For example, a professional association of physicians could never acquire exclusive rights to register a service mark under the name“Health Care Services.” Such a mark does little to dis
Trang 1services provided in the same field Service marks consist of letters, words, symbols, and other devices that help inform consumers about the origin or source of a particular service Roto-Rooter is an example of a service mark used by a familiar plumbing company TRADEMARKS, by contrast, are used to distinguish competing products, not services Whereas trademarks are normally affixed to goods by means of a tag or label, service marks are generally displayed only through advertising and promotion
Service marks are regulated by the law of
UNFAIR COMPETITION At the federal level, service mark INFRINGEMENT is governed by the LANHAM TRADEMARK ACTof 1946 (15 U.S.C.A § 1051 et
seq.) At the state level, service mark infringe-ment is governed by analogous INTELLECTUAL PROPERTY statutes that have been enacted in many jurisdictions In some states, service mark infringement may give rise to aCAUSE OF ACTION
under the COMMON LAW Because service marks are a particular type of trademark, the substan-tive and procedural rules governing both types
of marks are fundamentally the same
The rights to a service mark may be acquired
in two ways First, a business can register the mark with the government Most service marks are eligible for registration with the U.S.PATENT AND TRADEMARK OFFICE Several state governments have separate registration requirements Once a service mark has been registered, the law typically affords protection to the first mark filed with the government Second, a business may acquire rights to a service mark through public use
However, a mark must be held out to the public regularly and continuously before it will receive legal protection Sporadic or irregular use of a service mark will not insulate it from infringement
To receive protection, a service mark must also be unique, unusual, or distinctive Com-mon, ordinary, and generic marks rarely qualify for protection For example, a professional association of physicians could never acquire exclusive rights to register a service mark under the name“Health Care Services.” Such a mark does little to distinguish the services provided
by the business and tells consumers nothing about the HEALTH CARE practitioners involved
The law could give full legal protection to these same doctors, however, if they were to apply for a mark under the name “Snap and Jerk Chiropractic Services.”
Once a business has established vested rights
in a service mark, the law forbids other businesses from advertising their services with confusably similar marks Service mark in-fringement occurs when a particular mark is easily mistaken for other marks already estab-lished in the same trade and geographic market Greater latitude is given when businesses that share similar marks are in unrelated fields or offer services in different consumer markets For example, a court would be more inclined to allow two businesses to share the same mark when one business provides pest control services in urban areas, while the other provides film developing services in rural areas
Two remedies are available for service mark infringement: injunctive relief (court orders restraining defendants from infringing on a plaintiff’s service mark) and money damages (compensation for any losses suffered by an injured business) Both remedies are normally available whether a claim for infringement is pursued under state or federal law However, the
LANHAM ACTallows an injured business to recover significantly greater damages for infringement of
a federally registered mark than it could recover under comparable state legislation
Service marks protect the good will and reputation earned by businesses that have invested time, energy, and money in bringing quality services to the public Service marks also encourage competition by requiring businesses
to associate their marks with the quality of services they offer In this way, service marks function as a barometer of quality upon which consumers may rely when making decisions to purchase However, service marks are often infringed, and consumers grow leery when inferior services are passed off as a competitor’s through use of too similar a mark Thus legal protection of service marks can save consumers from making improvident expenditures for services of dubious or unknown origin Since the late 1990s, service marks have been registered in connection with the con-struction of sports stadiums and arenas In
2005 sports stadium and arena construction projects reached a total cost of approximately
$10 billion Apart from their expensive costs, sports facilities are receiving public attention for another reason, specifically the involvement of major corporations with regard to naming rights Generally, the sale of a naming right
Trang 2grants a private entity the right to license the
sports stadium the entity’s name in exchange
for monetary payments over a certain period of
time The sale of naming rights provides a
major source of funds for expensive
construc-tion such as the Naconstruc-tional Football League (NFL)
stadium in Denver, Invesco Field at Mile High,
which cost about $400 million
Some companies use naming rights not only
to build brand awareness but also to extend
legal protection for their service marks
Gener-ally corporate sponsors register their service in
the international class 041 (“Education and
entertainment”) The registered service marks
of the corporate naming rights sponsors
typically consist of their previously established
service marks plus the term“Field,” “Stadium,”
“Park,” or “Center.” The registrations usually
contain a disclaimer for the affix; for example,
“no claim is made to the exclusive right to use
‘Stadium’ apart from the mark as shown.” The
corporate sponsors have registered different
descriptions of their services, but two general
expressions have been widely used: providing
stadium facilities for sports and entertainment
and providing entertainment in the nature of
sporting events
Examples of service mark registrations
include: BUSCH STADIUM, “Providing a
sporting and entertainment facility for the
enjoyment of others,” owned by
Anheuser-Busch, Incorporated; UNITED CENTER,
“En-tertainment services; namely providing and
leasing stadium facilities for sporting events ,”
owned by United Airlines, Inc.; INVESCO
FIELD AT MILE HIGH,“Providing facilities for
sporting events, namely football games and soccer
Matches ” owned by Amvescap PLC Company
United Kingdom;
Some legal observers have questioned the
validity of these service marks, especially when
they are registered by a company that ordinarily
sells products and not services PepsiCo, for
example, sells beverages and snack products So
what legal purpose is served by allowing the
company to register a service mark for the
naming rights it owns in the Pepsi Center in
Denver, Colorado? The answer is that PepsiCo
negotiated the right to pour its Pepsi products
to customers for all events at the Pepsi Center
plus the first option for in-arena vending rights
and concession trade for PepsiCo’s subsidiary
food product division, which at the time PepsiCo
registered its service mark included Taco Bell, Pizza Hut, and Kentucky Fried Chicken In determining the validity of any service mark, the PTO will consider each case on its own merits The PTO has typically made its determi-nations in conjunction with traditional service businesses such as laundries, insurance compa-nies, telephone compacompa-nies, and railroads It remains to be seen whether the PTO will encounter any thorny legal challenges to this relatively new type of service mark
CROSS REFERENCES Consumer Protection; Trademarks.
SERVICE OF PROCESS Delivery of a writ, summons, or other legal papers
to the person required to respond to them
Process is the general term for the legal document by which a lawsuit is started and the court asserts its jurisdiction over the parties and the controversy In modern U.S law, process is usually a summons A summons is a paper that tells a defendant that he is being sued in a specific court that the plaintiff believes has jurisdiction Served with the summons is a complaint that contains the plaintiff’s allega-tions of wrongdoing by the defendant and the legal remedy sought by the plaintiff The summons also informs the defendant that he has a specified number of days under law to respond to the summons and complaint If the defendant does not respond, the plaintiff may seek a default judgment from the court, granting the plaintiff the legal relief specified
in the complaint
Rules of CIVIL PROCEDURE and CRIMINAL PRO-CEDUREdetermine the proper form of legal pro-cess and how it should be served The rules vary among federal and state courts, but they are meant to give the defendant notice of the proceedings and to command him to either respond to the allegations or to appear at a specified time and answer the claim or criminal charge The concept of notice is critical to the integrity of legal proceedings DUE PROCESS
forbids legal action against a person unless the person has been given notice and an opportu-nity to be heard
Process must be properly served on all parties in an action Anyone who is not served is not bound by the decision in the case A person
SERVICE OF PROCESS 129
Trang 3who believes that proper service has not taken place may generally challenge the service without actually making a formal appearance
in the case
Whether service was proper is usually deter-mined at a pretrial hearing A defendant must request a special appearance before the court A special appearance is made for the limited purpose of challenging the sufficiency of the service of process or thePERSONAL JURISDICTIONof the court No other issues may be raised with-out the proceeding becoming a general appear-ance The court must then determine whether it has jurisdiction over the defendant
Methods of Service Three basic methods are used for service of process: (1) actual, or personal, service, (2) substituted service, and (3) service by publica-tion Although each method is legally accept-able,PERSONAL SERVICE is preferred because it is the most effective way of providing notice and
it is difficult for the defendant to attack its legality
Personal service means in-hand delivery of the papers to the proper person Traditionally personal service was the only method of service allowed by law because it was best suited to give the defendant notice of the proceedings
Substituted service is any method used instead of personal service Forms of substituted service vary among different jurisdictions, but all are intended to offer a good chance that the defendant actually will find out about the pro-ceedings If a defendant is not at home, many states permit service by leaving the summons and complaint with any person at the defendant’s home who is old enough to understand the responsibility of accepting service Some states permit service by affixing the summons and complaint to the entrance of the defendant’s home or place of business and then mailing a copy of the papers to that individual at his last known address This method is often called
“nail and mail” service A number of states allow service simply by mailing the papers to the defendant’s actual address; registered mail is generally required States also consider service valid if the defendant’s property is attached, or legally seized, within the state and the papers are then mailed to him
Under the laws of some states, substituted service may be used only after diligent efforts to
effect personal service have failed Some forms
of substituted service may have to be tried before others can be used Other states permit substituted service at any time or after a single attempt to find the defendant and serve the papers personally
A third method of service is publication of a notice in a newspaper Publication is also called constructive service because the court construes
it to be effective whether the defendant actually reads the notice or not Generally, service by publication is allowed only by leave of the court, which usually grants permission only when the plaintiff can show that no other method of service can be effected Usually the legal notice must be published in at least one newspaper of general circulation where the defendant is likely
to be found or where the court is located, or in both places Ordinarily the notice must be published on more than one occasion, such as once a week for three weeks
In truth, courts realize that defendants rarely read notices published in newspapers, but the effort must be made when the defendant cannot be found and served in any other way Plaintiffs prefer not to use publication because it
is expensive and a court might later find that the defendant could have been served personally
Where Process May Be Served Legal papers may have to be served within the geographical reach of the jurisdiction, or authority, of the court If the service itself is the basis for the court’s jurisdiction over the defendant, then the service usually must be made within the state For lower-level courts, service may have to be made within the county where the court is located Trial courts of general jurisdiction usually permit service anywhere within the state Service of process for an action in a federal district court may be made anywhere within the state where the court sits or, for some parties, any place in the United States that is not more than one hundred miles from the courthouse
A variety of statutes permit state courts to exercise authority over persons not physically present within the state These are calledLONG
-ARM STATUTES They specify factors, other than the defendant’s physical presence within the state, that provide sufficient justification for the court to exercise jurisdiction over the defen-dant, such as doing business within the state or
Trang 4having an automobile accident within the state.
When one of these factors exists, the
prospec-tive defendant can be served with legal process
outside the state because the service itself is not
the basis of the court’s jurisdiction
Substituted or constructive methods of
service may be used on a defendant who comes
within the long-arm jurisdiction of the state
For example, many states permit a plaintiff to
serve an out-of-state resident who was involved
in a traffic accident in the state by serving legal
process on the attorney general of the
defen-dant’s state and then sending copies to the
defendant at his residence The statute makes
the attorney general the agent for the service of
process on out-of-state drivers Such a statute is
based on the theory that a nonresident driver
has consented to this method of service by using
the highways and facilities within the state
Who Must Be Served
Service of process is effective only if the right
person is served When the defendant can be
described but not named, service by publication
can be made with a fictional name like Richard
Roe Where the defendant is not a natural person
but a corporation, statutes generally provide for
effective service on a managing agent, a director,
an officer, or anyone designated an agent in the
corporation’s application for a charter or a
license to do business within the state
If the person to be sued is a child or a
person incapable of managing his own legal
affairs, service may be made on a parent,
guardian, or someone else entrusted with the
defendant’s care or affairs The plaintiff may ask
the court to designate a proper person when
there is doubt An estate can be sued by service
of process on an executor or administrator The
plaintiff may ask the court to appoint such a
person if none has yet been named
When more than one person is being sued,
each of them must be served For example, if a
partnership is sued, each partner must be
served
When Papers Can Be Served
The proper time for service of process depends
on the law of the jurisdiction Service must be
made within the time that the STATUTE OF
LIMITATIONS allows for starting that particular
kind of action because it is service that starts
the lawsuit
Many states have long prohibited personal
or substituted service on Sunday Service is also prohibited on legal holidays in some states
Process Servers Every jurisdiction specifies who may serve process Many states take a simple approach and allow service by any person over the age of 18 who is not a party to the suit Under federal law service of anything other than a summons, complaint, or subpoena must be made by a U.S marshal, a deputy marshal, or someone else appointed by the court Some states also follow this procedure and designate that such qualified service shall be by a sheriff or similar peace officer
In some jurisdictions anyone who serves more than a specified small number of sum-monses a year must be licensed Laws generally provide for fines or imprisonment of a process server who fails to obtain a required license A court will not dismiss cases started with service
by an unlicensed process server
For the most part, courts have allowed process servers to use any means necessary to serve papers on reluctant defendants as long as
no law is broken For example, a process server can knock on the defendant’s door and state that he has a package for the defendant If the defendant opens the door, the resulting service
of process is valid
A defendant cannot avoid the service of process by refusing to accept delivery of the papers Many cases have upheld service where the process server dropped the papers at the defendant’s feet, hit the defendant in the chest with them, or even laid them on the defendant’s car when he refused to get out or open the door
Invalid Service The tricks of serving process papers can, however, reach a point that the courts will not tolerate because they subvert the purpose of service or threaten to disrupt the administration of justice
The most intolerable abuse is called sewer service
It is not really service at all but is so named on the theory that the server tossed the papers into the sewer and did not attempt to deliver them to the proper party Sewer service is aFRAUDon the court, and an attorney who knowingly partici-pates in such a scheme can be disbarred
Anyone who serves process must file an
AFFIDAVITof service with the court, giving details
SERVICE OF PROCESS 131
Trang 5of the delivery of the papers If the facts in an affidavit of service falsely assert that the papers were delivered, the person who swears to them can be prosecuted for the crime of perjury In addition, the plaintiff’s action will not have commenced If the statute of limitations has expired by the time the true facts of the improper service are disclosed, the action is completely barred and the plaintiff has lost the right to sue
Service is also invalid if the defendant has been enticed into the jurisdiction by fraud
Courts have ruled that luring a potential defen-dant into the state in order to serve him with process when no other grounds exist to assert jurisdiction over him in that state violates the individual’s right to due process of law Service of process by fraud is null and void
Immunity from Service of Process Courts typically grantIMMUNITYfrom process to anyone who comes within reach of the authority
of the court only because he is required to participate in judicial proceedings The purpose
of this immunity is to ensure a fair trial by encouraging the active and willing participation
of witnesses and parties If a witness was discouraged from coming into a state because
of the risk of being sued in that state, justice would not be served
Immunity also protects nonresident attor-neys, parties, and witnesses from being served with process in unrelated actions while attend-ing, or traveling to, criminal or civil trials within
a state This immunity has been extended to protect out-of-state parties who enter a state not for trial but to settle a controversy out of court
Diplomatic personnel, ambassadors, and con-suls who are in the United States on official business are also immune from process
SERVICEMEMBERS CIVIL RELIEF ACT Congress passed the first Soldiers’ and Sailors’
Civil Relief Act in 1918 (50 App U.S.C.A § 501
et seq.) This act was designed to protect the
CIVIL RIGHTSand legal interests of individuals in the ARMED SERVICES during WORLD WAR I and ensure that they would not be distracted by legal obligations at home The act did not prevent persons from suing servicemembers Rather, it allowed a court to stay civil proceedings against them The act authorized a court to suspend legal actions against a member of the armed
forces during his time of service if the court determined that he was unable to defend himself in court because of active duty Congress passed a revised version of the act
in 1940, authorizing courts to postpone pro-ceedings against servicemembers beyond the time of active duty and until they were capable
of protecting their interests The 1940 amend-ments had three objectives concerning service-members: to suspend civil judicial actions until they could appear in court, to provide them peace of mind during their fighting, and to give them time to return home after service to protect their endangered interests Congress amended the act several times since 1940, usually to keep courts from interpreting the act too narrowly against servicemembers In addition, Congress has expanded coverage of the act to include all members of the armed forces including reservists In 2002 Congress brought members of the National Guard under the provisions of the law when“under a call to active service authorized by the President or the Secretary of Defense for a period of more than
30 consecutive days for purposes of respond-ing to a national emergency declared by the President and supported by Federal funds.” In
2003 Congress rewrote the act and renamed it the Servicemembers Civil Relief Act
The act provides servicemembers with three types of relief from judicial proceedings They may request a stay of proceedings, a reopening
of a DEFAULT JUDGMENT, or a stay of execution against a judgment To obtain any relief, a court first must find that the servicemembers’ ability
to defend their cases was affected by their service
Servicemembers may postpone proceedings during service or within 60 days after service Servicemembers or acquaintances of service-members may apply for a stay of proceedings with the court, or the court may decide on its own to issue a stay If a stay is issued, the case remains postponed until the court determines that the servicemember’s ability to defend against the suit is no longer affected by his or her military service
If servicemembers fail to obtain a stay of the proceedings and the trial court issues a default judgment, servicemembers may reopen the case To reopen a default judgment, service-members must apply with the trial court while still on active duty or within 90 days of discharge
Trang 6Congress has allowed servicemembers to reopen
only those default judgments that were rendered
during the servicemembers’ terms of service
or within 30 days after discharge Reopening a
default judgment gives a servicemember an
opportunity to present his or her defense to the
lawsuit
If a servicemember is unable to obtain a stay
or reopen a default judgment, he or she may
stay the execution of the judgment This does
not eliminate the default judgment; rather, it
gives the servicemember time to appeal the
judgment and prevents authorities from taking
the property of the servicemember in
satisfac-tion of the judgment during the appeal process
In 2003 Congress completely revised the act
and renamed it the Servicemembers Civil Relief
Act (SCRA), Pub.L No 108-189 (2003) This
was the first complete revision of the law since
1940 The SCRA sought to clarify statutory
language, incorporate decades of judicial
inter-pretations of the act, and update the provisions
to reflect accepted practices and new
develop-ments in U.S society
FURTHER READINGS
American Bar Association 2007 The Judge Advocate
General’s School Guide to the Servicemembers Civil Relief
Act Chicago: ABA.
Cushing, Peter C 2004 “Protecting Military Families: The
New Servicemembers Civil Relief Act ” Florida Bar
Journal 78 (December).
CROSS REFERENCES
Military Law; National Guard.
SERVICEMEN’S READJUSTMENT
ACT OF 1944
See GI BILL
SERVITUDE
The state of a person who voluntarily undertakes
the role of being a servant to another or who is
involuntarily forced to be a servant to another; in
property law, a charge or burden resting upon one
estate for the benefit or advantage of another
INVOLUNTARY SERVITUDE, which may be in the
form of SLAVERY, peonage, or compulsory labor
for debts, is prohibited by the THIRTEENTH
AMENDMENT to the U.S Constitution Article I,
Section 9, of the original Constitution had given
Congress the power to restrict the slave trade by
the year 1808, which it did, but slavery itself was
not prohibited until the Thirteenth Amendment was enacted in 1865 The slave trade had begun
in the American colonies in the seventeenth century and involved the forcible taking and transport of Africans and others to sell as slaves
The Thirteenth Amendment’s prohibition against slavery encompasses situations where
an individual is compelled by force, coercion, or imprisonment, and against his or her will, to labor for another, whether he is paid or not
The term servitude is also used in PROPERTY LAW In this context, servitude is used with the term easement, a right of some benefit or BENE
-FICIAL USEout of, in, or over the land of another
Although the terms servitude and easement are sometimes used as synonyms, the two concepts differ A servitude relates to the servient estate or the burdened land, whereas an easement refers to the dominant estate, which is the land benefited
by the right Not all servitudes are easements, because they are not all attached to other land as appurtenances (An APPURTENANCE is an append-age or something that belongs to something else.) All servitudes affecting lands are classified as either personal or real Personal servitudes are established for the benefit of a particular person and terminate upon the death of that individual
A common example of a personal servitude is the use of a house Real servitudes, also called
“landed servitudes,” benefit the owner of one estate through some use of a neighboring estate
AtCIVIL LAW, real servitudes are divided into two types: rural and urban Rural servitudes are established for the benefit of a landed estate;
examples include a RIGHT OF WAYover a servient tenement and a right of access to a spring, sandpit,
or coal mine Urban servitudes are established for the benefit of one building over another; some examples are a right of support, a right to a view, and a right to light Despite the name urban servitude, the buildings do not have to be in a city
Servitudes are also classified as positive and negative A positive servitude requires the owner of the servient estate to permit some-thing to be done on his or her property by another A negative servitude does not bind the servient owner in this manner but merely restrains him or her from using the property
in a manner that would impair the easement enjoyed by the owner of the dominant estate
CROSS REFERENCES Slavery; Thirteenth Amendment.
SERVITUDE 133
Trang 7SESSION The sitting of a court, legislature, council, or com-mission for the transaction of its proper business
A session can be the period of time within any one day during which the body is assembled and engaged in business In a more extended sense, the session can be the whole space of time from the first assembling of the body to its adjournment
A joint session is the convening of the two houses of a legislative body to sit and act together
as one body, instead of separately in their res-pective houses
As applied to a court, the word session is not strictly synonymous with the word term The session of a court is the time during which it actually sits each day for the transaction of judicial business A term of a court is the period fixed by law—usually amounting to many days
or weeks—during which it is open for judicial business and during which it can hold sessions from day to day The two words are, however, frequently used interchangeably
SET ASIDE
To cancel, annul, or revoke a judgment or order
SET DOWN
To list a case in a court calendar or docket for trial
or hearing during a particular term
SET-OFF
A demand made by the defendant against the plaintiff that is based on some transaction or occurrence other than the one that gave the plaintiff grounds to sue
The set-off is available to defendants in civil lawsuits Generally, civil actions are brought by plaintiffs seeking an award of damages for injuries caused by the defendant In customary practice the plaintiff files the suit and the defendant answers it The defendant may assert
a counterclaim against the plaintiff based on an event or transaction other than the event or transaction that forms the basis of the plaintiff’s suit A set-off is a counterclaim with the particular goal of defeating or diminishing the amount the defendant will have to pay if the plaintiff’s suit succeeds
The set-off has two distinctive features It must be based on an entirely different claim from
that of the plaintiff, and it must be a valid legal claim that the defendant could bring as a separate suit For example, a stereo store sues a customer for $700 due in outstanding payments on a home theater system However, the customer’s car was damaged in the store’s parking lot when the store’s delivery van backed into it, and the repairs cost $500 As the defendant, the customer has the right to assert a counterclaim for damages to the car; if the customer is successful, the set-off reduces the amount owed to the plaintiff store so that the defendant owes the plaintiff only $200
The remedy of recoupment is similar in effect
to a set-off but differs from it in several respects Whereas a set-off is based on a different claim, recoupment is a common-law remedy based specifically on the contract between the plaintiff and defendant that gave rise to the suit It allows defendants to claim damages against the plaintiff under two conditions: where the plaintiff has not complied with some contractual obligation or where the plaintiff has violated some duty that the law imposed in the making or performance
of the contract Recoupment usually occurs in cases where the plaintiff has performed only a portion of the contract and sues for compensa-tion for the partial performance For example, the defendant in the stereo store’s action might demand recoupment for the store’s failure to service the stereo under itsWARRANTY
Like all counterclaims, set-off and recoup-ment seek to achieve justice by BALANCING the plaintiff’s and the defendant’s rights They are designed to prevent a plaintiff from recovering complete damages from a defendant who has suffered injury or damages caused by the plaintiff They can also save time and money By combining the entire controversy within one action, recoupment and set-off prevent the courts from being inundated with multiple lawsuits
SETBACK
A distance from a curb, property line, or structure within which building is prohibited
Setbacks are building restrictions imposed
on property owners Local governments create setbacks through ordinances and BUILDING CODES, usually for reasons of public policy such
as safety, privacy, and environmental protec-tion Setbacks prevent landowners from crowd-ing the property of others, allow for the safe placement of pipelines, and help to preserve
Trang 8wetlands Setbacks form boundaries by
estab-lishing an exact distance from a fixed point,
such as a property line or an adjacent structure,
within which building is prohibited Generally,
prospective buyers learn that land is subject to
setback provisions when they are considering
purchasing it This information is important to
future development plans, because setbacks
remain in effect until changed by law or special
action of a local government
Setbacks can significantly affect a property
owner’s right to develop land or to modify
existing structures on the land For this reason
they can influence property values; severe
restrictions on land can decrease its value
Violating setback provisions can lead to legal
action against a property owner, and penalties
can include fines as well as an order to remove
noncompliant structures Property owners
whose desire to build is stymied by setbacks
have few remedies They can petition their local
government by applying for a variance—a
special permission to depart from the
require-ments of ZONINGordinances—but variances are
generally granted only in cases of extreme
hardship Litigation over setbacks is common
CROSS REFERENCE
Land-Use Control.
SETTLE
To agree, to approve, to arrange, to ascertain, to
liquidate, or to reach an agreement
Parties are said to settle an account when
they examine its items and ascertain and agree
upon the balance due from one to the other
When the person who owes money pays the
balance, he or she is also said to settle it A trust
is settled when its terms are established and it
goes into effect
The term settle up is a colloquial rather than
legal phrase that is applied to the final collection,
adjustment, and distribution of the estate of a
decedent, a bankrupt, or an insolvent corporation
It includes the processes of collecting the property,
paying the debts and charges, and remitting the
balance to those entitled to receive it
SETTLEMENT
The act of adjusting or determining the dealings or
disputes between persons without pursuing the
matter through a trial
In civil lawsuits, settlement is an alternative
to pursuing litigation through trial Typically, it occurs when the defendant agrees to some or all
of the plaintiff’s claims and decides not to fight the matter in court Usually, a settlement requires the defendant to pay the plaintiff some monetary amount Popularly called settling out of court, a settlement agreement ends the litigation Settlement is a popular option for several reasons, but a large number of cases are settled simply because defendants want to avoid the high cost of litigation Settlement may occur before or during the early stages of a trial In fact, simple settlements regularly take place before a lawsuit is even filed In complex liti-gation, especiallyCLASS ACTIONsuits or cases in-volving multiple defendants, a settlement requires court approval
Civil lawsuits originate when a claimant decides that another party has caused him or her injury and files suit The plaintiff seeks to recover damages from the defendant The defendant’s attorney will evaluate the plaintiff’s claim If the plaintiff has a strong case and the attorney believes defendant is likely to lose, the attorney may recommend that the defendant settle the case By settling, the defendant avoids the financial cost of litigating the case Trials are often extremely expensive because of the amount of time required by attorneys, and even alternatives to trials, such as mediation and
ARBITRATION, can be costly In deciding whether
to settle a claim, attorneys act as intermediaries
The parties to the suit must decide whether to offer, accept, or decline a settlement
The cost of litigation is only one factor that encourages settlement Both plaintiffs and defen-dants are often motivated to settle for other reasons For one thing litigation is frequently unpleasant The process of discovery—in which both sides solicit information from each other—
can cause embarrassment because considerable personal and financial information must be released Litigation can also have a harmful impact on the public reputation of the parties
Employers, for example, sometimes settleSEXUAL HARASSMENT claims in order to avoid unwanted media exposure or damage to employee morale
Like litigation itself, settlement is a process
Generally, the easiest time to settle a dispute is before litigation begins, but many opportunities for settlement present themselves As litigation advances toward trial, attorneys for both sides
SETTLEMENT 135
Trang 9communicate with each other and with the court and gauge the relative strength of their cases If either of the parties believes he is un-likely to prevail, he is un-likely to offer a settlement
to the other party
Litigation ends when a settlement is reached
The plaintiff typically agrees to forgo any future litigation against the defendant, and the defen-dant agrees to pay the plaintiff some monetary amount Additionally, settlements can require the defendant to change a policy or stop some form of behavior
Often, the exact terms of settlements are not disclosed publicly, particularly in high-profile cases where the defendant is seeking to protect a public reputation In high-profile cases, settle-ments are often followed by a public statement by the defendant It is not unusual for a large com-pany to settle with a plaintiff for an undisclosed amount and then to issue a statement saying that the company did nothing wrong
In some forms of litigation, settlement is more complex In class actions, for example, attorneys represent a large group of plaintiffs, known as the class, who typically seek damages from a company or organization Courts review the terms of a class action settlement for fairness
Complexities also arise in cases involving multi-ple defendants In particular, when only some of the defendants agree to settle, the court must determine the share of liability that accrues to those defendants who choose to pursue litigation
FURTHER READINGS Menkel-Meadow, Carrie and Andrea K Schneider 2006.
Negotiation: Processes for Problem-Solving New York:
Aspen Publishers.
Practising Law Institute (PLI) 1996 Class Action Settlements,
by Roberta D Liebenberg, Ralph G Wellington, and Sherrie R Savett Corporate Law and Practice Course Handbook series: Financial Services Litigation, PLI order no B4-7153.
——— 1996 Settlement, by Norma Polizzi Litigation and Administrative Practice Course Handbook series: Liti-gation, PLI order no H4-5247.
——— 1995 Damages and Settlements in Sex Harassment Cases, by Richard G Moon Litigation and Administra-tive Practice Course Handbook series: Litigation, PLI order no H4-5213.
SETTLEMENT STATEMENT
A breakdown of costs involved in a real estate sale
Before real estate is sold, federal law requires both the buyer and seller to provide a settlement statement This official document lists all the
costs involved in the sale A settlement state-ment is typically prepared by either a lender or a third party known as an escrow agent, who must follow the regulations set forth in the Real Estate Settlement Procedures Act of 1974 (RESPA) (12 U.S.C.A § 2601 et seq.) RESPA
is a CONSUMER PROTECTION law enforced by the federalHOUSING AND URBAN DEVELOPMENT DEPART-MENT(HUD)
Historically, the secondary costs in real estate transactions have been expensive These costs include broker’s fees and appraiser’s fees, some of which are required by lenders in real estate deals Buyers and sellers have not always known the full extent of these costs in advance Responding to the maze of hidden costs during the early 1970s, both the secretary of HUD and the administrator
of Veterans’ Affairs petitioned Congress on behalf
of reform that would reduce the likelihood of unpleasant surprises for consumers
RESPA set forth four goals First, it attempted
to improve advance disclosure of settlement costs
to home buyers and sellers Second, it sought to eliminate corruption in the form of kickbacks or referral fees that unfairly inflate settlement costs Third, it aimed to reduce the amounts home buyers are required to deposit in an escrow account—in this case, a bank account established
to ensure the payment of real estate taxes and insurance Finally, Congress wished to modern-ize an outmoded system of local record keeping
of land title information
Besides a full accounting of sale costs, RESPA requires lenders to keep settlement statement records for five years or until they dispose of the loan It provides no civil penalties for lenders who fail to properly disclose information However, section 8, which includes anticorruption measures, sets forth criminal and civil penalties for illegal referral fees: it is designed to keep intermediaries in the deal from cheating consumers by piling
up costs
In the 1990s the scope of RESPA expanded Initially RESPA had only covered home purchase loans, but it grew to include refinances and subordinate lien loans with the enactment of the Housing and Community Development Act of
1992 (Pub L No 102-550, 106 Stat 3672) These changes took effect in 1994 after HUD amended its rules (24 C.F.R pt 3500) As a result, lenders providingEQUITYor second mort-gage loans, home improvement financing, and
Trang 10Settlement Statement
B Type of Loan
6 File Number: 7 Loan Number: 8 Mortgage Insurance Case Number:
1 FHA 2 FmHA 3 Conv Unins.
4 VA 5 Conv Ins.
C Note: This form is furnished to give you a statement of actual settlement costs Amounts paid to and by the settlement agent are shown Items marked “(p.o.c.)” were paid outside the closing;
they are shown here for informational purposes and are not included in the totals.
D Name & Address of Borrower: E Name & Address of Seller: F Name & Address of Lender:
G Property Location: H Settlement Agent:
J Summary of Borrower's Transaction K Summary of Seller's Transaction
100 Gross Amount Due From Borrower 400 Gross Amount Due To Seller
101 Contract sales price 401 Contract sales price
103 Settlement charges to borrower (line 1400) 403.
Adjustments for items paid by seller in advance Adjustments for items paid by seller in advance
120 Gross Amount Due From Borrower 420 Gross Amount Due To Seller
200 Amounts Paid By Or In Behalf Of Borrower 500 Reductions In Amount Due To Seller
201 Deposit or earnest money 501 Excess deposit (see instructions)
202 Principal amount of new loan(s) 502 Settlement charges to seller (line 1400)
203 Existing loan(s) taken subject to 503 Existing loan(s) taken subject to
Adjustments for items unpaid by seller Adjustments for items unpaid by seller
220 Total Paid By/For Borrower 520 Total Reduction Amount Due Seller
300 Cash At Settlement From/To Borrower 600 Cash At Settlement To/From Seller
301 Gross Amount due from borrower (line 120) 601 Gross amount due to seller (line 420)
302 Less amounts paid by/for borrower (line 220) ( ) 602 Less reductions in amt due seller (line 520) ( )
303 Cash From To Borrower 603 Cash To From Seller
Section 5 of the Real Estate Settlement Procedures Act (RESPA) requires the following: • HUD
must develop a Special Information Booklet to help persons borrowing money to finance the
purchase of residential real estate to better understand the nature and costs of real estate
settlement services; • Each lender must provide the booklet to all applicants from whom it
receives or for whom it prepares a written application to borrow money to finance the
purchase of residential real estate; • Lenders must prepare and distribute with the Booklet a
Good Faith Estimate of the settlement costs that the borrower is likely to incur in connection
with the settlement These disclosures are manadatory.
Section 4(a) of RESPA mandates that HUD develop and prescribe this standard form to be used at the time of loan settlement to provide full disclosure of all charges imposed upon the borrower and seller These are third party disclosures that are designed to provide the borrower with pertinent information during the settlement process in order to be a better shopper.
The Public Reporting Burden for this collection of information is estimated to average one hour per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information.
This agency may not collect this information, and you are not required to complete this form, unless it displays a currently valid OMB control number The information requested does not lend itself to confidentiality.
[continued]
A sample settlement statement.
SETTLEMENT STATEMENT 137