B. Lane Hassler, P.C. attorney at law in Chicago and New York

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B. LANE HASLER, P.C. LEGAL NEWS - 2018

April 2018

Horse Board Contracts - Good Ones and Bad Ones

Every horse needs a home. For all but the fortunate few equestrians who own a barn, this means boarding and that means signing a board contract.

Finding a good barn is more than just its proximity to your home; the quality of the arenas and footing; or the overall ambiance. A fair board contract should be part of the decision-making process.

A well-run barn with competent management will have a properly written board contract that provides a clear statement of what is being provided for the monthly fee and the relative rights and obligations of the barn owner, manager and the owner. They also will be receptive to comments to their board contract and not respond that it is "Standard" or "Non-Negotiable". Such negative responses are a sign of trouble to come and a strong indication that you should find another barn.

A good board contract will have the following basic sections:

Identity of the Parties:  There are up to four potential parties to a board contract. The Owner of the barn ("Barn Owner"); the barn Manager ("Manager"); the Owner of the horse ("Owner"); and a lessee of the horse ("Lessee"). The contract should identify each of these parties and provide full contact information, including mobile telephone numbers since equestrian activities often require immediate communication. If there is a Lessee, then that person should be the one signing the board contract, but the Owner should be referenced in appropriate sections affecting the horse and given notice by the Barn Owner or Manager of actions under the board contact that affect the Owner. Be careful of contracts that use definitions for the parties such as "Stable" or "Owner" because this can lead to unexpected results when the wrong definition is used in a particular provision of the contract. Either use a short hand of the actual name (for example, High Point Farm LLC would be High Point) or take the time to check each use of a defined term by saying the actual name when reading the provision.

Identity of the Horse:  There should be a separate contract for each horse. This avoids confusion where there are different Lessees for an Owner's horses.

Description of the Services and Goods Provided:  There should be a specific description of what is included in the monthly flat rate and the cost of any additional services. For example, does the flat rate include a specific stall location, bedding and what type, feed and how often and what type, fly protection system, turnout, how many times and where, and stall cleaning how many times a day, and whether there are assigned lockers and tack room locations. There should be a clear statement regarding how extra services are ordered. For example, must written approval be given in advance.

Description of Care for the Horse:  The Barn Owner should agree to provide the customary care for the horse as is provided by a prudent horse Owner. There may be a provision requiring the Owner or Lessee, as the case may be, to provide the required veterinary, dental and farrier care. The Barn Owner and Manager will require authorization to provide for emergency care to the horse with an obligation to contact the Owner and Lessee, if there is one, as soon as is possible. The Owner should identify, in the board contract, whether medical care for colic or other life-threatening illness should be provided without prior authorization. This is an example of something that a Lessee should confirm with the Owner prior to signing the board contract.

Payments and Bills:  The amount of the monthly bill and the per event cost of extras should be clearly stated including whether this amount may change annually and if so, how that is documented. It is customary for a one-month security deposit, which should be held in a segregated account and not in the Barn Owner's general account, where it could be spent by the Barn Owner or taken by creditors of the Barn Owner. It should be clear when bills are issued (ie by the 5th of the month) and when they are due. While there should be a late fee and interest, this should be tempered by a 30-day grace period in case a check is lost or an Owner is temporarily out of town.

Termination:  A common source of dispute is terminating a board contract. The Barn Owner needs advance notice in order to line up a replacement horse for the stall. The Owner or Lessee needs the flexibility of being able to move if circumstances require it. A typical notice period is 30 days.

Barn Rules:  There should be an attachment to the board contract listing all barn rules including hours of operation; restrictions on dogs; requirement for protective headgear; and similar regulations. The Owner or Lessee should be allowed to terminate the contract without the 30 days-notice if the barn rules change.

Stablekeeper's Lien:  Under most state laws, the Barn Owner is given a lien on the horse in the amount of any unpaid fees. This means the Barn Owner can, after following the required notice provisions and giving the Owner time to pay, sell the horse, take what is due and give any remaining amount to the Owner. The Barn Owner may include a provision in the contract that refers to this statutory right so that the Owner is aware of it. This is another provision that the Lessee needs to bring to the Owner's attention and the Barn Owner should be required to give notice to the Owner and not just the Lessee of any stablekeeper's lien.

Hold Harmless or Release:  Under most state laws, the Barn Owner is not liable for accidents resulting from things outside of its control. Every barn has the signs citing the law. Just like the lien provision, most board contracts will include a reference to this law so Owners or Lessees, as the case may be, have signed a document confirming that they are aware of it. A hold harmless or release provision is okay if it strictly tracks the statue. If it in any way expands the release, then it may still be proper if it is mutual, meaning the Barn Owner and Manager also release the Owner and Lessee from claims arising from the Barn Owner and Manager's actions.

The "Legalese":  At the end of the contract there is usually a series of paragraphs identifying where any court action will occur which is important when the Owner is located in a different area; stating that the written contract is the entire agreement so that later there are no claims of an oral agreement that is different from the written agreement; and statement that both sides have had a chance to read the contract and have it reviewed by an attorney so that later there are no claims that a party didn't know or understand what the contract said.

Now for the cautionary tales.

A bad board contract will have the following provisions that you must demand be removed and if not, you should walk away.

Condition of the Barn:  A contract may include a provision stating that the Owner or Lessee have inspected the barn and are satisfied with its condition. This is unrealistic and unfair. No Owner or Lessee has the time or is qualified to inspect every aspect of a barn. The Barn Owner or Manager will use this provision later if there is an accident to claim the Owner or Lessee knew about the condition and accepted it.

Payments:  The monthly fixed rate can have a short grace period because it is known every month, but anything less than 14 days is unreasonable. Any extra charges should be due within 30 days of the invoice.

Rates:  If the Barn Owner changes the rate, the Owner or Lessee should be required to sign an addendum to the board contract accepting the increase. Many contracts will allow the Barn Owner or Manger to simply post on the bulletin board a rate increase.

Group Turnout:  A Barn Owner and Manager will want the convenience and low cost of turning out a bunch of horses in the same paddock. Do not agree to this because it is an invitation to disaster and one for which the Barn Owner or Manager will not be responsible if this provision is in the board contract.

Indemnification, Hold Harmless, and Releases:  These three terms all mean basically the same thing, the Barn Owner and Manager are not liable for anything. I will refer to all of them as releases.

This is usually the most harmful and improper clause in a barn contract. If there is a blanket release that has the Owner or Lessee releasing the Barn Owner and Manager from all claims, this is a deal breaker. You should refuse to do business with a Barn Owner or Manager that won't take responsibility for their own actions. Beware that such releases provisions are often snuck into various sections throughout the contract. If you see this, do not sign the contract and look for another barn.

It is never appropriate for a Barn Owner and Manager to require an Owner or Lessee to release them for their own willful misconduct or gross negligence. Such a provision would, for example, allow a Barn Owner and Manager to escape responsibility should the barn have woefully inadequate electrical service resulting in a fire.

A Barn Owner or Manager should never include a laundry list of things that they are not responsible for such as snow falling from a roof which may be the result of the Barn Owner improperly maintaining their roof. A particularly bad clause in a contract is one that has the Owner and Lessee release the Barn Owner and Manager from any claims relating to the condition of the facility such as holes in the ground or nails in fences.

Even with a limited release, a Barn Owner or Manager may stick names of other people and other companies into the release even though they aren't parties to the contract. This should be rejected.

One-Way Attorney Fee Provisions:  It is perfectly appropriate to include a provision allowing the party that has to enforce the contract to recover its attorney fees from the other party. But if the Barn Owners and Managers includes a one-way attorney fee provision giving them the right to recover attorneys’ fees but not the Owner or Lessee, then either make it mutual or take it out.

Improper Lien Provision:  Many board contracts will include a section purporting to repeat the statutory lien given to a stablekeeper on a horse. This is a trap. Barn Owners and Managers don't just repeat the statute word-for-word, instead they modify the statute by eliminating protections for the Owner such as the right to notice; the right to contest the amount of the lien; and the right to post a bond to get the horse while the parties argue about the amount owed.

Time Limitations:  Barn Owners and Managers will sneak in a sentence that shortens the time limit for Owners or Lessees to make claims. This is never proper. State law already sets a statute of limitations for claims which are based on a balancing of the need for an Owner or Lessee to discover and evaluate a claim before bringing it and protecting a Barn Owner and Manager from stale claims.

Taking Property:  Barn Owners and Managers may include a provision that any property left at the barn after the termination date immediately becomes property of the Barn Owner or Manager. This is a trick provision since the termination date may well be before the Owner or Lessee can move the horse and equipment if the Barn Owner exercises a right to immediate termination for alleged bad behavior by the Owner, Lessee or horse.

Limitation on Liability:  I saved the worst clause for last. The most unfair and inappropriate clause I've seen in a board contract is one that limits the liability of Barn Owners and Managers to an unreasonably small amount, such as $500. If the Barn Owner or Manager refuses to fix a door that then pops open and allows a horse to escape and be injured, the most the Barn Owner or Manager is liable for is $500. Even worse, if a Barn Owner or Manager or any of their employees intentionally hurts a horse then the most the Barn Owner or Manager is liable for is $500.

This is so outrageous that seeing such a clause in a board contract should cause you to stop reading right there and walk away. The mere fact that the Barn Owner and Manager would put such a clause in the contract - even if they later agree to take it out - shows they cannot be trusted, will not manage the barn properly and have no respect for the Owner or Lessee. I've seen this type of provision in a barn contract so I know there are Barn Owners and Managers out there right now taking advantage of Owners and Lessees.

A bad board contract is a sign of bad management. No matter how much you like the look and feel of a barn, and no matter how friendly and knowledgeable the Barn Owner or Manager may seem, bad management can make your time there miserable. It is far better to move on and count yourself lucky for having avoided a contract that will stick you with financial loss; make you feel powerless to demand the full benefit of your bargain; and impair the enjoyment of your horse.

March 2018

How to Collect from A Dead Person

It is difficult enough to collect money from a live person, but when an individual debtor dies - don't give up. Perversely, it actually may be quicker and easier to collect a claim through the administration of the debtor's estate.

The first step is to gather the key documents evidencing the claim. If there has already been a lawsuit that resulted in a judgment, the judgment order is all that is necessary. If there has not been a judgment order entered, then the contract, order form, shipping invoice or other documentation showing why the debtor owes money is required.

The second step is to attempt to identify a representative for the deceased debtor. This should start with an attorney, if the claim was already in the process of collection. If not, then contact a former business associate or employee to determine the next of kin contact information. If still no success, try online obituaries.

The third step is to contact the representative and to determine if a probate estate will be opened to handle the deceased debtor's liabilities. This will be a straightforward conversation if dealing with an attorney, but if contacting the next of kin, the approach should include asking if there is an attorney representing the deceased debtor's estate. Although this is a business matter, sensitivity to the personal side should not be overlooked.

The fourth step depends on whether or not there will be a probate estate opened. If the representative confirms that a probate estate will be opened, then the initial action calls for the deceased debtor's will to be filed with the court. This must be done within 30 days. Once this is done, the person named as executor in the will must file a petition to open a probate estate. If there is no will, then any heir may file a petition to open a probate estate. There is no deadline to open a probate estate, so the representative may stall and hope the creditor either goes away or fails to timely file a claim.

But what if neither the executor or any heir timely opens a probate estate or if the representative states that no probate estate will be opened? The creditor has the right to open a probate case for the deceased debtor. The creditor files a petition to open a probate case and pays the filing fee. This will generate an initial hearing date at which the creditor nominates a person to serve as personal representative of the probate estate. Typically, this is an independent person identified by the creditor's attorney who will be paid first by the creditor, who will later be reimbursed from the deceased debtor's probate assets.

This last point is important - there is a cost for a creditor to open a probate case. If the creditor is a business entity, then it must hire an attorney to appear for it. Even if the creditor is an individual, there is the probate filing fee and the need to find an independent person to serve as the estate's representative, typically for an hourly fee. The decision to proceed must be done after confirming the existence of some assets owned by the deceased debtor which are not already encumbered by another creditor.

Once a probate case is opened, the fifth step is to submit a claim. If the deceased debtor's representative is cooperative or if the creditor opened the probate estate, then the claim may be sent to the representative by certified mail. The deadline for making a claim has three parts: (1) two years from the date of death; (2) 3 months from the date that the representative sends notice of the filing of the probate case to the creditor; and (3) if no notice is sent, then 6 months from the date that the representative publishes notice of the filing of the probate case in a newspaper. The representative has 30 days to object to the claim. If the representative objects, then the claim must be filed with the probate court and a filing fee paid. If the representative is not cooperative, then there is no point in sending the claim to the representative and the creditor should skip that step and file it with the probate court (and still send a copy to the representative).

The sixth step is to monitor the case to determine when the inventory, statement of heirs, accounting and proposed closing order are filed. In order to ensure that these documents are sent to the creditor, an appearance must be filed and a filing fee paid. Otherwise, it is a matter of periodically checking the court docket.

The seventh step is to make any objections to filed documents. The inventory may not include all known assets or may not undervalue those assets. The accounting may include claims that are disputed, particularly claims by heirs or related parties. The proposed closing order may not properly calculate the exempt property or payments to creditors. If any objections are found, these must be filed with the court, which will allow the representative to respond, then conduct a hearing to resolve the objection.

As part of the seventh step, the representative may object to the claim. If this happens, then the claim is litigated in the probate court in a streamlined manner as would have occurred if the debtor had not died. The parties are each entitled to take discovery. The representative is entitled to assert defenses, both factual and legal. The probate court will conduct a hearing to determine the validity and amount of the claim.

The eighth and last step is to receive payment on the claim. This will occur prior to the order closing the probate case, so if payment has not been received, an objection to closing the case must be filed.

The steps to collecting from a deceased debtor are tedious, but not impossible. The process can actually be quicker and cheaper than if the creditor was to proceed in "regular" court. So, all is not lost when a debtor dies - a determined creditor can still get paid.

February 2018

How to Respond to A Citation to Discover Assets

So a judgment was entered against you, and you received a document entitled "Citation to Discover Assets".

You probably know about the judgment, since the complaint that started the lawsuit had to have been served on you.

However, if it was not served on you, that is a potential defense. No service, no jurisdiction for the court to enter a judgment against you. You need to hire an attorney and attack the judgment.

But more likely than not you were served and either litigated and lost or ignored the service and a "default" judgment was entered against you because you did not appear and defend yourself.

If you litigated and lost, you likely had an attorney and that attorney should have already advised you about post-judgment actions such as a motion to reconsider, motion to set aside or appeal. But if you did the litigation yourself ("pro se") or if you didn't defend in the litigation, and you are within 30 days of the date of the judgment then you need to hire an attorney immediately to see if you have any post-judgment options. The deadlines are firm - miss them and even if you have a valid post-judgment remedy you won't be able to use it.

All of the foregoing analysis is necessary before dealing with the citation to discover assets. Illinois is unique in having a statute, 735 ILCS 1402, that allows a judgment creditor to both obtain a lien against the personal property of a judgment debtor and compel the judgment debtor to provide documents and appear for examination about the judgment debtor's assets.

The statute allows a judgment creditor to have a citation to discover assets is issued by the clerk of the court. This is typically done using a form on the clerk's website. The service by the judgment creditor of the issued citation on the judgment debtor creates a lien in favor of the judgment creditor on all of the judgment debtor's non-exempt personal property. At this point, the judgment debtor is prohibited from using any non-exempt property and violation of the citation lien can result in the responsible person being found contempt of court. This means the judgment debtor if an individual, but also includes the person in control of an entity if the judgment debtor is a corporation, limited liability company or partnership.

The judgment debtor now needs an attorney to first determine what property is exempt and can be used pending a review of the citation to discover assets. Illinois has a list of personal property that is exempt from creditors. If the judgment debtor needs to use non-exempt property, then the judgment debtor must ask the court for permission and show how the use of that non-exempt property won't hurt the judgment creditor. For example, a judgment debtor that is a business may need to use cash to pay employees so work in process may be completed thereby generating accounts receivable that exceed the amount of cash used thereby improving the judgment creditor's position.

Simultaneously with determining the exempt property and the need to use non-exempt property, the judgment debtor's attorney needs to review the citation to discover assets to determine if it has any defects that would allow it to be "quashed" (ie terminated).

A motion to quash a citation avoids the immediate need for the judgment debtor to turnover financial records and appear for examination.

The judgment creditor can always fix the defects and issue a new citation, but during the time that the citation is being challenged, the judgment debtor has an opportunity to do three things. First, get a clear understanding of all options, including a bankruptcy filing. Second, create a plan to sell assets or borrow money to create a settlement fund. Third, create and negotiate a settlement of the judgment.

A citation to discover assets is a very powerful tool for a judgment creditor, but all is not lost for the judgment debtor if an attorney skilled in collection law is hired quickly before the expiration of deadlines or entry of further orders enforcing the citation to discover assets.

January 2018

Trees

A tree can be a beautiful feature in your landscaping. It can also be the subject of litigation.

Typical tree cases arise from: 1) a neighbor cutting a tree hanging over the property line; 2) a neighbor crossing the property line to cut a tree; 3) a tree company mistake while caring for a tree; 4) a contractor working on a building harming a tree; 5) a government agency or utility trimming a tree; or 6) a tree falling on a neighbor's property. In resolving these cases, the common breach of contract and injury laws are supplemented by an established body of law regarding trees.

Since a mature tree can add tens of thousands of dollars to the value of a home and be practically irreplaceable, having an attorney experienced in tree-law is essential. If there is an insurance company involved, then it is even more important. So, if your tree was harmed, you may have a claim for damages or conversely you may be liable for damages if your tree harmed a neighbor.

I have had the unique experience of handling tree cases for homeowners and businesses.

The first common issue in these situations is whose the owner of the tree? A tree belongs to owner of the land where the majority of the trunk is located. The location of branches and roots are irrelevant. In rare cases, a tree is jointly owned, typically where it is impossible to determine the exact lot line. The fact that a neighbor enjoys the shade, soil stabilization or ambiance of the tree does not give that neighbor any rights to the tree. Conversely, the neighbor may not force the removal of a tree that is unsightly to the neighbor or sheds leaves, nuts or fruit on his property. The only thing a neighbor may do is trim branches that are over the neighbor's property, but must do so in a reasonable manner and not in such a way as to damage the tree.

However, governments and utilities have what are known as "easement rights" to the borders of property. This includes the right to trim a tree reasonably deemed to interfere with utility lines or roadways. This can be done without notice to the landowner. There is no right to cut down an entire tree without either the landowner's consent or an order of the appropriate regulatory commission or a court.

The second common issue is what is my tree worth? You see the loss in property value and even emotional distress while the other side sees raw wood. The relationship of the tree to the property governs the applicable measure of damages.

The first relationship is a significant landscaping element where the tree is part of the overall esthetic of the property. For example, a large shade tree in the front yard of a home. Here, Court's typically award a diminution in value damage. The primary witnesses for both sides will be real estate appraisers who will testify as to the impact on the home's value from the removal of the tree.

A second relationship is general landscaping element. For example, a row of medium growth trees along the side or back of a building. Here Court's typically award replacement value. The primary witnesses for both sides will be landscaping companies who will testify as to the cost for replacing the tree. The difficulty in this measure of damages is where the tree is larger than what is customarily stocked in a nursery. A Court may be reluctant to award the actual cost of replacement, but instead use a hybrid of awarding both the cost of replacement for the largest stock tree plus a diminution in value due to the tree not being the same as the one damaged. Courts also will not award restoration damages that are more expensive than the value of the entire property. This is considered economic waste.

The last relationship is that of a crop or woodland. Here, Courts typically award the lumber value of the tree. The primary experts for both sides will be timber buyers.

In determining damages, Courts have often focused on whether the damage was intentional, negligent or innocent. Evidence relevant to which applies includes whether the responsible party pulled a survey, if that survey was wrong, if they thought they had permission and how that permission was documented and whether they sought advice from an attorney.

Many states have statutory damage laws if the tree was removed without permission of the landowner. These statutes assess either a per tree penalty or a multiplication of the damages. Certain statutes also award attorney fees and costs.

Any of the three measures of damages may be supplemented by enhanced or punitive damages. This is limited to cases of intentional harm to a tree, for example a neighbor that poisons a fruit tree on the property line because it was dropping fruit in his yard.

Finally, some states have statutes making it a criminal offense to willfully damage a tree. While this is important for a responsible party to know, it will not play a part in any civil action due to ethics rules that prohibit the use of potential criminal penalties in civil cases.

One area of damages not discussed here is emotional damages. The law of intentional and negligent infliction of emotional distress is very complex and beyond the scope of this article. But under the right circumstances, a claim for emotional damages could be made due to damage to a tree.

Owning a tree gives the right to damages, as has been discussed so far. But it also imposes responsibilities. A landowner must provide reasonable care for a tree, including trimming dead wood and removing potentially dangerous branches. Liability is not absolute; meaning just because the tree is on one property and damages another does not automatically make the landowner with the tree responsible for damages. The test is whether the landowner acted reasonably in caring for the tree. A corollary to this test is whether the damage was reasonably foreseeable. A landowner has an obligation to periodically inspect the trees on his property. A safe practice is to hire an arborist to perform an inspection every few years and get a written assessment of the trees.

The best outcome for both sides in a tree dispute is having knowledgeable attorneys who can provide a good evaluation of the facts and law in order to educate the parties on the probable outcome if the matter was to go to trial. This provides a basis for a settlement that allows the damaged homeowner to recover a significant portion of its damages without the legal fees, delay and distraction of litigation.

The information on this website is for general information purposes only. Nothing on this website should be taken as legal advice for any individual case. The information on this website is not intended to create an attorney-client relationship. BLHPC only accepts clients after personal consultation and execution of a written retainer agreement.


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