TRENDOWSKI & ALLEN, P.C. NEWSLETTERS

GENERAL LIABILITY MARCH 2010 ISSUE XII

Defendant Allowed to Bring Third-Party Apportionment Claim
Against Plaintiff's UIM Insurer Under Certain Conditions

The Hon. Terence Zemetis recently held in Kimberly Wheeler et al v. Eileen Wojtowicz, Conn. L. Rptr. No. 16, 578 (January 11, 2010), that a defendant in a motor vehicle accident case may bring a third-party apportionment claim against the Plaintiff’s UIM insurer based on the alleged negligence of an unidentified third motorist, provided that the plaintiff has asserted a direct UIM claim against the insurer prior to the scheduling of oral argument of the insurer’s motion to strike.

The above case involved a motor vehicle accident allegedly caused in part by debris on the road that had fallen from an unidentified vehicle. The defendant, Wojtowicz, properly served an apportionment complaint against the plaintiff’s insurer, GEICO, for the imputed negligence of the unidentified tortfeasor pursuant to the plaintiff’s UIM coverage. Shortly thereafter, the plaintiff moved to amend her complaint to include a claim against GEICO, which had already appeared and moved to strike the apportionment complaint. GEICO argued that the apportionment statute is limited to “persons,” and that insurers cannot be added under the statute.

The Connecticut Supreme Court has previously affirmed a trial court’s decision to strike an apportionment complaint against a “John Doe” unidentified hit and run driver, recognizing that “there has to be an identifiable person upon whom to serve a complaint.” Eskin v. Castiglia, 253 Conn. 516 (2000). However, in Collins v. Colonial Penn, 257 Conn. 718 (2001), the Supreme Court required the trial court on remand to instruct the jury on apportionment after the plaintiff’s UIM carrier had settled with the plaintiff during trial. In Collins, the plaintiff sued his UIM carrier because the defendant claimed that his car was rear-ended by an unidentified driver, which caused his vehicle to be propelled into the plaintiff’s vehicle. The Court held that because the UIM carrier was an original defendant in the case, “the obstacle of [the apportionment statute was] not present.” The Court noted in Collins that it was significant that the plaintiff could recover against a UIM carrier as a surrogate for the unidentified driver, unlike in Eskin, where the apportionment complaint was brought against an unidentified person.

Likewise, Judge Zemetis held in Wheeler that the obstacle of the apportionment statute was not present, as it was in Eskin, since the plaintiff had moved to amend her complaint to include her UIM carrier after the Defendant’s filing of the apportionment complaint. Unfortunately, for defendants, this case provides plaintiffs with “gatekeeper” ability in regard to apportionment in similar circumstances. However, once the plaintiff brings a direct action against her UIM carrier, the two cases may then be eligible for consolidation.

LIQUOR LIABILITY JANUARY 2010 ISSUE X

Email Extortion

When the club owner opened the plain envelope and started reading, the letter seemed to be innocuous. “Over the last two years alone, I have received at least 11 unsolicited email advertisements from your organization to my Yale University account.” The letter then went on, however, to cite Connecticut General Statutes, Section 52-570c, which is an anti-spam statute providing damages of $500.00 per unsolicited email. The letter then went on to demand a $4,500.00 “settlement,” or the writer would file suit and even try to organize others to sue the club. There were a number of other threats. The multi-page letter ended with, “I am sure that your illicit electronic mail advertising campaigns have yielded you much greater profits than $4,500.00 through greater patronage. Now is the time to give back some of those profits to me, an aggrieved party, and very reasonably hope that your legal conundrum will most likely blow over. I hope you realize the gravity of this situation and make the prudent choice to settle this matter with me to make this all go away.”

The club owner didn't settle. The writer filed suit. While the suit ultimately was resolved in the club owner’s favor, he had to retain an attorney and defend the matter. A successful defense is not, however, the point of the story. When the letter writer appeared at court, he stated that he was amazed that the club owner had decided to fight because “all the other bars paid quite quickly and without any problem.” This is the sad point of the story, that the creep who abused the legal system had played this extortion game with other places and succeeded. For all I know, he’s still at it. That is the point of this article. If you receive a similar letter in the mail, you should seriously consider fighting it, or at least calling the police or the attorney general. If you would like a copy of the original letter and the subsequent lawsuit, just email a request to jantrendowski@trendowskilaw.com and I will send it to you.

The Resurrection of Negligent Service of Alcohol to an Adult

In Piontkowski v. Agan, Judge Riley of the Judicial District of Windham held that a social host can be legally liable for the negligent service of alcohol to an adult. The plaintiff alleged in his complaint within a premise liability count that the defendant, Kevin Agan, negligently furnished alcohol to his brother, Jason Agan, "whom he knew or should have known to have a propensity to become violent under the influence of alcohol" and whom assaulted the plaintiff. The defendant moved to strike on the ground that Connecticut does not recognize a cause of action against a social host for negligent service of alcohol to an adult. In the landmark case of Craig v. Driscoll, the Connecticut Supreme Court recognized a negligent service of alcohol cause of action, stating: "[I]t is now time to discontinue the fiction that the behavior of anyone who is under the influence of alcohol is automatically, as a matter of law, an intentional intervening act that relieves the liability of a vendor of alcohol even though the vendor's negligence is otherwise established." The Connecticut General Assembly responded quickly, passing P.A. 2003, No. 03-91 to amend the Dram Shop Act to include the following: "Such injured [person] shall have no cause of action against such seller for negligence in the sale of alcoholic liquor to a person twenty-one years of age or older."

Now that the dust has settled, it appears that the trial courts are interpreting the amendment to apply only to alcohol retailers. In Raymond v. Duffy, a 2005 decision of the Connecticut Superior Court, Judge Barbara Quinn wrote, "Unquestionably the Dram Shop Act, as amended by Public Act No. 03-91, legislatively overrules Craig as it applies to sellers of alcoholic beverages." In all other respects, Craig is good law. Following the reasoning of Raymond, the court holds that a social host, who also owns property, can be held liable for the negligent service of alcohol to an adult under the common law. This case is notable because it seems to directly conflict with the Connecticut Appellate Court decision last month in Jordan Pike v. Blake Bugbee et al that social host liability only applies when alcohol is furnished to minors. The current trend in the Superior Courts is also notable because it allows for lawsuits against private citizens who furnish alcohol as social hosts without the $250,000 cap on damages fixed by the Dram Shop Act.

This case is important for at least two reasons. First, this cause of action must be kept in mind while considering apportionment complaints and the addition of other potential defendants to a case. Second, this cause of action allows for an additional potential avenue for subrogation recovery. Notably, most homeowner policies do not expressly exclude liquor-related claims and, as such, are generally denied to provide coverage.

GENERAL LIABILITY JANUARY 2010 ISSUE XI

Supreme Court Affirms Defense of Superseding Cause for
Intentional and Criminal Third Party Acts

In the recently decided Supreme Court case of of Sullivan v. Metro-North Commuter Railroad Co., 292 Conn. 150 (2009), the Court reviewed the doctrine of superseding cause. The plaintiff’s decedent was shot and killed by a third party at the defendant’s train station. The plaintiff alleged that the decedent’s death was a result of the defendant’s failure to provide adequate security. The defendant successfully defended the claim, arguing that the decedent’s death was the result of the intentional and criminal acts of a third party that superseded any negligence on its part. The plaintiff appealed, arguing that the doctrine of superseding cause had been abandoned by the Supreme Court.

The 2003 decision in Barry v. Quality Steel Products, Inc., 263 Conn. 424 (2003) held that the doctrine of superseding cause was to be abandoned in favor of a proximate cause analysis in negligence claims. The doctrine of superseding cause previously relieved a tortfeasor of liability for injuries inflicted by the unforeseeable act of another tortfeasor. The plaintiff argued that the decision to abandon the doctrine of superseding cause was to be or should be applied in all civil cases. The Supreme Court disagreed with the plaintiff’s argument, noting that the 2003 decision explicitly limited the abolishment of the doctrine to subsequent negligent acts and made clear that the holding did not “necessarily affect those cases where the defendant claims an unforeseeable intentional tort, force of nature, or criminal event supersedes its tortuous conduct.” Consequently, this case reaffirms that defendants are entitled to a jury instruction that the jury should consider whether criminal conduct of a third party was the superseding cause of the plaintiff’s injuries, relieving the defendant of liability to the plaintiff.

LIQUOR LIABILITY DECEMBER 2009 ISSUE IX

As I mentioned in the last issue, more suits are being filed claiming injuries from insufficient security. Mr. Chris McGoey, a recognized expert in a variety of security areas, has kindly allowed me to reprint a few of his excellent articles on security considerations for bars and nightclubs. While the articles are not tuned to any particular jurisdiction, the points he makes are certainly valid. For more information on Mr. McGoey’s publications and credentials, please visit his website at www.crimedoctor.com.

Nightclub & Bar Security

Bouncers Doormen Need Training

Nightclub bouncers and doormen have been known to physically eject obnoxious patrons with such force that they have suffered serious injury or occasionally a death. It always makes me wonder what led up to this violence and if excessive force was necessary? As a general rule, a bouncer should never lay hands on a nightclub patron, except in a self-defense or arrest situation. If you think about it, what other business type has to use bouncers to bodily eject paying customers into the street?

Bouncers

The industry term bouncer presents an image of someone who will physically break up fights and forcibly eject undesirable patrons. Bouncers are often portrayed in movies as tough, thug-like scrappers who love to fight, like in the movie "Road House". Many nightclubs foster that image by hiring over-sized, ex-jocks or body-builders to handle drunken or out of control patrons. Are big burly guys necessary to prevent violence in a nightclub? Many of these bouncers have little experience and receive no real training. In a crisis, inexperienced bouncers will be forced to rely on their own common sense and physical instincts to solve a problem. This is a scary concept.

The duty of a bouncer is to monitor the crowd to see that everyone behaves and follows the house rules. The goal should be to see that everyone has a good time but within limits. The best bouncers are personable, friendly, and can talk to people without appearing threatening or intimidating. Not all bouncers should be male. The best bouncers don’t bounce anyone…they manage people. The mere presence of a well-trained bouncer should remind the patron that their conduct is being monitored. To be effective, a bouncer needs professional training on how to manage and control a packed house. Bouncers must watch over the club so it does not get too intense, the crowd too large, and keep a sharp eye out for intoxicated patrons. In a nightclub setting, the combination of too much alcohol, testosterone, and machismo can sometimes lead to physical fights over seemingly insignificant issues.

Job Requirements

The very nature of a bouncer’s job is to be confrontational and serious incidents can develop if mishandled. Before being turned loose into a disagreement between customers, bouncers need to have had training and preferably prior experience. When hiring a bouncer, you must look for someone with the proper attitude and demeanor. You don't want someone who is hot-headed or likes to fight. Thorough pre-employment screening is necessary to determine an applicant's suitability for the job. For liability reasons, ex-felons should not be employed or anyone with a history of violence. The physical aspect is only one attribute essential for the job. Bouncers need to learn how o approach people in a non-threatening and professional manner. They need to earn about criminal and civil law applicable to use force against another and heir power to arrest. Bouncers must also be taught about the limits of their authority and the amount of force that can be lawfully and safely applied.

Because of my work as a consultant, I am aware of incidents where bouncers have severely injured ejected customers. I have heard many stories about fights where bouncers have pummeled a customer while in the process of ejecting them from the premises. There have been cases where intoxicated customers have been killed after being taken into custody by bouncers by either asphyxiation or by use of deadly force. This is not supposed to happen.
There’s a common misconception that bouncers have authority to pick someone up and physically remove him or her from the premises for violating a club rule. It is believed that bouncers can use pain compliance holds, full-nelsons, choke holds, wrist locks, and arm bars to manhandle their patrons. This is generally not true. Simply stated bouncers cannot legally use force against a patron being escorted out unless they are taking someone into custody for a crime or in self-defense. When force is used it must be reasonable depending on the circumstances. Ordinarily, that means no tackling, no punching, no kicking, no choking, no head butts, no piling on top, no hog-ties, and no pain compliance holds unless in self defense.
The authority of a bouncer, in most cases, is the same as any ordinary citizen. Bouncers have no special authority to physically eject a customer who merely becomes intoxicated or verbally obnoxious. As an employee of the nightclub, bouncers can only demand that the undesirable customer leave. If the customer refuses to leave your only legal recourse is to call the police. Sometimes a warning that the police will be called has the same effect causing the customer to depart. The police can remove an unwanted patron and issue a formal trespass warning not to return. In a few states, bouncers may legally use minimal force to remove a trespasser after being duly warned. If the customer returns after receiving this formal warning they are subject to arrest.
Deadly Restraints
A common liability issue involving bouncers has been the use of restraints and control holds to remove or subdue a patron. Bouncers have used various forms of headlocks and choke holds on disruptive customers and caused serious head and neck injuries, asphyxiation, and even death. Handcuffs have been inappropriately applied and in doing so caused broken arms, dislocated shoulders, and have cut off circulation to hands causing permanent damage.
Nightclub patrons have died from positional asphyxiation after being handcuffed from behind and then laid face down on the floor or from other bouncers piling on top. You can't breathe very well in that position especially if the victim is overweight. In most cases the offending bouncers were discovered to have no formal training or experience using handcuffs or control holds and weren’t told about positional asphyxiation. Watching the Worldwide Wrestling Federation or Extreme Fighting on TV is not considered proper training in use of force for nightclub bouncers or security personnel.
What’s Needed?
The nightclub and bar industry needs to address these important security issues in their trade journal publications and at trade show seminars. Bouncers and door hosts need to be screened to weed out unsuitable applicants like violent felons. Real training should be provided to all those responsible for crowd control. Bouncers should have at least basic training in laws of arrest, verbal judo, first-aid, and even CPR if they are responsible for monitoring patron conduct and physically ejecting or arresting those who become obnoxious. Popular nightclubs should consider hiring off-duty police officers to work outside the front door to support the bouncers and act as a deterrent. Bouncers should be required to complete written reports and logs of activity where the police were called or a customer was contacted and asked to leave. These reports should be reviewed daily by club management and filed for future use in case a lawsuit is filed against the club.
Bouncers are most visible aspect of security in a nightclub or bar is the often the huge guys working in a club. The proper application of bouncers and doormen as part of a nightclub and bar security plan are important. Inadequate security procedures could contribute to the Death of a Nightclub.
Doormen
The doorman or door-host is the first person the patron sees and sets the tone for the style and attitude of the club. Some clubs employ burly-looking guys who set the tone of the "Barbary Coast" days in San Francisco where bothersome patrons would be forcibly thrown out into the street. Other clubs use well-dressed ladies and gentlemen to make patrons feel like they have entered a nightclub with dignity and class.
The true function of a doorman is to provide access control for a busy nightclub and screen those that enter. A doorman is traditionally the person who stands at the door and checks IDs to assure that each patron is of age to legally enter the establishment and is dressed appropriately. In some urban clubs, doormen use metal detectors and pat downs procedures where the format attracts mostly young people and has an expectation of finding weapons. Another function of a doorman is to prevent admittance to those that are obviously intoxicated or who have previously caused trouble inside the club. Most clubs have an "86" policy where objectionable patrons are barred from returning to the club for some designated period of time. Depending on the club, a doorman can be used to collect cover charges, tickets, or direct patrons to tables.
In addition to normal doorman duties, some nightclubs use the door staff to monitor patron conduct on the sidewalk as well as inside the club. The nature of this additional task can lead to confrontations with aggressive nightclub patrons if not handled professionally. Obviously, more training and experience is required as the doorman becomes more assertive and begins to assume more security-like duties. Most busy nightclubs begin to have problems at the door when too many duties are heaped on to an inexperienced and poorly trained doorman.
Bouncers
Bouncers are an enigma. The term bouncer presents an image of a brawler who will break up fights and forcibly eject obnoxious patrons. Bouncers are often portrayed in movies as tough, thug-like scrappers who love to fight, like in the movie “Road House”. Many nightclubs foster that image by hiring over-sized ex-jocks, wrestlers, or martial artists to handle drunken or out of control patrons. Usually these bouncers have little experience and receive no real formal training in criminal or civil law that they must apply. See my web page Bouncers Need Training. In a crisis, these inexperienced bouncers will be forced to rely on their own common sense and instincts to solve a problem. This can be a scary concept.
The duty of a bouncer is to monitor the crowd to see that everyone behaves. The goal should be to see that everyone has a good time, but within established limits. The best bouncers are personable, friendly and can talk to patrons without appearing threatening or intimidating. The best bouncers don’t bounce anyone…they talk to people. The mere presence of a well-trained bouncer will remind the patron that their conduct is being scrutinized and that their patronage can be revoked.
Floor Men
A better job title for a bouncer might be floor man or floor person. In the UK you often hear the titles of Head Doorman or Cooler. A nightclub is about the business of providing hospitality where people can come to relax, unwind, and have a good time. A good floor man will manage the patrons inside a club and will see to it that no one becomes overly aggressive and spoils the party. A well-trained floor man will circulate throughout the club, be highly visible, and be easily identifiable as a club employee. The floor man should continually evaluate the conduct and attitudes of each patron and watch for changes behavior. Let’s face it, drinking alcohol in a nightclub setting is designed to remove inhibitions and subtle behavior changes are expected. A floor man's job is to recognize the negative behavior changes and begin to manage the patron. Good floor men will use eye contact and body language to let troublesome patrons know that their conduct is reaching the threshold for unacceptable behavior.
Rule Enforcement
It is up to the nightclub to set conduct limits and then require the floor man to evenly and fairly enforce those rules. The best run clubs enforce rules and do so immediately. A well-timed and discreet comment from the floor man about offensive language or noise level is all that is necessary, in most cases, to resolve objectionable behavior. Sometimes, second reminders are necessary followed by warnings that further conduct will result in being asked to leave the premises. Any patron who aggressively rejects a reasonable request to behave should be asked to leave. Remember though that rule violations are not the same as crimes. You can’t manhandle patrons or physically take someone into custody for violating a club rule.
The biggest mistake a floor man can make is to ignore a patron who has become a nuisance and hope that they will either calm down or leave on their own. The worst case scenario can occur when another patron is forced to confront an overly aggressive customer on their own because the floor man was oblivious to the situation. Ultimately, the situation becomes explosive, a fight breaks out, and the floor men are forced to physically separate and eject the brawlers. This is not only bad business, but can become dangerous for everyone involved.
Patron Ejection
Having to eject a patron from a nightclub doesn't always mean that the floor man did not manage them properly earlier in the evening. Sometimes people come into a nightclub just looking for trouble, or can’t handle alcohol, or can’t interact socially with others. Sometimes, patrons bring their outside anger inside the club and no one knows about it until violence erupts. These people need to be asked to leave the club by the floor man as soon as their hostile conduct becomes evident.
No one likes to be asked or told to leave an establishment, especially if they paid a cover charge to get in. If a floor man has reminded the guest several times about their conduct then it will come as no surprise when finally asked to leave. If the patron is taken aside and discreetly told about the decision, the likelihood of an aggressive exchange is reduced. There is nothing worse than having a big bouncer-type approach a young man, in front of his friends, and tell him to leave. After embarrassing this young man, you are guaranteed to get a verbal barrage of insults and foul language that may escalate into a physical fight.
If it becomes necessary to escort an aggressive patron to the door, floor men should be well trained to do so. For safety purposes, a rule of thumb is to have at least one more floor man present than the number of people being escorted out. Unless a patron has committed a crime, floor men are generally not allowed to use physical force. This is not to say that you cannot slightly touch a patron to guide, direct, or block re-entry. Force should only be used in self-defense or for the purpose of detaining a criminal for the police. Punching, kicking, tackling, dragging, or putting someone in a choke hold are all inappropriate methods for floor men to remove someone from a nightclub. Unlike the movie "Road House" it is never appropriate for a floor man to punch a patron out of anger or because of a challenge to fight.
Escorting a patron out of a nightclub involves the use of professional verbal commands and a polite explanation of why they are being asked to leave. If a patron has been dutifully warned previously, then it will be of no surprise. If the conduct of the patron was obviously inappropriate, then likewise it should be clear why they are being escorted out. If the patron has been over-served and is intoxicated the ejection request may be more difficult.
If a floor man is expected to consistently enforce the rules, there can be only two ejection choices for the patron. Either leave the premises quickly and quietly or be arrested by the police. Once a patron has been asked to leave by the proprietor, they become subject to trespass laws if they fail to leave. In some states, trespassers can be removed from the premises using minimal holding force. Typically this involves one bouncer holding each arm while leading the trespasser from the club. Floor men must be prepared to take a little verbal abuse if a patron is asked to leave. Likewise, floor men should consider a refund of the cover charge, if any, for ejected patrons to remove that point of contention. If the patron becomes combative they may become subject to assault and battery charges and it goes down hill from there.
The floor man should be certain that the ejected patron understands that they must leave the premises immediately or be subject to arrest by the police. If the ejected patron attacks a floor man, reasonable force can be used in self-defense. Reasonable force can also be used to take an assaillant in to custody for the police. If you do this, it is important to actually file criminal charges or risk for false imprisonment lawsuit. Under no circumstances should excessive force be used. (See my webpage on Use of Force Continuum for more details on use of force). Headlocks and pain compliance techniques (i.e. arm twisting, wrist locks) are not appropriate ways of escorting a rule-violator from a club. Choke holds and sleeper holds should never be used except in life threatening scenarios. Floor men should also use care when taking a patron down to the floor, handcuffing, and piling on top. Intoxicated or overweight persons have died from positional asphyxiation from too much body weight pressing them to the floor.
Customer Fights
If two or more customers mutually get into a fistfight, they must be removed from the club immediately for everyone’s safety. The question is how to do it safely? The old fashioned method was to throw both parties out into the street and let them duke-it-out for themselves is wrong. The correct method is to delay the ejection of the more passive offender, if possible, until the more aggressive co-combatant has completely vacated the property. The reason for this is that it is foreseeable that two people who were engaged in a fight inside will continue the assault outside. The nightclub floor men have no legal basis for detaining someone unless a crime has been committed and cannot hold someone who wishes to leave voluntarily and continue to fight. However, the floor men has a duty to be reasonable and see that known offenders have left the property and to call the police if they know a fight is about to occur or if one combatant requests it.
The articles above are printed as written by Chris E. McGoey and reprinted from www.crimedoctor.com with permission.

REAL ESTATE DECEMBER 2009 SPECIAL EDITION

On December 4, 2009, we learned from CATIC that the Federal Deposit Insurance Corporation (FDIC) has issued a press release announcing the failure of AmTrust Bank and the assumption of all its deposits by New York Community Bank, Westbury, New York. New York Community Bank also purchased approximately $9 billion in assets of AmTrust, with the FDIC retaining the remainder of the failed institution's assets for later disposition.

The FDIC has established a number of websites to assist consumers who have questions about their financial dealings with AmTrust, including General Information about the bank's failure and a Question and Answer Guide.

Most loans have been assumed by New York Community Bank. However, all nonperforming single family residential loans, acquisition development and construction loans, and land loans are currently owned by the FDIC and are being serviced by all of the same personnel with whom borrowers have worked in the past. All prior contacts remain the same for all loans.

All lines of credit, including Home Equity Lines of Credit (HELOCs), that were nonperforming or past due have been retained by the FDIC and these accounts have been suspended at this time. All performing HELOCs were purchased by New York Community Bank. These customers should contact New York Community Bank at any former AmTrust Bank office if they have a question about their line of credit or HELOC.

The FDIC has indicated that all foreclosures on AmTrust loans will be temporarily suspended in order to properly evaluate the loans and the borrowers' ability to repay.

Loans retained by the FDIC are currently being reviewed independently to determine the best action for each individual loan. Loans may be sold at a future date. If that occurs, the borrowers will be notified in advance through written correspondence. If a borrower is concerned about whom the future lender or servicer may be, borrowers have the right to independently refinance your loan with another lender.

Borrowers or Brokers with loans currently being processed are advised to contact AmTrust immediately to determine the status of these applications.
Information and Articles provided by CATIC were utilized in creating this newsletter.

GENERAL LIABILITY OCTOBER 2009 ISSUE X

Mandatory Pre-Suit Disclosure of Policy Limits

October 1, 2009 is the date when many new laws becomes effective. Public Act 09-240 was recently passed by the General Assembly and becomes law Today. In the past, claims representatives had discretion as to whether or not they disclosed their policy limits to a claimant or a plaintiff's attorney prior to suit being filed and a formal discovery request being issued in that suit. Public Act 09-240 will change this.

Claims representatives will now only have thirty (30) days in which to disclose the limits of their applicable policy or policies after receiving a request from the claimant or his/her attorney. The request must be from a person alleging a death or bodily injury as a result of a motor vehicle collision involving a person covered by the insurer's private passenger automobile policy. It must be sent to the insurance adjuster or insurance company at its last known principal place of business via certified mail. The request must include a letter from a Connecticut licensed attorney or an affidavit from the person alleging the injuries and must include the following information:

1. his or her juris number (if an attorney),

2. the type of claim alleged against the insured,

3. the date and approximate time the alleged incident occurred,

4. a description of the injuries the insured is alleged to have caused;

5. a copy of the person's medical bills and treatment records for the injuries; and

6. a copy of the accident report of the collision that allegedly caused the person's injury or death, if available.

The policy disclosure from the claims representative or insurance company must be in writing and sent out within 30 days of the request. It must also include all the coverage the insurer provides to the insured, including any applicable umbrella or excess liability insurance.

REAL ESTATE AUGUST 2009 ISSUE VIII

Mandatory Foreclosure Mediation is Here

The Connecticut General Assembly passed Senate Bill 911, which calls for mandatory foreclosure mediation. Governor Rell has signed this legislation and it is being implemented already. The act required the Chief Court Administrator to establish mediation programs in each judicial district by July 1, 2009. Mandatory mediation will be available to all owners of one to four family residential properties. Under the act, if a lender commences a foreclosure on a borrower after July 1, 2009, the lender must give notice of the foreclosure mediation program by attaching to the front of the complaint a notice of the programs availability coupled with a foreclosure mediation request form. Borrowers can then request mediation by submitting the form to the court and filing an appearance within 15 days of the return date. If a mediation is requested, a court will not be able to enter a judgment of foreclosure. Judgment may also not enter until after the period for requesting a mediation has expired. Borrowers should also be very aware of the deadlines in this bill. The mediation is only mandatory if the borrower requests it within the proper time period.

Prior to the new bill, a voluntary mediation program proved to be a huge success. Seven out of every ten foreclosures that participated in the voluntary program were settled. The Connecticut Legislature hopes to continue this success by requiring a mandatory notice of the defendant's right to mediation. Any potential buyers should be aware of any pending mediations if they are interested in acquiring a property that is in foreclosure.

New Truth-in-Lending Rules Effective July 30, 2009

The Mortgage Disclosure Improvement Act (MDIA) has amended the Truth-in-Lending Act (15 USC 1601) effective July 30, 2009. The principal objective of these Regulation Z amendments is to enable consumers to know, prior to closing, what their closing fees and charges will be. In too many cases in the past, mortgage lenders did not know the exact dollar amounts for the fees and charges borrowers were required to pay at closing, until shortly before the closing. In some instances consumers did not find out what they actually had to pay for certain fees until they appeared at the closing. This situation has proven problematic for creditors and consumers alike. The new disclosure model is intended to address this problem by avoiding "last-minute" fee issues.

Lender Requirements

MDIA requires creditors to provide "early disclosures" to consumers within three business days after receiving an application for a mortgage loan and before any fees, other than a reasonable fee for a consumer credit report, are collected from the consumer. This "early disclosure" requirement applies not only to loans secured by principal dwellings but also to loans on other one-to-four family properties, such as "second homes."

Once the early disclosure has been provided, the creditor must wait seven business days before closing the loan. If a change occurs that makes the annual percentage rate (APR) in the early disclosure inaccurate beyond a specified tolerance, creditors must provide new disclosures with a revised APR and wait an additional three business days before closing the loan.

Practical Implications: Anticipated Changes in Closing Procedures and Practice

Timely Pre-Closing Disclosures. The rule changes should help consumers by requiring lenders to provide "final" disclosures at least 3 days before the closing.

Postponed Closings, Higher Initial Disclosed Costs, or Escrow Closings. In those cases, however, where creditors cannot provide accurate disclosures in advance of the originally scheduled closing date, closings may have to be rescheduled. Alternatively, some creditors might disclose higher than anticipated fee amounts in their initial disclosures, in order to avoid the need for re-disclosure. Other creditors may consider the use of "escrow-style closings" (common in many western states), where the parties execute and place documents in escrow pending satisfaction of all of the closing conditions.

Changes to Loan Application, Rate Lock, and Commitment Processes. The new rules may also impact how creditors initially accept a loan application, when and how creditors lock an applicant's interest rate and points (and collect a fee for a "rate lock"), or when they extend the deadline of a rate lock agreement or a mortgage loan commitment.

Closings on Short Notice. The new disclosure rules may also affect closings that historically have taken place on short notice, such as loan modifications and private banking loans. In the past, loan terms for these transactions might be negotiated up until closing. The impact of the new rules on such transactions is not yet clear.

New Disclosure - No Consumer Requirement to Complete the Agreement. The new rule also requires that creditors include in the initial disclosure statement and in any corrected disclosure statement the following statement:

"You are not required to complete this agreement merely because you have received these disclosures or signed a loan application."

Timeshare Loans. Creditors who make loans to finance an interest in a timeshare plan must provide the initial disclosures by the earlier of (1) consummation or (2) three business days after receipt of the consumer's application. If the initial disclosures become inaccurate before consummation, the creditor must provide revised disclosures prior to consummation (as opposed to three business days in advance).

Right of Consumer to Expedite Consummation Despite 7-Day and 3-Day Rules. Under the new rule, consumers can expedite consummation of the loan to meet a bona fide personal financial emergency.