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.

While Arizona does have an anti-deficiency statute which prohibits lenders from pursuing some borrowers personally for the balance due on a note after a foreclosure sale, its protection is generally limited to purchase money mortgages on residential property of two and one-half acres or less. Purchase money mortgages are those given to secure the payment of the balance of the purchase price or to secure a loan to pay all or part of the purchase price.

Although the anti-deficiency statute may at first appear fairly mundane, for many homeowners, investors or trusts, its application is anything but. Common issues that require careful consideration and analysis include: (1) the impact of equity lines of credit; (2) personal guarantees; (3) the potential for cross-defaults under other loans; (4) whether the property is a “dwelling” under the statute; (5) whether the lender has waived any right to a deficiency; and (6) the amount of the deficiency. The analysis of whether a borrower has potential liability for a deficiency (and to what extent) often requires careful review of the loan and security documents, as well as the borrower’s actions following the execution of the note and security instrument. Although there are many sources that purport to provide this information, a comprehensive analysis should be conducted by an attorney experienced with these matters.

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?