On September 11, 2018, the U.S. Department of Justice (DOJ) announced a settlement agreement with a Nebraska landlord for violations of the Servicemembers Civil Relief Act (SCRA).[i] The landlord had been charging early lease termination fees to servicemembers who had military orders for a permanent change of station, deployment, or retirement. According to the settlement agreement, the landlord required 65 servicemembers who properly terminated their leases upon receipt of military orders to pay back all “rent concession” amounts they had received over the course of the lease, which violates SCRA.

Under the terms of the settlement agreement, the landlord must pay a total of $76,516 in damages to the 65 identified servicemembers, pay a civil penalty of $20,000 to the federal government, and is prohibited from engaging in future violations of the SCRA.

SCRA prohibits imposing early termination charges when a servicemember lawfully terminates a residential lease upon receipt of qualifying military orders.[ii] SCRA also provides consumer protections for servicemembers in matters such as evictions, rental agreements, security deposits, prepaid rent, mortgage interest rates, mortgage foreclosures, and income tax payments.

DOJ’s enforcement of SCRA is conducted by the Civil Rights Division’s Housing and Civil Enforcement Section and U.S. Attorney’s Offices. According to DOJ’s Official Press Release, the Department has obtained over $467 million in monetary relief for servicemembers through enforcement of SCRA since 2011.

On October 5, 2018, the U.S. Securities and Exchange Commission (SEC) charged a real estate developer in Virginia with violations of the Securities Act of 1933[iii], the Securities Exchange Act of 1934,[iv] and the Investment Advisors Act of 1940[v] for defrauding investors.

The developer is accused of skimming investor funds that were intended for purchasing an office building near the site of the Washington DC metro system’s new transit line in Northern Virginia. He also allegedly commingled and misappropriated investments in several other real estate and investment projects.[vi] The SEC alleges that the developer made misrepresentations about his own investments in the development and misappropriated millions of dollars of investor funds to support an extravagant lifestyle (buying tickets to sporting events, lavish meals, and trips on private jets) as well as to make “Ponzi-like” payments to prior investors.[vii] The Department of Justice (DOJ) is also pursuing criminal charges against the developer for securities fraud.[viii] The developer could potentially face up to 20 years in prison for the alleged offenses.

The Securities Act of 1933 prohibits fraud and misrepresentations in the sale of securities. The Securities Exchange Act of 1934 and Investment Advisers Act of 1940 provide additional restrictions on deceitful and fraudulent conduct. The Securities Act of 1933 and accompanying regulations criminalize the employment of manipulative and deceptive devices in the sale of securities (i.e., securities fraud).  
 

In this case, a seller sued an auctioneer for breach of fiduciary duty resulting from the auctioneer’s failure to convey a verbal offer to the seller. The case was filed in Bessemer Circuit Court in November 2013.

The seller claimed that prior to the auction, the auctioneer failed to convey a verbal offer that was made by a person later determined to be an agent of the City of Bessemer. The verbal offer was much higher than the final bid, which was also made by the City’s agent. In his complaint, the seller claimed the auctioneer was liable for breach of fiduciary duty, breach of contract, fraud and negligence.

The auctioneer argued that the verbal offer was invalid under the statute of frauds (requiring contracts for the sale of real estate to be in writing) and moved for summary judgment. The seller responded that the statute of frauds covers only “agreements” for the sale of real property and not “offers,” and further, that the statute was irrelevant since the case “centered around breach of a fiduciary duty by the defendants.”[xi] The trial judge denied the auctioneer's summary judgment motion without issuing an opinion.

The case went to trial in March 2016, and the jury rendered a verdict in favor of the seller. In awarding damages, the jury did not assess the full difference between the verbal offer ($220,000) and the final bid at auction ($19,752), but more or less split the difference at $78,273. The auctioneer subsequently filed an appeal with the Alabama Court of Civil Appeals, who affirmed the trial court without an opinion in March of 2017. The auctioneer then petitioned for a writ of certiorari to the Alabama Supreme Court, which was denied without opinion in November 2017.  

Summary:

On August 29, 2018, the Alabama Supreme Court released its decision in Portersville Bay Oyster Company, LLC, et al. v. Blankenship. In this case, several owners of oyster harvesting operations sued the Alabama Department of Conservation and Natural Resources (“the Department”) and its contractors for inverse condemnation. The harvesters claimed the Department’s authorization of a wetlands project near their operations caused silt contamination and harmed their oyster beds, constituting inverse condemnation. The Department argued that the harvesters did not have a valid cause of action. The Alabama Supreme Court sided with the plaintiffs, in a victory for private property rights.

Background:

The plaintiffs in this case were several companies who had oyster harvesting operations near Bayou La Batre, AL. One company harvested oysters on the sea floor several hundred feet from land owned by a timber company, which action is authorized by state law providing landowners and their lessees the right “to plant and gather” oysters in the waters in front of their land to the distance of 600 yards from the shore.”[xii] The other company had a shellfish aquaculture easement from the Department, and grew their oysters in cages on the easement tract.

Near these operations, the Department authorized the construction of a wetlands/marsh area that ended up disseminating sediment and silt, which the plaintiffs said damaged many of their oysters. The plaintiffs sued the Department for inverse condemnation. The trial court entered final judgment for the Department, and the plaintiffs appealed.

Alabama Supreme Court Decision:

The Department argued that the shellfish aquaculture easement granted to one of the plaintiffs deprived them of the ability to seek compensation for inverse condemnation based on language in the easement grant. The language at issue prohibited a claim of “title or interest” to the easement premises by the oyster farmers. The plaintiffs replied that the grant only prohibited claiming ownership of the property on which the easement was given, rather than the oysters grown upon it. Otherwise, the easement would effectively be rendered useless since the State could damage personal property on the easement at will without paying compensation. The Supreme Court agreed that the plaintiffs had a right to claim damages for the property damaged on their easement.

In addition, the Department argued that under the Alabama Supreme Court’s holding in Ex parte Carter,[xiii] a statute must specifically authorize an inverse condemnation suit for the specific type of taking before a plaintiff can make a claim. Here, the Department argued that since there is no such statute for claims about silt and sediment dissemination damaging oyster harvesting, the plaintiffs’ claim was invalidated. On appeal, the plaintiffs requested that Carter be overruled.

The court sided with the plaintiffs and overruled Carter. The Supreme Court relied on precedent for the principle that since the state has the inherent power to condemn property, an inverse condemnation action “pursuant to the rights recognized by § 23, Ala. Const. 1901, did not depend on whether the legislature had adopted procedures for certain types of taking.”[xiv] That is to say, a claim for inverse condemnation of a specific category of property does not require a specific statute authorizing that cause of action.