The ruling was issued in a case where the City of Phoenix agreed to rebate half of its future sales tax revenues from the “CityNorth” retail project, up to $97.4 million, in exchange for the developer building parking spaces and dedicating part of those parking spaces exclusively to drivers participating in commuting programs. The decision hinged on the presumption that the value of the dedicated parking spaces did not come close in value to the $97.4 million in tax benefits. (Note that, had a present value calculation been performed for the $97.4 million in payments over 45 years, it is not clear that the trade off in value would have been unequal, especially given the uncertainty of the timing and amounts of those payments.)

The ruling arguably prohibits any Arizona governmental entity from giving tax breaks to a private enterprise in exchange for locating a new business enterprise, or expanding an existing facility, in Arizona, unless the government entity receives direct consideration of roughly equal or greater value. New tax revenues expected to be generated from the expanded economic activity do not qualify as direct consideration to the government under the court’s ruling.

Arizona is struggling to attract new businesses and jobs to the state. We will have to be all the more creative and thoughtful if we are to be successful without the ability to offer the incentives being liberally offered by other states.

Binding arbitration is typically the result of a contractual agreement between the parties providing that any disputes between the parties will be resolved in binding arbitration. Under the Federal Arbitration Act (“FAA”) and its state law counterparts, such agreements are presumptively valid and enforceable. Generally speaking, if you sign a contract that contains an arbitration provision, you will be bound by that agreement and forced to resolve any disputes through arbitration. In other words, by entering into an agreement containing an arbitration provision, you are waiving your right to address any disputes through traditional litigation in a court of law.

The most commonly cited benefits of binding arbitration mirror the most commonly cited negatives associated with litigation: faster resolution and reduced expense. There is no denying that traditional litigation takes too long and is very expensive. Arbitration is substantially faster than litigation in the overwhelming majority of cases (often less than 6 months with no mechanism for appeal compared to 1.5 to 2 years through trial in traditional litigation, with the possibility of several additional years if the case goes to appeal). Arbitration can also be substantially less expensive than traditional litigation, although not in every case. Depending on the arbitration agreement and the rules of the organization conducting the arbitration, discovery is likely to be substantially limited, which significantly reduces both the cost and invasiveness of traditional litigation.

Despite the benefits of arbitration, there are still many cases in which it is not the best option. First, arbitration of claims involving larger amounts often requires payment of substantial upfront fees. While court fees are typically a flat fee of a few hundred dollars, a large dollar case in front of AAA, for example, can require the payment of $15,000 – $20,000 in administrative fees to AAA prior to any award by the arbitrator. Moreover, the benefits associated with limited discovery are only beneficial in cases in which the parties are able to obtain the necessary evidence to prove their case. Discovery is often considered critical in litigation, and the significant limitations on discovery in arbitration may prevent a party from obtaining critical evidence. Finally, in our experience, there are fewer opportunities for dispositive motions, and dispositive motions are less likely to be granted, in the arbitration context. In those circumstances in which a client is likely to have strong legal defenses and a reasonable probability of success on a dispositive motion, the client may well be better off in traditional litigation with an opportunity for appeal if the decision at the trial court level goes the other way.

The attorneys at Dioguardi Flynn have extensive experience in both arbitration and litigation, and can assist clients in determining which approach is in their best interests in their specific situation.

Now the Arizona Supreme Court has another request before it to review the Act being pushed by a host of business and immigrant support organizations. Although it hasn’t accepted the appeal, the Arizona Supreme Court has requested the Obama administration’s Solicitor General to submit a brief outlining the federal government’s views on the Act. Although the federal government isn’t a party to this current appeal, the Supreme Court requested the administration provide its input before the appellate court decides whether to accept the appeal and hear the case since immigration laws and enforcement have typically been a matter solely within the authority and purview of the federal government. The Arizona Solicitor General has already submitted a brief which asserts the Arizona Supreme Court shouldn’t accept and hear the appeal. The state asserts the federal Immigration Reform and Control Act of 1986 expressly authorized states to impose sanctions through “licensing and similar laws”.

It will be interesting to see if, and what the administration files in response to the Arizona Supreme Court’s request. The Arizona law was signed into effect by then Arizona governor, Janet Napolitano, the current Secretary of the Department of Homeland Security. Also, during the campaign, then-candidate Obama repeatedly asserted that the enactment of various separate state immigration laws “underscored” the importance of the federal government establishing “comprehensive immigration reform”. Campaigning is one thing — the realities of the office are altogether another. Since taking office, President Obama has spent his time on a host of domestic policy issues and is now saddled with the healthcare reform debate. Federal immigration reform hasn’t surfaced as a priority, although the talking heads expect the issue to arrive front and center in 2010.

The fact the Arizona Supreme Court has requested the Obama administration weigh-in on this issue as it decides whether to accept the pending appeal certainly seems to indicate Arizona’s highest state court is poised to take a hard look at the law. Since a host of states have copied Arizona’s law to enact their own state immigration enforcement legislation, it seems likely the federal government will take up this issue in the coming year. It would not be surprising to see the Arizona Supreme Court accept the appeal and render a decision on the enforceability of Arizona’s law before any new federal legislation is passed. Given the political make-up and geographic location of Arizona, don’t be shocked if Arizona took another run at instituting Arizona legislation addressing immigration enforcement if the current Arizona law is struck down as unconstitutional. Any such state effort might run in to a road block if President Obama picks up the mantle of federal immigration reform in 2010. Of course, campaigning is one thing — enacting comprehensive federal legislative reform is entirely another topic altogether.

Whether Arizona’s employers are seeking to comply with the current Arizona law or understand the anticipated federal developments in 2010, the attorneys at Dioguardi Flynn LLP can assist to best ensure Arizona’s employers don’t find themselves with Sheriff Joe, County Attorney Thomas or their brethren knocking on the door.

MERS was created in 1997 to obviate the need to record changes to mortgages stemming from the subsequent transfers of their corresponding Notes. Although MERS does not own or service the mortgages it registers, it is typically listed in the mortgage as a nominee for the actual owner.

Although the majority of the challenges to MERS (which have been largely unsuccessful) involve the proprietary of its role vis-a-vis the borrower or homeowner, there may be some question as to the legitimacy of its registration vis-a-vis a subsequent bona fide purchaser or encumbrance holder for value.

All states have recording acts governing the recordation of documents concerning the title to real estate. These acts are designed to protect subsequent bona fide purchases of an interest in land from unrecorded claims. They generally have no application to the validity of a deed between the grantor and grantee.

There are three types of recording acts: Race, Notice and Race-Notice. In a Race statute, whoever wins the race to record first prevails over anyone who has not recorded or subsequently records. In a Notice statute, a subsequent purchaser wins if he or she has no notice of a prior claim when he or she acquires the interest in the property. Race-Notice statutes protect subsequent purchasers who take their interest without notice of the prior claim and win the race to record.

Given that the vast majority of states have either a Notice or Race-Notice statute, the question is whether security instruments listing MERS as a nominee provide sufficient “notice” to subsequent purchasers. The recorded mortgage typically will not identify the current owner of the mortgage, nor will there be subsequent recorded documents identifying the owner. Therefore, it is not possible for a subsequent purchaser to discern from the records whom is asserting a prior claim to the property. Further, should the subsequent purchaser contact MERS, he or she will typically only be informed of the entity that is servicing the mortgage. This may not necessarily be the same entity that owns the mortgage.

Should subsequent purchasers or encumbrance holders for value begin to challenge MERS, Courts will likely be asked to determine the level of “notice” required. Is notice of an asserted interest in property, without notice of the person or entity asserting the claim, sufficient?

Most attorneys and clients intuitively understand the importance of good communication from the attorney to the client in keeping the client apprised of developments in the matter in which the attorney is providing legal services, even if some attorneys sometimes fail to live up to this requirement in practice.   There is no denying that such communications are a critical part of the attorney-client relationship, and are an area of focus in our firm.  Indeed, probably ninety percent of potential clients that come in looking for new counsel because they are dissatisfied with their current or prior counsel indicate that poor communication and/or a lack of up-to-date information from their attorney is the reason that they are looking for a change.

With that said, however, candid, open communications from the client regarding all aspects of a legal engagement are of equally critical importance in developing and maintaining the attorney-client relationship and achieving the results that the client seeks to achieve.   We value our client relationships and will aggressively move to achieve our clients’ desired results, but without candid and open communications from the client as to the desired objective, counsel’s actions may fail to achieve the desired results.  Below are some suggestions for clients that will help ensure that you and your attorneys are on the same page, thereby maximizing the likelihood of the desired outcome. 

Setting the Goal 

Before your attorney can take action to achieve your desired objective, you must first determine what that desired objective is.  Spend some time thinking on your own about what you actually want to accomplish in the legal engagement, and then discuss that goal with your counsel.  This is not to say that the ultimate goal for the engagement should be set without the advice of counsel.  To the contrary, the only reasonable way to set a realistic, achievable goal for a legal engagement is to engage in a candid, open discussion with your attorney regarding your desired outcome, other possible outcomes and scenarios, legal issues, and financial considerations.  Listen to your attorney, and be realistic in setting your goals and expectations.

Be Candid About Financial Considerations

It is a simple fact of life, particularly in these difficult economic times, that legal services are expensive and that financial considerations will play a significant, if not decisive, role in setting the goal for the engagement and determining an effective strategy for achieving that goal.  For example, litigators by nature have an inherent desire to “win” the case.  But if “winning” a lawsuit costs the client more than it can afford or, worse, more than is obtained in a “victory,” then the result for the client is not a “win” at all.  Attorneys must be candid with clients regarding the costs of an engagement, and clients must be candid with their attorneys regarding their financial circumstances and ability to pay.  While many clients enter into litigation in “battle mode” believing that they want to move forward as aggressively as they can to “win” the case, that approach will result in large legal bills early in the case.  Arizona litigation clients should also be cognizant of the fact that Arizona’s up-front disclosure requirements are such that discovery expenses are substantially front-loaded in the early part of a litigation matter.

Don’t be Afraid to Ask Questions

The old adage that the only stupid question is the one that goes unasked is particularly true in the context of the attorney-client relationship.  While we attempt to anticipate as many of our clients’ questions as possible, it is still important for our clients to feel comfortable enough to ask any questions they may have.  While your attorneys have the advantage of understanding the legal issues, you (the client) will always have a far better understanding of your personal or business circumstances and those circumstances may be critical in determining the appropriate strategy for your engagement.  We are here to answer your questions and client questions often have a way of leading to critical information that may lead to a better strategy or a change in the ultimate goal.

The Attorney-Client Privilege Exists for a Reason

Remember that essentially anything that you tell your attorneys (with the possible exception of a present intention to commit a felony in the near future) is privileged and confidential, and will not be disclosed under any circumstance.  The reason that the attorney-client privilege exists and is enforced by our courts is that the legal system recognizes that candid, open, and forthright communication between attorney and client is absolutely critical.  In the litigation context, when “bad” facts are disclosed to your attorneys, we can plan around those facts and create a strategy for minimizing any damage to your case that may result from those facts.  On the other hand, withholding “bad” facts from your attorneys is a recipe for disaster as the likely result is that the opposing party will find out about those facts and use them at the most inopportune moment, catching your attorneys off guard. 

On those occasions over the years when I have learned about “bad” facts that were not disclosed to me by my clients, the clients often were “afraid” or “embarrassed” to disclose bad facts because they were afraid that the “bad” facts would be unnecessarily disclosed and hurt their case, or that I would think less of them as a result of my knowledge of the “bad” facts.  As to the first reason, parties in litigation are all required to play by the same set of rules.  We play by those rules and will disclose information that is required to be disclosed.  It is universally true, however, that the failure to disclose required information always turns out worse than making the required disclosure and implementing a strategy to minimize any damage resulting from that disclosure.  With respect to the second concern that I may think less of my client as a result of the disclosure of “bad” facts, my job is to solve my clients’ problems, not to “judge” their actions under difficult circumstances.  Clients should always disclose all pertinent information to their attorneys.