Category Archives: Property Law

Understanding Civil Forfeiture Laws

Criminal Justice, Property Law, Society, Uncategorized, ,
Understanding Civil Forfeiture Laws
Understanding Civil Forfeiture Laws

Has your personal property been naughty lately? If so, it could be sued by federal, state, and municipal governments resulting in a good ole bona fide Fourth Amendment seizure. Also known as civil forfeiture, the practice has been around for decades. Although once generally limited to suspected drug dealers, with increasing bureaucratic budget shortfalls, its’ becoming widely used by government agencies as a source of department revenue across the nation.

Civil Forfeiture on the Federal Level

Civil forfeiture is codified on the federal level by 18 U.S.C. § 981 (paralleling 18 U.S.C. § 982) and 21 U.S.C. § 881.[1] Essentially, the government initiates civil actions against the property itself, not the owner to remedy a harm, through the fiction of the property’s “guilt.”[2] The result, if your property has been naughty – I.e., involved in or an instrumentality to a crime – it may be seized by the government without its’ owner (you) ever being charged or convicted of a crime. With regards to the guilt or lack thereof of the property’s owner, the Supreme Court ruled that Due Process does not require pre-seizure notice or hearing, and that the innocence of the owner is not a general defense.[3] What’s worse, state and local governments have since jumped on the bandwagon implementing their own form of civil forfeiture laws punishing naughty property by seizing it, selling it for 100% profit, and then incorporating the funds into their general operating budget.

Understanding Civil Forfeiture Laws
State & Local Civil Forfeiture

Civil Forfeiture on State and Local Levels

Originally the law was designed to give the federal government the authority to seize drug kingpin property used in illegal drug trafficking. For instance, if a drug trafficker was using his private plane or boat to transport narcotics, under the; RICO, Criminal and Drug Forfeiture Acts, the Feds could legally confiscate those items in order to prevent further trafficking. However recently, state and local level civil forfeiture laws have given local police departments the authority to forfeit personal items such as a jewelry, cash, homes and essentially anything else that can be sold. As noted, though the property owners are never charged, local & state agencies can bring action against the item itself leading to nonsensical forfeiture case names such as State of Texas vs. One Gold Crucifix or South Dakota v. Fifteen Impounded Cats.[4]

Here, in State of Texas vs. One Gold Crucifix, the “police confiscated a simple gold cross that a woman wore around her neck after pulling her over for a minor traffic violation.” [5] Since the defendant in civil forfeiture cases is the property itself, the rights of the owner have no bearing on the outcome. As a result, many individuals whose property is confiscated simply choose not to fight due the high costs of legal fees.

Further, one jurisdiction in particular, Philadelphia, PA, engages in the most notorious and aggressive civil forfeiture tactics in the country. Specifically, in a recent case involving a couple whose son was caught selling $40 worth of narcotics outside their family home, Philadelphia authorities sought to confiscate the couple’s entire home, sell it at auction, then retain the profits. As a result, The Institute for Justice has taken on the couples – and others similarly situated – case(s) filing a class action lawsuit seeking an injunction against the City of Philadelphia to halt what it refers to as “violations of rights guaranteed by the Due Process Clause of the Fourteenth Amendment.”

Defenses to Civil Forfeitures

As noted, unless provided by statute, the innocence of the owner is generally not a defense to a civil forfeiture. Even where statutory defenses are available, they are narrowly construed by the courts. [6] For example, “courts may apply an objective standard to determine if the owner should have had knowledge of the property’s illegal use, rather than require proof of actual knowledge.”[7]

In certain situations, owners may be able to argue that if no crime occurred, the government lacks probable cause, “or that the property is not closely enough connected to the crime to be considered an instrumentality or proceeds.”[8] Even where the government is required to return the property seized, it is not liable for any further damages resulting from its confiscation, nor any interest ordinarily accrued on actual forfeited funds.

Proposed changes

On the national level there has been chatter on reforming federal civil forfeiture statutes however not much has been done. There is bi-partisan support for the proposed Civil Asset Forfeiture Reform Act proposed by Tim Walberg (R-Mich) however it faces an uphill battle in the Judiciary Committee.

Currently, North Carolina is the only state in the country that prohibits civil forfeiture unless the owner of the property has been convicted of a crime. A state lawmaker in Virginia, Delegate Mark Cole, is proposing legislation in the 2015 general assembly to curtail current civil forfeiture statutes.[9] Hopefully other lawmakers will catch on as this little known, seemingly secret process is being brought to light.

Understanding Civil Forfeiture Law
Now that Its Affecting Many more Americans than Originally Intended . . .

Conclusion

If your property has been naughty or even has the inclination of naughtiness, have a sit down with it and explain the ramifications of its behavior. If that sounds ludicrous, so does the governments rationale for seizing it! My theory is that since this practice was primarily directed at inner-city “drug dealers” many Americans simply didn’t care. Once its pervasiveness started sprawling into suburban America, it now has become a problem that needs reform. It’ll be interesting to see how much government the limited government folks will tolerate once their loved ones and neighbors are affected.

 

 

[1] Forfeiture | Wex Legal Dictionary / Encyclopedia | LII / Legal Information Institute, , http://www.law.cornell.edu/wex/forfeiture (last visited Nov 6, 2014).

[2] Id.

[3] Calero Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663 (1974).

[4] Civil forfeiture perverts justice – Technician: Opinion, , http://www.technicianonline.com/opinion/article_f07018ae-5a60-11e4-a320-0017a43b2370.html (last visited Nov 6, 2014).

[5] Id.

[6] Forfeiture | Wex Legal Dictionary / Encyclopedia | LII / Legal Information Institute, supra note1.

[7] Id.

[8] Id.

[9] State lawmaker targets civil forfeiture | Alexandria Times, , http://alextimes.com/2014/10/state-lawmaker-targets-civil-forfeiture/ (last visited Nov 6, 2014).

Consumer Confusion and Trade Name Infringement

Intellectual Property, Property Law, Trade Name, , ,

I’ve always wanted to invent my own brand of soda called Peepsi! However, I’m positive I’d get a cease and desist letter for trade name infringement from Pepsi before I could screw the cap on my first bottle. Although there is a difference between Peepsi and Pepsi, the consumer confusion would likely turn into a winnable trade name infringement case. Generally, infringing on a business’s trade name comes at the expense of a company’s good will it has established over time, in Pepsi’s case, over a century. So let us discuss consumer confusion and trade name infringement.

mcdowells-tshirt-coming-to-america-swatch

Consumer Confusion and Trade Name Infringement

In the famous movie “Coming to America” starring Eddie Murphy, John Amos played the role of Cleo McDowell, an entrepreneur who owned McDowell restaurants which eerily resembles McDonalds. In the film, he’s quoted as saying “… me and the McDonald’s people got this little misunderstanding. See, they’re McDonald’s… I’m McDowell’s. They got the Golden Arches, mine is the Golden Arcs. They got the Big Mac, I got the Big Mick. We both got two all-beef patties, special sauce, lettuce, cheese, pickles and onions, but their buns have sesame seeds. My buns have no seeds.” Great fodder for film but in real life this would hardly fly. Specifically, under 15 U.S.C §§ 1051 et seq., also known as the Lanham Act that governs consumer confusion cases, a specific set of guidelines “protects the owner of a federally registered mark against the use of similar marks if such use is likely to result in consumer confusion, or if the dilution of a famous mark is likely to occur.”[1]

Establishing Trade Name Infringement

Typically, in determining whether consumers were unjustly confused to the detriment of an established registered mark, a court will consider seven factors. In consideration of these seven factors, the court uses a balancing test in deciding whether consumer confusion has occurred. The seven major factors a court will use in determining the “likelihood of confusion,”, include (1) the similarity of the plaintiff’s and defendant’s goods or services, (2) the identity of retail outlets or purchasers, (3) the identity of advertising media, (4) the “strength” (for example, inherent distinctiveness) of the trade name, (5) the defendant’s intent, (6) the similarity of the trade names, and (7) the degree of care likely to be used by consumers. [2]

So in our hypothetical case involving Cleo’s McDowell restaurant, first a court will consider the fact that both McDonalds and McDowell’s are in the fast food industry, primarily selling hamburgers, specifically “two all-beef patties, special sauce, lettuce, cheese, pickles and onions.” Being that both entities are selling virtually identical products (minus the seeds), element one will likely go into McDonalds favor.

Second, the court would look at the fact that both restaurants use fast-food outlets to target and serve its customers. If Cleo were operating out of, let’s say a food truck instead of an actual fast-food restaurant, a court might give deference to that fact. However, here, both entities are using similar outlets which would likely serve as another blow to Cleo’s consumer confusion defense.

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Third, with regards to identity of the advertising media, presumably McDowell’s advertised primarily through community presence and its logo. As Cleo put it, “McDonalds has the gold arches, while his logo uses the golden arcs.” Here, the logo’s and even the typeface are extremely similar. This form of self-advertising media bears a striking resemblance in both restaurants which would likely land another check in McDonald’s favor.

Fourth, the court would determine the strength of the plaintiff’s own brand. Here, McDonald’s – having been in existence since the 1950’s – would have amassed a significant amount of good will under its brand by now. Though it is unknown how long Cleo McDowell’s franchise has been in existence, it unlikely pre-dates McDonalds.

Fifth, it is unclear that Cleo McDowell’s intent was to purposefully confuse consumers; however a court can and will infer intent by conduct. Specifically, the closeness of the brand, the logo, the type of food sold, the similarity in uniforms and the fact that when Cleo is first confronted by King Jaffe Joffer, he is seen reading a McDonald’s Operation Manual. [3]

Sixth, with regards to the similarity in trade names, a court will take into consideration the use of one’s family name in contrast to an existing trade name. However, courts have held that “the right of an individual to use his or her own name in connection with a business must yield to the need to eliminate confusion in the marketplace.” B.H. Bunn Co. v. AAA Replacement Parts Co., 451 F.2d 1254, 1266 (5th Cir. 1971) (“[O]ne may be forbidden to use even one’s own name, absent other distinctions, if the total effect of using it is to create confusion as to source.”) [4] Here, while Cleo used his family name, unfortunately there simply aren’t enough distinctions between the McDowell’s and McDonald’s brand to distinguish the similarities.

mcdowells 2

Lastly, in establishing the degree of care likely to be used by consumers, all McDonald’s would need to establish is a “likelihood of confusion” arising from the defendant’s use of the same or similar name.” WSM, Inc. v. Hilton, 724 F.2d 1320, 1325 (8th Cir. 1984). [5] This could be satisfied constructively or literally. For instance, if a customer, on any occasion, entered McDowell’s thinking it was McDonald’s, or attempted to use a McDonald’s coupon, or even referred to Cleo’s “Big Mic” as a “Big Mac” when placing an order, it would likely satisfy the last element. [6]

Conclusion

In conclusion, given the totality of the circumstance resulting from the balancing test, a court would likely determine that Cleo’s restaurant is liable for customer confusion and trade name infringement. So remember that while you’d like your product to be recognized by the masses for what it is, there could be serious confusion for what it isn’t. My personal brand of soda, Peepsi, while specific and individual to me, is unlikely to be easily differentiated by a consumer. This causes consumer confusion and ultimately infringes on Pepsi’s established good will. So if you’re contemplating starting the next big burger franchise called Burger Queen, think again about how consumer confusion and trade name infringement.

[1]LANHAM ACT | WEX LEGAL DICTIONARY / ENCYCLOPEDIA | LII / LEGAL INFORMATION INSTITUTE, http://www.law.cornell.edu/wex/lanham_act (last visited Oct 23, 2014)

[2]REMEDIES FOR TRADE NAME INFRINGEMENT, http://www.fwlaw.com/news/189-remedies-trade-name-infringement (last visited Oct 23, 2014)

[3]COMING TO AMERICA – WIKIPEDIA, THE FREE ENCYCLOPEDIA, http://en.wikipedia.org/wiki/Coming_to_America#McDowell.27s (last visited Oct 23, 2014)

[4]REMEDIES FOR TRADE NAME INFRINGEMENT, http://www.fwlaw.com/news/189-remedies-trade-name-infringement (last visited Oct 23, 2014) See Basile S.P.A. v. Basile, 899 F.2d 35, 39 (D.C.Cir. 1990) (limiting right of watch manufacturer to use family name “Basile,” where prior user had obtained trademark over use of the name); Perini Corp. v. Perini Construction, Inc., 915 F.2d 121, 124 (4th Cir. 1990) (limiting second comer’s right to use family name “Perini,” where name had acquired secondary meaning in the construction industry through prior use); B.H. Bunn Co. v. AAA Replacement Parts Co., 451 F.2d 1254, 1266 (5th Cir. 1971) (“[O]ne may be forbidden to use even one’s own name, absent other distinctions, if the total effect of using it is to create confusion as to source.”)

[5]REMEDIES FOR TRADE NAME INFRINGEMENT, http://www.fwlaw.com/news/189-remedies-trade-name-infringement (last visited Oct 23, 2014)

[6]Id.

Break Your Lease Without Breaking the Law

Property Law, Real Estate Law, Society, Uncategorized, , , , ,

How to break a lease

We’ve all been there before, when life’s circumstances simply don’t align with your existing contractual obligations. Whether it’s a cell phone or gym membership contract there can be stiff penalties for early termination. However, if it’s an actual rental agreement, knowing how to break your lease without breaking the law will leave you with more options than taking a financial hit over the head like a cell phone plan or gym membership.

Generally, a rental agreement is defined as any agreement, either oral or in writing, between a lessor (owner) and lessee (renter) which gives the lessee exclusive use of the premises for an agreed upon time for an agreed upon price. Simply put, it’s the long packet of documents you initialed and signed when you leased your apartment. However, note that even oral rental agreements are valid if the length of the rental agreement is for less than one year.

How to break a lease
Read, then Re-Read Your Lease Agreement

Steps to Take When Breaking Your Lease

As Nicole Schreck pointed out, there are generally three steps you should take when you plan to break a lease. First and foremost, you should thoroughly read through your rental agreement. Many apartments, property managers and landlords alike use generic rental agreements which usually contain similarly generic language. Included in that language is what’s called an “opt-out clause.” Opt-out clauses specifically stipulate what is required to break a lease, what you’ll be responsible for and how much notice should be given to the owner or property manager. Some opt-out clauses require that you give up to two months’ notice to the landlord, owner, or property manager.

Secondly, and the most important step after becoming aware of your changed circumstances and the contractual requirements of the lease is to talk to your landlord and/or property manager. Depending on the relationship you have with your landlord and the exclusivity of the property, they may be willing to work with you in getting the premises re-leased. Often times, where we anticipate a large legal fall-out, good-ole-fashion interpersonal communication can easily resolve a matter. Since the ultimate goal is replacing you as a tenant, communicate with your landlord your willingness in helping to find an alternative renter or sub-lessor.

Lastly, find a new tenant. In many jurisdictions a landlord is responsible for mitigating any financial losses before legally pursuing damages from you as a tenant. Simply put, the landlord cannot let the premises sit vacant while the unpaid rent accumulates then go after you for the unpaid rent. By personally finding a new tenant, you ensure there is minimal vacancy, which in turn, reduces the chances of any adverse action against you as a former tenant. Alternatively, if the landlord is left to finding a replacement tenant, he or she may lease the premises for a lower rate than you leased it for thus allowing the landlord to seek damages for the difference between your original lease price versus the new leased price.

Break your lease
Find a New Tenant

Special Circumstances in Breaking a Lease

There are special circumstances where a lessee can legally break a lease without any legal consequences. Those include (1) inhabitable living conditions, (2) military deployment, and (3) death or incapacity. Hopefully, it’s not for the latter! It should be noted that some leases procured through a real estate agent will allow the lessee the option to place the premises back on the MLS. However, the lessee is still responsible for rent throughout the listing and showing period in addition to the remaining commission owed to the agent which is usually around 6% of the monthly lease rate for the remainder of the lease.

So if life has dealt you some incongruent circumstances that simply aren’t compatible with your contractual obligations, namely the lease you signed, relax, there are options. If you’re fretting over how to break a lease without breaking the law, knowing all your options before making any decisions is key to avoiding unnecessary headaches. Read, then re-read the agreement you signed. Speak candidly to your landlord; explain your circumstances along with your willingness to help avoid any disruption in tenancy. Then personally make an effort to find a replacement tenant.