Reminder: Do Not Face an Insurance Company Alone

In an article in the March 2007 issue of The Legal Report, we cautioned you against trying to handle your personal injury action against an insurance company without an attorney (full article can be found in our blog section of www.Ajalatlaw.com). Simply put, the insurance company is in the business of adjusting your claim down (i.e., paying you less or outright denying your claim) and they are professionals at doing so. They will reassure you, mislead you, and coax you into believing that they are on your side, all in the name of paying you less. Having an attorney on your side will protect you from their tactics and will, in all likelihood, result in you receiving the compensation you are entitled to. For example, in a recent case we handled in which our client suffered major injuries in a car accident, the insurance company outright failed to disclose a second, large insurance policy which had over ten times the coverage of the initially disclosed small policy. On the verge of settling for the limits of the small policy, we discovered the insurer’s deception and the large policy, convinced the insurer to accept full liability and ended up settling the matter for the full policy limits of both policies. Had our client not had an attorney looking out for her, in all likelihood, she would have ended up severely under-compensated for her injuries.

Don’t Let Your Statute of Limitation Run Out on You!

A Statute of Limitation is the strict “deadline” for filing a lawsuit against a defendant. Once the statute date is met, if a lawsuit is not filed, the claim is “barred” and that lawsuit can never be pursued. For example, the statute of limitation in a personal injury action is two years from the date of the injury. So, if you were injured in a car accident on May 1, 2010, you must file a lawsuit on or before April 30, 2012, or your claim will be barred. In addition to the two-year statute on personal injuries, other common statutes of limitation are: three years on a property damage claim; two years on an oral contract; and four years on a written contract. There are some statute dates that are complicated to calculate. For example, the statute of limitations on a medical malpractice claim is one year from the date the injury is discovered, or three years from the date the injury occurred, whichever occurs first. So if a surgeon left a pair of scissors in a patient on May 1, 2009 and that patient discovers it on May 1, 2010, the patient has one year – until April 30, 2011 – to file a lawsuit. If the patient does not discover the scissors until May 2, 2012 (over 3+ years), the claim is barred. Lawsuits involving minors or the government also have complicated rules for determining the relevant statute dates. Further complicating the determination is that in certain cases, the statute may be “tolled” or suspended for a period of time. The Courts strictly apply the statute dates because by law, the judge has no jurisdiction if a lawsuit is filed too late. A lawsuit filed even one day late will be barred, regardless of the reasons for its lateness or the severity of the damages. Needless to say, if you have a claim that may be close to approaching the statute date, you should immediately seek the advice of an attorney or risk forever losing the ability to pursue that claim.

iPhone Users Yell “Jailbreak!”

The United States Copyright Office and the Library of Congress have recently announced several new exemptions to the Digital Millennium Copyright Act, a 1998 law that prohibits people from bypassing technical measures that companies put on their products as copyright protection. The rules apply to all forms of electronic devices, but will be enjoyed mostly by owners of Apple’s iPhone. Until now, iPhone users have described themselves as being “in jail” since they could only install software and applications pre-approved by Apple and downloaded only from Apple’s iTunes store. Unlocking the phones is known as “jailbreaking” and had, up until this decision, been illegal. With this new rule in place, software developers can create, market and sell their own iPhone software without having to obtain permission or approval from Apple. In addition, those with the technical expertise will be able to use the unlocked iPhone with any cellular provider. While “jailbreaking” is now technically legal, that doesn’t mean Apple won’t do everything in it’s power to stop it. So if you do jailbreak your phone, keep in mind that you will probably void your Apple warranty and be forbidden from downloading software updates. Final note: The new exemptions also allow bypassing of copy-protection and security encryption software placed on DVD or Blu-Ray discs if there is a legitimate fair use purpose.

U.S. Supreme Court Hearing Arguments Over the Validity of “Obama-Care”

The United States Supreme Court is hearing oral arguments on the validity of President Obama’s 2010 national health care law. The most central and decisive issue is whether the “individual mandate” and the provision that penalizes (i.e., fines) individuals and families for not maintaining health insurance is constitutional. The Obama position is that the individual mandate is constitutional under the Constitution’s Commerce Clause, which allows the federal government to regulate interstate economic activity. In most cases, when a person lacks insurance and seeks medical care, the doctors and hospitals end up footing the bill. That, the argument goes, affects instate commerce. The opposition argument – put forth by twenty-six states and a private business group – is that the federal government is not regulating existing economic activity, but rather, is forcing individuals to engage in economic activity in the first place, which exceeds the power allowed by the Commerce Clause. The Supreme Court will likely issue their opinion in June and in our opinion based on a review of the transcripts, will strike down the mandate as being an unconstitutional exercise of power. If that happens, several other portions of the law will also be negated and at that point, if President Obama wants to create a national health care system, he will have to get reelected, then go back to the drawing board. Next up for the Supreme Court? Arizona’s immigration law.

What is a “Class Action” Lawsuit?

There seems to be a common misconception about what a “class action” lawsuit is and who is involved. Often, people believe that if there are a lot of plaintiffs, it is by nature, a “class action”. That is not the case. A class action lawsuit is one in which one person, or a handful of people, represent a much larger class or category of people in a lawsuit against a defendant to obtain compensation for the entire class, or to force corrective measures. The “class” itself can be any conceivable category, but it is usually “customers” of the company that’s being sued. The named plaintiffs are known as the “class representatives” and often have little actual involvement in the lawsuit. A good example of a case that is commonly thought of as a class action, but was not, is the famous “Erin Brokovich” case in which 650 Hinkley, California residents sued Pacific Gas & Electric for contaminating their drinking water. That was a direct action, i.e., 650 named plaintiffs suing PG&E directly. The importance of a class action to potential plaintiffs is that if a person is identified as being a part of the class, has received notice of the action, and chooses to opt-out, then that person must file their own costly direct action if they wish to pursue it. Otherwise, being part of a class action can help minimize the cost (in time and money) to the class members while still addressing their issues.

Estate and Gift Tax Update: The Tax Relief Act of Dec. 17, 2010

The so-called “Year to Die” has come and gone, as has the unlimited estate tax exemption. Fortunately for taxpayers, Congress finally acted by extending the Bush tax cuts and passing the Tax Relief Act of 2010.
With regard to the estate tax, instead of allowing the exemption to drop down to the 2001 level of $1M with a 55% tax rate, the Legislature voted to “freeze” the exemption at $5M per person (or $10M per couple) and a 35% rate. This “freeze” only lasts two years and if Congress does not act again, we’ll be revisiting this issue very soon.
The Legislature also voted to “re-unify” the estate and gift taxes at the $5M level. As such, not only can a person give a tax-free annual gift of $13,000 per donee, but they can also give up to $5M in gifts tax free for their lifetime ($10M for couples). However, there is still a dollar-for-dollar offset against the estate tax exemption amount. The previous lifetime gift exclusion was $1M (or $2M per couple).

A Couple of New Laws Extend the Anti-Deficiency Rules

Among the 725 new laws that took effect in California on January 1, 2011 are SB1178 and SB931, both of which provide added protection to homeowners facing foreclosure and/or short selling their property.
SB1178 forbids anti-deficiency judgments against homeowners who default on refinanced loans. Previously, the anti-deficiency laws protected only purchase money loans (i.e., loans used to actually acquire the property). However, the refinance must be solely a refinance of the original purchase money loan (e.g., to obtain a lower rate) and not a cash-out or construction loan.
Similarly, SB931 forbids anti-deficiency judgments against homeowners who choose to short sell their property, regardless of whether the property is their primary residence or investment property (of 4 units or less) or whether the loan is a purchase money or refinance (though it must be the first loan, i.e., first-in-line). Previously, the anti-deficiency laws protected short-sellers only if the property was the borrower’s primary residence and/or the loan was a purchase money loan.