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FMG Law Blog Line

Archive for September, 2012

“Show Me Your Papers” Upheld by Arizona Federal Judge, Echoing Georgia Ruling

Posted on: September 7th, 2012

By: Kelly Morrison

A federal judge ruled Wednesday that Arizona authorities can enforce the most contentious section of the state’s immigration law, which critics have dubbed the “show me your papers” provision.

The ruling by U.S. District Judge Susan Bolton clears the way for police to carry out the 2010 law’s requirement that officers, while enforcing other laws, question the immigration status of those they suspect are in the country without documents.

An almost identical provision recently was approved by the Eleventh Circuit for use by Georgia law enforcement officers.

Recent Court Rulings Suggest Homeowners’ Associations May Selectively Enforce Covenants

Posted on: September 6th, 2012

By: Marc Bardack

In two recent rulings, state trial court judges have rejected homeowner claims against homeowners associations (HOAs) for failing to enforce covenants against a neighbor.  These rulings raise the question of whether HOA’s can enforce neighborhood covenants selectively as they see fit.

In Sugarloaf Residential Property Owners Association, Inc. v. Greenwald, the homeowners sued the HOA for arbitrarily enforcing landscaping and other property improvement covenants against them and not against their neighbors.  In ruling against the homeowners, Gwinnett Superior Court Judge Michael Clark held that the HOA had the right to enforce covenants, but not an affirmative duty to do so.  He interpreted the HOA’s governing documents as providing that right but not making it an obligation.  Thus, the court effectively ruled that the HOA could enforce covenants as it saw fit.

Judge David Dickinson reached a similar conclusion in the Forsyth County Superior Court case of Lake Astoria Community Association, Inc. v. Ingmire v. Furr where the homeowner sued the HOA for failing to enforce neighborhood covenants consistently.  Similar to the declarations in the Gwinnett County case, Lake Astoria’s Declarations provided that the HOA could not “be held liable for any injury, damages or loss arising out of the manner or quality of approved construction on or modifications to any lot.”  Judge Dickenson ruled that this provision precluded Mrs. Ingmire from arguing that the HOA had a legal duty to enforce its architectural standards or design guidelines.  Again, the implication with this ruling is that the HOA is free to enforce its covenants when it sees fit to do so.

Of note is that neither court specifically addressed the “arbitrary and capricious” enforcement of covenants argument advanced by the homeowners.  While some would argue that such rulings negate the purpose of having an HOA and neighborhood covenants, homeowners are not without recourse.  For example, in both the Gwinnett County and Forsyth County cases described above, the homeowner did sue the neighbor who allegedly caused excess surface water runoff.  A question remains as to whether a homeowner would have standing to sue a neighbor for violation of a covenant when that violation did not cause direct damage to the homeowner.  In other words, it is clear that a homeowner could sue his next door neighbor for directing excess surface water onto his property and flooding his basement, but it is not as clear that the homeowner could sue the neighbor down the street for putting an addition on a house without HOA approval. Additionally, homeowners always have the option of getting involved on their HOA boards in order to push the enforcement of covenants.

Nonetheless, these rulings do provide some relief to HOAs and their board members (as well as their insurers) who dread getting dragged into the middle of disputes between neighbors.  These rulings cast a broad measure of protection even if enforcement is in fact selective.

FDIC Continues to Pursue Directors and Officers

Posted on: September 4th, 2012

By: Ben Mathis

The FDIC continues to file a number of claims around the country against directors and officers of failed financial institutions. Recent decisions in Georgia, however, have raised the bar in holding that the business judgement rule requires the FDIC to prove gross negligence, as opposed to ordinary negligence, which is a much higher burden of proof.

The FDIC is not going away easily, however, and is appealing the issue to the Eleventh Circuit. The outcome is very important not just for financial institutions, but for directors and officers of any corporation. For a summary of recent D&O claims involving the FDIC and status, please see the attached link:

PLAN Spotlight: FDIC D&O Litigation

NLRB Finds Blanket Policy Requiring Employee Confidentiality During Internal Investigations Unlawful

Posted on: September 1st, 2012

By Brad Adler and La’Vonda McLean

In most employee investigations, employers understandably direct that the participants (including witnesses) refrain from discussing the investigation with other employees.  Now, the employee-friendly NLRB has weighed in on this previous uncontroversial issue and placed yet another landmine that employers have to think about in managing their workforce. (more…)

Recent Court Rulings Suggest Homeowners’ Associations May Selectively Enforce Covenants

Posted on: September 1st, 2012

By Marc Bardack

In two recent rulings, state trial court judges have rejected homeowner claims against homeowners associations (HOAs) for failing to enforce covenants against a neighbor.  These rulings raise the question of whether HOA’s can enforce neighborhood covenants selectively as they see fit.  (more…)