Property Law Developments—Joseph William Singer

Judge Jed Rakoff of the Southern Districit in New York   held that legal publishers West and Lexis did not violate copyright law by publishing searchable versions of lawyers briefs. Their conduct was a protected “fair use” because it was transformative, changing the purpose and character of the works. White v. West Publ’g Corp., 2014 WL 3057885 (S.D. N.Y. 2014).

The Texas Supreme Court affirmed its ruling that the border between state-owned submerged lands and private lands along the coast is the “mean higher high tide line” or the mean location of the high tide line over the regular tidal cycle of 18.6 years. Porretto v. Tex. Gen. Land Office, 2014 WL 2994436 (Tex. 2014). In various ways, agents of the state of Texas has acted so as to claim public rights in property that is on the “private” or landward side of the line. The Texas General Land Office (GLO) claimed that it owns lands that the Texas Supreme Court says are privately owned; that office also requested that tax records be changed to indicate state ownership of those lands. These statements have made it harder for private owners to sell those lands. However, since the GLO ended its bid to change the tax rolls to claim public ownership of those lands and, “even though the [GLO] lawyers’  statements injured the [landlowners]”, the state did not actually dispossess the owners and therefore did not “take” their property without just compensation in violation of the takings clause.

The court also held that the line separating public and private ownership does not change because of state renourishment of beaches. “The State does not gain the dry beach by dumping sand on it,, nor does it lose what was before the wet beach, even if the renourishment pushes the MHHT [mean higher high tide] line farther seaward, which is usually the purpose of renourishment.”

The Massachusetts Land Court has held that no prescriptive easement can arise no matter how long a sewer pipe has traversed a neighbor’s property because the non permissive use was not “open and notorious” and there were no other indications that the pipe was there. 143-145 Nahant Rd, LLC v. Mastoras, (Mass. Land Ct. 2014), 2014 WL 2548094, 42 Mass. Lawyers Weekly 1879 (July 7, 2014). With no easement, the use was likely a trespass although that was a question on remand.

In K.G.M. Custom Homes, Inc. v. Prosky, 10 N.E.3d 117 (Mass. 2014), the Supreme Judicial Court of the Commonwealth of Massachusetts held that a buyer can choose to seek either specific performance or damages when a seller breaches the promise to sell. The issue was hard because Massachusetts allows only specific performance as a remedy for anticipatory breach and the complaint had alleged only anticipatory breach. Because the issue of actual breach was fully litigated and the court found the seller to have committed an actual breach, the judge was justified in giving the plaintiff a choice of remedies. Massachusetts law also provides that a liquidated damages clause does not prevent an aggrieved party from seeking specific performance of a real estate transaction. The court also affirmed the rule that every contract contains an “implied covenant of good faith and fair dealing.” That covenant “exists so that the objectives of the contract may be realized.”

In a classic application of a traditional doctrine of contract law, the Massachusetts Land Court allowed a mortgage document to be reformed because of mutual mistake. Citibank, N.A. v. Heywood, 2014 WL 2158409 (Mass. Land Ct. 2014). While courts are very reluctant to amend written property documents or contracts because of unilateral mistake, it is standard practice to ignore the written terms of the agreement, despite the statute of frauds, when the evidence shows that it does not reflect the intent of both parties. The court noted that [A] court acting under general principles of equity jurisprudence has broad power to reform, rescind, or cancel written instruments, including mortgages, on grounds such as fraud, mistake, accident, or illegality” as long as the mistake was mutual.

The Ninth Circuit held that a mortgage servicer that allegedly engaged in robo-signing may well have violated an Arizona statute, Ariz. Rev. Stat. § 33-420, that criminalizes filing false property title documents with the state recording offices. In re Mortg. Electronic Registrations Systems, Inc (Robinson v. Am. Home Mortg. Serv. Inc.), 2014 WL 2611314, 2 014 U.S. App. LEXIS 10934 (9th Cir. 2014). There was  evidence that trustee’s sale documents were notarized in blank and signed later by a person other than the one who was supposed to sign the document. Such signings were also done in bulk (robo-signing) and because not signed by the correct person were forged. In addition, notaries are supposed to witness the signature not notarize a blank document before any signature appears. The case is notable because the servicer was MERS (Mortgage Electronic Registration Systems, Inc.). Judge William Fletcher engaged in a detailed discussion about the advantages and disadvantages of the MERS system.