I recently filed a brief in the California Supreme Court on an interesting legal issue involving real estate. I represented a client who was a real estate developer. This developer bought vacant land in Los Angeles with the intent of building an office building on one lot and using an adjacent lot for parking to satisfy the City’s zoning and density requirements.
A neighbor who owned an adjacent commercial building, opposed my client’s application to the City for a variance to allow parking on the lot that was not zoned for that use. A lawsuit followed.
In that lawsuit the neighbor claimed he had both an express easement and a prescriptive easement over portions of my client’s property. We claimed we had the right to possess the vacant property and the neighbor’s parking on our property amounted to a trespass.
We won at trial and were even awarded damages by the jury for trespass. We proved that the neighbor abandoned their express easement. We also proved that the neighbor failed to establish a prescriptive easement because they did not show their use was hostile or adverse. We claimed their use was permissive. When use of property is made with permission of the owner of the burdened property, or by agreement with him, a user cannot acquire a prescriptive easement.
The neighbor filed an appeal in the Court of Appeals. We appeared before the Court of Appeals and won there.
The neighbor then filed a Petition in the California Supreme Court. The issue he raised was which party had the burden of proof on the issue of permissive use. He claimed that we had the burden to show that the neighbor’s use was without permission and was indeed hostile. There was a split of authority in the lower courts on that issue and this neighbor thought the issue needed to be decided by the Supreme Court.
Our position was regardless of who had the burden of proof, we proved that the use was permissive.
We are waiting for the Supreme Court to decide if they want to hear more on this issue with further briefing.
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There has been alot of talk about a pending General Motors bankruptcy. The company says it would be devastating and would hinder car sales on the theory that nobody would want to buy a car from a company in bankruptcy.
There are broader issues. General Motors is indebted to the members of the United Auto Workers (UAW) union for health and retirement benefits in a staggering amount which by estimations exceeds $200 million. GM is currently negotiating with the UAW where it is expected to pump $35 billion into a voluntary employee-benefit association.
If GM files for bankruptcy it could reject its UAW contracts and avoid most if not all of this $200 million debt. The consequences would be disaterous for all the current and retired auto workers.
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President Bush announced the federal government will make $13.4 billion in federal loans available almost immediately to Chrysler and General Motors. This money given to the automakers is almost always called a bailout. But in reality it is a short term loan with conditions. Regardless of what its called the question is whether this is a wise thing to do.
The options faced by the automakers if they do not get this money is to file for bankruptcy. There are different types of bankruptcy. In this case the auto makers would file a Chapter 11 bankruptcy which is not a liquidation of the company where the assets are sold off but a corporate reorganization. This will allow the auto companies to renegotiate several of their contracts and gives them an opportunity to reject certain contracts that are unfavorable. They would present a plan to the bankruptcy judge for approval. Once they are out of bankruptcy they would then be bound by the plan the court approved. If later they are unable to comply with the plan the creditors could then force liquidation of the company.
Much of the problems faced by the auto makers is they are paying a lot of money for benefits to retired workers including health care and pension benefits. It has been said that $1500 of every GM car sold goes to pay benefits to retired workers. It appears these payments are creating a choke hold on these companies. If they file for bankruptcy they could renegotiate union contracts and reduce these payments. While that might be good for the company, it certainly would be detrimental to the retired and current union workers.
I am doubtful the auto companies will be able to present to Congress a workable plan on how they will overcome their financial problems and become profitable. I suspect in three months they will either return to Congress asking for more money or be forced to file for bankruptcy.
I do not feel filing for bankruptcy will result in the liquidation of these companies. I also feel the government is in a position to provide the immediate cash needed for these companies to continue to operate and at least plan for recovery or at least prepare for a soft landing if they are forced into bankruptcy. I also suspect these loans will not be dischargeable if these companies eventually file for bankruptcy.
This is a good opportunity for Congress to force the auto makers to reform and make cars that are competitive on the world market and that can use alternative energy to reduce our dependency on foreign oil and at the same time improve our environment.
I think the wise thing to do is give these loans so that a plan can be developed in order to provide these companies some breathing room.
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