Every Real Estate Claim Must Have These 3 Things to be Viable
RECOGNIZE, BUT DO NOT FEAR, UNCERTAINTY
Legal disputes are scary because for most people they are unfamiliar territory. As humans we are all innately scared of the unknown, and the law contains many unknowns for the average person.
Lawyers frequently add to this anxiety by answering questions with questions or presenting a complex array of potential outcomes hinged on minutia. This only adds to the sense of uncertainty, and I have never found this to be a productive way to ease clients’ fears, or effectively shepherd them through a legal dispute.
Instead, I try to focus on identifying and labeling “knowns” and “unknowns.” It is undeniable that “unknowns” are plentiful in the world of real estate lawsuits.
IDENTIFYING AND ACCEPTING UNKNOWNS IN THE LEGAL WORLD
Every case contains at least the following factors, over which one party (and that party’s lawyer) have no genuine “knowledge” or control:
- what a judge or jury will think about a certain “fact,” document, party or witness;
- how the opposing party will react to certain actions, arguments and tactics taken against them in a lawsuit; and
- the exact outcome of a legal dispute decided in a court of law.
In short, the thoughts or actions of another person are always “unknowns” – both in life and in law.
While the unknowns can be reduced to a tolerable range by analyzing possible outcomes and their likelihood, they can never be completely eliminated.
Any lawyer who claims to have a Crystal Ball or clairvoyance is in the wrong business, and should immediately abandon the law practice and start a business “advising” stock market investors, racehorse gamblers and political candidates. Think Biff Tannen in the 80’s movie classic Back to the Future II!
ABSOLUTE TRUTHS IN EVALUATING A REAL ESTATE (OR ANY LEGAL) DISPUTE
While unknowns and uncertainties are inherent in every real estate dispute, there also exist what I call absolute truths. After working for more than 20 years as a real estate attorney who represents both Plaintiffs and Defendants, I have learned that every civil lawsuit (whether related to real estate or some other subject matter) MUST have 3 components to be viable: Liability, Damages and Collectability.
The absence of any one of these components will almost certainly make a real estate lawsuit incapable of ending successfully. No matter how strong any one or two of these components may be, they cannot overcome the absence of the third.
Thus, when analyzing the strength of a claim to be advanced by or against my prospective clients, I always begin with an earnest review of Liability, Damages and Collectability.
If any one of these factors is missing, a legal claim related to real estate has an Achilles’ Heel.
IDENTIFYING “MUST HAVES” BEFORE REAL ESTATE DISPUTES CAN BECOME VIABLE REAL ESTATE LAWSUITS
What follows is a brief discussion of each of the 3 necessary elements of any viable real estate lawsuit:
- Liability – Is the Party Against Whom a Claim is Made bound or obliged in law or justice to do, pay, or make good something?
Any claimant in a real estate dispute bears the burden of proving that the respondent is legally responsible for causing an injury. If the respondent maintains no legal liability for an injury (i.e. if he is “not liable”) then that party cannot be compelled to compensate the claimant.
Under Texas law, the respondent ‘s acts or omissions must be the “proximate cause” of the claimant’s injury. The Texas Pattern Jury Charge requires a jury to answer the following question in order to apportion liability:
“Did the negligence, if any, of those named below proximately cause the [injury] [occurrence] in question?”
If the respondent (who by that point in the process is a “defendant”) did not proximately cause the claimant/plaintiff’s legal injury, then the defendant is not liable to pay damages to the plaintiff.
Analyzing liability, and how it may be apportioned among all of the parties to a legal dispute (including the plaintiff) is essential to understanding the feasibility of a lawsuit. Even cases with huge damages models involving a deep-pocketed opponent are not feasible if that opponent is not liable for the Plaintiff’s injury.
It is critical for the claimant/plaintiff in a real estate dispute to fully appreciate potential problems associated with proving the respondent’s liability. This includes consideration of all legal excuses, affirmative defenses, and bars or defenses. A claimant can best assess whether and how much time, money and energy to invest in pursuing a claim by thoroughly understanding the likelihood of proving the respondent/defendant’s liability.
Likewise, a respondent/defendant in a real estate claim can evaluate his legal options (settle versus litigate) with a realistic comprehension of his potential liability.
In this way, understanding LIABILITY is the linchpin and natural starting point in analyzing the viability of a real estate dispute.
2. Damages – Has the Claimant been harmed, suffered loss or been injured in a legally recognized way?
Even where a defendant is clearly liable for causing an injury to a claimant, the claimant’s damages don’t always justify the effort and expense of pursuing a claim.
Let’s face it – legal services and lawsuits are expensive. In the real estate world, most lawyers rarely take cases on a contingency basis. Thus, the claimant/plaintiff must make an early business decision concerning whether to invest time and money chasing a defendant for a wrongdoing (perceived or actual).
Determining whether damages are significant enough to offset the risk of spending time and money to obtain an uncertain result is frequently the most difficult part of analyzing the viability of a claim. This is true because this aspect of claim analysis involves the most emotion. Where lawsuits are concerned, emotion is rarely the best Guide star.
Some legal injuries are simply not compensable under the law. Other times, the amount of harm (in terms of dollars and cents) is less than the cost of pursuing the claim.
Like unscrupulous funeral directors, some less-than-ethical lawyers seek to prey on prospective clients’ emotions by selling them false expectations of victory, or steering them toward a costly course of action. I tend to go too far in the opposite direction, and seem to talk myself out of work on a regular basis.
While not an “absolute truth,” it is common for real estate lawsuits to last longer and be more costly than predicted on the front-end. For this reason, cases with marginal damages sometimes die a slow death in a war or attrition. This never results in a happy client, and frequently leaves the claimant with buyer’s remorse.
I do my very best to help claimants understand my fervent belief that most cases without significant damage models should not be litigated. Of course, there are exceptions to this rule, but litigating “matters of principle” rarely fits into any recognized exception.
For the most part, I do not accept cases with small damages because I love nothing more than satisfied clients who become lifelong allies. It is nearly impossible to achieve this outcome when simple economics requires a client to spend more in attorneys’ fees and court costs than they can recover.
On the other hand, when defending small cases, I encourage respondents/defendants to consider whether they would rather buy guaranteed peace, or pay me to fight a claim with no certainty of a good outcome. There is always a sense of flattery when a client says:
“I’d much rather pay you to represent me than pay the other side anything.”
Yet, I know that this isn’t really true — we all want to solve problems in the cheapest and most expeditious fashion, even when our emotional side is yelling “Alba gu bràth.”
Even on defense I strongly discourage emotional decisions about litigation strategy. Yet, recognizing that a claimant’s resolve will likely be hampered by their own (or their attorney’s) recognition of the limited upside is part of a defensive strategy.
No matter which side of a real estate dispute you find yourself on, you will be well-served to focus on damages, and whether the juice is with the squeeze.”
3. Collectability – Does the Respondent Have Finds to Settle? Is a Judgment Capable of being Monetized?
As a baby lawyer, I was involved in an injury case where a woman was innocently sitting on her car trunk in the street in front of her home. Suddenly, a drunk driving 20 miles over the speed limit hit her, severing both of her legs. The drunk had no money and no insurance. He also had no non-exempt assets with which to settle or satisfy a judgment.
Liability and damages were both abundantly clear, but the victim did not have a viable case. Any claim against the drunk driver — however strong — was simply not collectable. Since he was headed to prison for his acts, there was also no reasonable expectation nation that he would ever have money to satisfy a claim. This happened 20 years ago, and the victim’s grievous but uncompensated loss disturbs me even today.
Where real estate disputes are concerned, a claimant’s damages are typically far less dramatic than severed limbs. Nevertheless, collectability is essential to any viable real estate lawsuit. Even a substantial jury verdict or judgment against a Judgment-proof Defendant is worthless.
Texas and federal law provide generous exemptions from creditors’ claims. Among other assets, the following personal property is generally exempt from garnishment, attachment, execution or other seizure:
(1) home furnishings, including family heirlooms;
(2) provisions for consumption;
(3) farming or ranching vehicles and implements;
(4) tools, equipment, books, and apparatus, including boats and motor vehicles used in a trade or profession;
(5) wearing apparel;
(6) jewelry not to exceed 25 percent of the aggregate limitations prescribed by Section 42.001(a);
(7) two firearms;
(8) athletic and sporting equipment, including bicycles;
(9) a two-wheeled, three-wheeled, or four-wheeled motor vehicle for each member of a family or single adult who holds a driver’s license or who does not hold a driver’s license but who relies on another person to operate the vehicle for the benefit of the nonlicensed person;
(10) the following animals and forage on hand for their consumption:
(A) two horses, mules, or donkeys and a saddle, blanket, and bridle for each;
(B) 12 head of cattle;
(C) 60 head of other types of livestock; and
(D) 120 fowl; and
(11) household pets.
Wages are also generally exempt from creditors’ claims. Thus, unless a respondent has insurance or substantial assets, the claimant should start with the assumption that she is Judgment-proof.