Introduction to Civil Law

Say What – A Little Out of Touch With Reality

Originally published by State Bar of Texas .

This contribution is from Justice Bob McCoy of Fort Worth (Second istrict Court of Appeals), who suggests that a possible title might be “So There is a Texas A&M Law School After All.”

The following excerpts come from the deposition of an individual who is appealing his conviction for assault of a corrections officer.

A. I’m a state judge from Bryan/College Station.

Q. I didn’t realize you were a judge.… [D]o you wear your judge robes in prison?

A. No, sir, I don’t. I come here on leave out of the county. …

Q. Went to high school and college. Where did you go to college?

A. Bristo A&M [sic]. What they call Texas A&M University. …

Q. How did you become a judge?

A. I went to school, got licensed to be a — practice law.

Q. Was that over at Bristo A&M?

A. Yes it was. …

A. You still can go to school there and practice law and be a judge.

Q. [M]aybe you ought to write a letter to the State Bar and let them know it’s there.

A. I own the damn State Bar.

Q. You own the State Bar?

A. Yes, I do. …

Q. And are they one of the reasons you’re in jail because you just don’t do what the State Bar wants?

A. Yes, sir. I come here on leave undercover from — I mean, other than Bryan, College Station. …

Q. Are you sure you’re not just a little out of touch with reality?

A. No sir, I’m not. I completed high school and college.

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Under Florida Law, a "Sudden" Event Can Occur Over Time

Originally published by Larry Bache .

If you are a frequent reader of this blog, you are likely familiar with the general rule that policy language determined to be ambiguous is read in favor of the insured because the insured is the nondrafting party. A contract is ambiguous when its language is reasonably susceptible to more than one interpretation, or is subject to conflicting interests.

There are two types of ambiguities — patent and latent.

Patent ambiguities are on the face of the document or policy, while latent ambiguities do not become clear until extrinsic evidence is introduced and requires parties to interpret the language in two or more possible ways.

Recently, the Second District Court of Appeal overturned a summary judgment in favor of the insurer, Castle Key Indemnity Company, holding that the term “sudden,” as used in the policy, was a latent ambiguity.

In Price v. Castle Key Indemnity Company,1 water flowed from a pipe going to Mr. Price’s upstairs toilet for approximately thirty days…

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SEC: Futuristic Bitcoins Stolen in an Old-Fashioned Scam

Originally published by By Brian Humphrey .

In an ongoing lawsuit by the Securities and Exchange Commission (SEC) against a Texas man it has accused of defrauding investors in a Ponzi scheme involving the popular “virtual currency” Bitcoin, Federal Magistrate Judge Amos Mazzant of the Eastern District of Texas re-affirmed in August his earlier denial of the defendants’ motion to dismiss. In his ruling, Judge Mazzant held that Bitcoin is “money” and that contracts involving the investment of Bitcoin rather than traditional currency are nonetheless subject to federal securities law. In an ironic twist, the ruling lends credibility to Bitcoin as a currency while simultaneously allowing the government to proceed in a case highlighting Bitcoin’s risks and to potentially subject it to closer regulation-certainly an uncomfortable situation for a currency whose entire point is to serve as an alternative to government-sponsored legal tender.

Bitcoin, described by its developers as “open source, peer-to-peer money,” is an online payment system that takes the form of a virtual currency and has been in existence since early 2009. Bitcoins are created by “mining,” where users are rewarded with bitcoins when their computers perform the processing work required to process Bitcoin payments and maintain the public ledger that records Bitcoin transactions and prevents them from being “double spent” or counterfeited. Once “mined,” Bitcoins can be circulated similarly to other currency, being used to pay for goods and services or sold for traditional currency.

Unlike traditional currencies, there is no government, central bank, clearing house, or other authority issuing Bitcoin or ensuring its integrity. Rather, bitcoin is a “cryptocurrency” that depends on cryptography both to prevent counterfeiting and to regulate its creation.

While Bitcoin is a fascinating and innovative experiment in economics and the nature of money itself, it shows few indications of becoming reliable either as a currency or an investment in the near future. Currently, while a number of businesses do accept payment in Bitcoin, the majority of economic activity involving Bitcoin is trading by speculators. This has resulted in a great deal of volatility that has impaired its use as a medium of exchange and a store of value. In the last 12 months, the price of one Bitcoin in US dollars has ranged between $122 and over $1,100.

Then there are fraudsters who use the novelty and excitement surrounding Bitcoin to separate unwitting investors from both their Bitcoins and their real money. In the case pending before Judge Mazzant, the SEC alleges that Trendon Shavers, owner of the Texas-based “Bitcoin Savings & Trust,” is one such con artist. The lawsuit alleges that Shavers promised up to 7% returns to those who deposited their Bitcoins with him.

Rather than a futuristic Bitcoin investment bank, however, the SEC alleges that Bitcoin Savings & Trust was nothing more than an old-fashioned Ponzi scheme. The Bitcoins invested with Shavers were not generating any actual returns. Instead, Shavers used a portion of new investors’ deposits to pay “interest” to his old investors, with the rest of the Bitcoins going into Shavers’ virtual pocket. The SEC alleges that Shavers’ investors lost a total of 263,104 Bitcoin, worth $3 million at the time the Ponzi scheme inevitably collapsed in 2012. Those Bitcoin would be worth over $26 million today.

Shavers does not appear to be disputing that he was operating a Ponzi scheme. Instead, his defense has been that Bitcoin is not real money and is not regulated at all by the U.S. government. His argument was that Bitcoins represent nothing more than abstractions, like points in a video game, and that defrauding people out of them is not a crime. However, as Judge Mazzant pointed out, Bitcoin can certainly be used as money, as Shavers proved by using his stolen Bitcoin to pay for his own living expenses. Bitcoin can also be exchanged for conventional currencies, to the tune of over $470 US per Bitcoin at last count.

There is nothing unique about Bitcoin that allowed it to be used in a Ponzi scheme-luring marks in with arcane, novel, and unusual investment ideas has been a staple of the Ponzi scheme from day one. Charles Ponzi himself told his victims in the 1920s that he was making them money by arbitrage on postal reply coupons.

As innovative and fascinating as Bitcoin is, it is still in its infancy. It is a risky way to make money, and is no more immune to fraud than any other type of investment.

If you or someone you know has been the victim of investment or securities fraud, contact the attorneys at Abraham, Watkins, Nichols, Sorrels, Agosto, and Friend by calling 713-222-7211 or 1-800-870-9584.

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Say What?! – Did I Really Hear That?

Originally published by State Bar of Texas .

From Martha Failing of Houston (Martha Failing & Co.), a trilogy of “words that blossomed” in hearings before Judge Jim Scanlon (Probate Court No. 3 of Harris County):

“First, earnest lawyer speaking to witness in hearing to determine heirship:”

Q. Tell me, ma’am, how well did you know the late decedent?

Martha comment: How well did she know the early decedent? Or was there a later one?

***

“Second, intense lawyer summarizing the testimony elicited during a hearing, the point of which I never got.”

…your Honor, that the decendent was hit and killed by the truck without just cause.

Martha comment: I would have objected that the testimony of the truck was not in evidence and besides, maybe the truck did have just cause, but I was just an innocent bystander.

***

“And third, grave lawyer with arm around the shoulders of the client, in beseeching voice:”

And your Honor, we respectfully request that this will be admitted to probate as a monument of title.

Martha ends with this note: “Lawyers never cease to amaze me: what we say as opposed to what we mean.” How true!

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Does Vacancy Preclude Coverage, Even If Not Related to Cause Of Loss?

Originally published by Phillip Sanov .

The Texas Supreme Court recently ruled that a vacancy clause remained enforceable by the insurance carrier to preclude coverage in a homeowner’s claim, even though the vacancy played no role in the cause of loss. In Greene v. Farmers Insurance Exchange,1 the Court found in favor of the insurance carrier with analysis that the case turned on the coverage purchased by the homeowner that Farmers had agreed to provide. The homeowner, the Court concluded, sought “to have [the Court] re-write the insurance policy under the guise of ‘construing’ it so Farmers provides coverage it did not agree to provide, and [the homeowner] receives coverage she did not contract for.”

Background Facts From The Lower Courts

A house in Irving, Texas, that had been vacant for several months was damaged when fire spread to it from a neighboring property. The house was insured under a homeowner’s insurance policy issued by Farmers Insurance Exchange containing a clause suspending…

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District court judge, State Bar staff member receive prestigious awards

Originally published by Lindsay Stafford Mader .

The Judicial Section of the State Bar of Texas recently presented two of its most important awards at the Bar Foundation Luncheon, held in conjunction with the Judicial Education Conference in Fort Worth, on Sept. 8, 2014. Tracy Nuckols, project manager of State Bar sections, received the Friend of the Judiciary Award, and Larry Gist, senior criminal district judge of the Jefferson County Drug Impact Court in Beaumont, received the Lifetime Achievement Award.

The Judicial Lifetime Achievement Award is given annually by the section to a current or former Texas judge who has earned a reputation for judicial excellence. “I am very honored to receive this exceptional award,” said Gist, who is the first non-Supreme Court of Texas justice to receive the award. “I hope it encourages all judges to not only be fair and impartial but to make sure that the perception of fairness is always shown. I am very proud to be a member of the judiciary of Texas and serve with so many outstanding men and women.”

In the presence of about 600 Texas judges, Nuckols accepted the Friend of the Judiciary Award, which has been presented to state lawmakers. Nuckols, who has worked for the bar for 16 years, manages a four-person department that is responsible for helping the 47 sections of the State Bar with their communications, newsletters, websites, and other initiatives.

“It meant a great deal to me that the Judicial Section recognized me by giving me this award,” said Nuckols. “I was very honored—and surprised. But it is mainly a recognition of the people who I work with—they are enthusiastic and they are problem-solvers. I could not do this job without them.”

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