, the insurance proceeds shall be applied to the sums secured by this Security Instrument, whether or not then due, with the excess, if any, paid to Borrower. Such insurance proceeds shall be applied in the order provided for in Section 2.

Paragraph 5 of Fannie Mae/Freddie Mac Form 3010 01/01 FLORIDA--Single Family at page 7 (emphasis added).

16

Paragraph 5 of Fannie Mae/Freddie Mac Form 3010 01/01 FLORIDA--Single Family at page 7 (emphasis added).

17

Alvarez-Mejia, 208 So. 3d at 799 (emphasis added).

18

Vongohren, 2016 WL 739070, at *5 (emphasis added).

The above reprint from the book, Catastrophe Claims:  Insurance Coverage for Natural and Man-Made Disasters, is with the permission of Thomson Reuters West, the publisher, and Dennis J. Wall, the author.  This selection, Section 2:18 (2018, Thomson Reuters), is reprinted here in its entirety with permission of Thomson Reuters.  Any further reproduction without the consent of the publisher is expressly prohibited.

WHEN I OBSERVED THE VOTE RECOUNT IN SEMINOLE COUNTY ...

It didn't look like this:

   Vote recount in Broward County (AP Photo/Brynn Anderson).

Or like this:

   Orange County, Florida Vote Recount (Jacob Langston/Orlando Sentinel)

Instead it looked like the principal's office in my junior high school (now probably called middle school).  Cramped but ready for business.

At least they can say they tried to count everyone's vote.  And that's better than you can get in many other States.  We're not pointing fingers, but we in Florida are looking at States to the North of us!

Please Read The Disclaimer.  ©2018 Dennis J. Wall.  All Rights Reserved.

"I WOULD GET ON MY KNEES AND BEG."

You who are reading this probably don't have to get on your knees and beg.  Instead, Comment by 12.10.18.

HAPPY THANKSGIVING, THIS WEEK AND ALWAYS!

A person fleeing from Nicaragua wants a chance to tell her story of oppression, why she and her family are good candidates for asylum in the United States of America.  Ms. Idenia Rocha, as reported by CBS News, appealed directly to President Donald J. Trump, and said:

I would get on my knees and beg.

Don't send us back.  We're walking and scared. You say you will militarize the border but I pray to God that with our evidence of persecution you won't send us back. I fear for my family's life. Please Mr. Trump, open the doors for us, I beg you.

   Idenia Rocha from Nicaragua.  CBS NEWS.

As you are reading this, you probably don't have to get on your knees.

You don't have to beg.

You just have to give thanks.  And act with fairness.

You can leave a Comment on rules proposed by the Department of Homeland Security to redefine what it means to be a "Public Charge" so harshly that fewer people in need could qualify for admission.  See the proposed rule and leave your Comment here by December 10, 2018, or at https://www.federalregister.gov/documents/2018/10/10/2018-21106/inadmissibility-on-public-charge-grounds.

Please Read The Disclaimer.  ©2018 Dennis J. Wall.  All Rights Reserved. 

SHOUTS FAKE "FRAUD!" EXCEPT WHEN HE WINS THE ELECTION.

Rick Scott is one of many politicians who spent millions of their own dollars to get elected only to claim "fraud" when maybe they did not win the election.

And if they do win the election, it's not "fraud" any more if you pay attention to them.

Real "fraud" is when a company defrauds veterans and seniors of their Medicaid and Medicare money and pleads guilty to doing it.   Amy Sherman, PolitiFact: Did Rick Scott Invoke the Fifth Amendment 75 Times? (Tampa Bay Times Online June 22, 2014), at http://www.tampabay.com/news/politics/national/politifact-did-rick-scott-invoke-the-fifth-amendment-75-times/2185493.

How long can this nonsense go on?  Not long.

  (Handout Photo / Sun Sentinel)

Please Read The Disclaimer.  ©2018 Dennis J. Wall.  All Rights Reserved.

 

FORCE-PLACED INSURANCE ISN'T DEAD. IT ISN'T EVEN PAST.

Lender force-placed insurance practices are alive and well.  Cases decided in 2018 tell the tale.  See, e.g., Wieck v. CIT Bank, N.A., No. 16-00596 JMS-RLP, 2018 WL 5779485 (D. Haw. November 2, 2018), and Wieck v. CIT Group, Inc., 308 F. Supp. 3d 1093 (D. Haw. March 30, 2018) (case involves alleged lender force-placed insurance practices from November, 2016 as well as earlier dates); Iaffaldano v. Sunwest Mortgage Co., No. 2:17-CV-14222-ROSENBERG/HOPKINS, 2018 WL 310050 (S.D. Fla. January 4, 2018) (practices alleged as of August, 2014).

And as of today, no lender force-placed insurance case has been found that has ever gone to trial on LFPI claims.

Lender force-placed insurance practices aren't dead.  They aren't even past, to rephrase Mr. William Faulkner to match contemporary LFPI practices.

Please Read The Disclaimer.  ©2018 Dennis J. Wall.  All Rights Reserved.

FIRST FAKE NEWS, NOW FAKE ATTORNEY GENERAL. STAY TUNED.

First fake news, now a fake attorney general.  See Neal K. Katyal and George T. Conway III, Trump’s Appointment of the Acting Attorney General Is Unconstitutional (New York Times Online, Nov. 8, 2018; the New York Times may require a subscription to access), at https://www.nytimes.com/2018/11/08/opinion/trump-attorney-general-sessions-unconstitutional.html?action=click&module=Opinion&pgtype=Homepage.

Stay tuned.  More undoubtedly to come.

Please Read The Disclaimer.  ©2018 Dennis J. Wall.  All Rights Reserved.

 

 

"This is What Democracy Looks Like" Orlando 11.08.18.

This video literally speaks for itself.  "This is What Democracy Looks Like" Orlando 11.08.18, an (amateur) news video by Dennis Wall, available to you here.   

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