The Three Professors Top Cases for 2010

The Speakers

Steven Bender

Steven Bender is the James and Ilene Hershner Professor of Law, Director of Portland Programs, and Director of the Green Business Initiative at the University of Oregon School of Law. He is the lead author of a  casebook, Modern Real Estate Finance and Land Transfer:  A Transactional  Approach, with Celeste Hammond (John Marshall), Michael Madison  (Fordham/Columbia) and Robert Zinman (St. John’s), and co-author of a  treatise published by West Group, The Law of Real Estate Financing, with  Michael Madison and Jeffry Dwyer. Prior to joining the Oregon faculty in 1990, he practiced real estate law with the Phoenix law firm of Lewis and Roca. In addition to teaching at Oregon, Professor Bender has taught real estate finance at the University of California-Hastings and at UNLV. He also teaches commercial law, property, contracts, real estate planning, and ethics in business transactions. Bender is a member of the American Law Institute and the American College of Real Estate Lawyers.

Roger Bernhardt

Roger Bernhardt is Professor of Law at Golden Gate University in San Francisco. He has written, in whole or part, for attorneys:  California Mortgage and Deed of Trust Practice, and Bernhardt’s California Real Estate Codes, and he is the Editor of the California Real Property Law Reporter.  He has also written, for law schools and law students: Cases and Statutes on Real Property, Real Property in a Nutshell, The Black Letter Law of Real Property, and also Cases on California Real Estate Finance

Bernhardt has been Chair of the American Bar Association Legal Education Committee of the Real Property Probate and Trust Section, Advisor to the California State Bar Executive Committee of the Real Property Section, and a member of the American Law Institute, the American College of Real Estate Lawyers, and the American College of Mortgage Attorneys.  He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it. .

Pat Randolph

Pat Randolph, the Elmer E. Pierson Professor of Law at the University of Missouri, Kansas City, has taught there since 1980.   He is of counsel to the law firm of Blackwell Sanders Peper Martin, Kansas City, Missouri where he specializes in real estate matters.  Professor Randolph is a graduate of Yale University and the University of California, Berkeley (Boalt Hall), and has published eight books and many articles on real estate law topics.   He is a member of the state bars of Missouri, Oregon and California and has taught real estate law in those states and in Iowa, Kansas and Utah.  He a former chair of the Missouri State Bar Property Law Committee, a member of the American Law Institute, the American College of Real Estate Lawyers, and the American College of Mortgage Attorneys.  He recently recently completed a six year term as Supervisory Council member of the ABA Section on Real Property, Probate and Trust Law and currently chairs that Section’s Joint Committee on E Commerce and Electronic Transactions.  He also is Executive Director of the Joint Editorial Board on Uniform Real Estate Acts, working with state legislatures and law reform groups on the Uniform Land Security Interest Act, the Uniform Common Interest Ownership Act, and other laws. REALTOR magazine recently named Professor Randolph as one of the 25 Most Influential People in American Real Estate.

The Three Professors Top Cases for 2010

The Cases

1. Bank Mutual v S.J. Boyer Construction, --  NW2d --,  2010 WL 2696859, Wisconsin, July 9, 2010.  The Wisconsin Supreme Court held that its foreclosure statute which reduces the time of foreclosure sale from six or twelve months to three months when the mortgagee waives a deficiency judgment against “every party who is personally liable” for the mortgage debt, does not protect a guarantor of the mortgage from liability, even when the guaranty is absolute rather than conditional.

2. Capitol Justice LLC v. Wachovia Bank, N.A., __ F.Supp.2d __, 2009 WL

6356710 (D.D.C. 2009). Lender denied summary judgment in borrower's

action for the alleged breach of an $89.5 million loan commitment, with

the court ruling the material adverse change clause relied upon by the

lender was ambiguous. The clause allowed termination of the proposed

CMBS financing "in the event of any material adverse change in the

financial, banking or capital market conditions that could impair the

sale of the Loan by Lender as contemplated in the Term Sheet." The

commitment was both executed and terminated within the year 2007 amidst

upheaval in the CMBS market that was known to the parties. The issue of

fact precluding summary judgment concerned whether the clause

encompassed any meaningful adverse change (whether foreseeable or not),

or just an unforeseeable adverse change.

3. Destiny USA Holdings, LLC v. Citigroup Global Mkts. Realty Corp., 889

N.Y.S.2d 793 (N.Y. App. Div. 2009).  The borrower under a construction

mortgage loan structured as an advancing term loan may obtain a

preliminary injunction requiring the lender to fund draw requests.

4. ER Holdings, LLC v. 122 W.P.R. Corp, 887 N.Y.S.2d 138 (N.Y. App. Div.

2009).  Notwithstanding fraud by the purported agent of the Principal

owner of real estate, a mortgagee deceived by such fraud cannot collect

on the mortgage because it is the responsibility of a mortgagee to

perform due diligence on mortgage transactions into which the mortgagee

enters.

5. Harvest Homebuilders LLC v. Commonwealth Bank and Trust Co., 310 S.W.3d

218 (Ky. Ct. App. 2010). Rejects good faith covenant claim against

lender that didn't approve a requested short sale to release the

developer borrower and guarantors from a significant deficiency liability.


6. IndyMac Bank F.S.B. v. Yano-Horoski, 26 Misc.3d 717, 890 N.Y.S.2d 313

(N.Y. Sup. Ct. Suffolk County 2009) and Emigrant Mortg. Co. Inc. v.

Corcione, 28 Misc.3d 161, 900 N.Y.S.2d 608 (N.Y. Sup. Ct., Suffolk

County 2010). Both authored by Judge Spinner, the leader of the pack of

judges invoking draconian remedies against lenders in the current

crisis, here for failing to adequately negotiate loan modifications with

residential borrowers under New York's mandatory judicial settlement

conference. In one case the judge canceled the note for inequitable

conduct and in the other he levied a $100,000 punitive damage award

while canceling just past due interest. Finally, in Wells Fargo v.

Tyson, 27 Misc.3d 684, 897 N.Y.S.2d 610, 2010 N.Y. Slip Op. 20079 (N.Y.

Sup. Ct. Suffolk County 2010), Judge Spinner awarded $150,000 in

punitive damages against a lender for a premature lock-out/winterization.

7. ING Real Estate Finance (USA) LLC v. Park Avenue Hotel Acquisition LLC,

2010 WL 653972 (N.Y. Sup. Ct., NY County 2010) Lessons in drafting from

a commercial real estate case where the court had to reconcile 30-day

cure provisions in the loan agreement with a springing "bad-boy"

guaranty that encompassed senior liens and nonpayment of realty taxes.

8. Midcounty Bank v Krueger, 782 NW2d 238, Minnesota, May 20, 2010.  The Minnesota Supreme Court held that a mortgage that covered three parcels but was indexed in the recorder’s tract index only against two of the parcels (although the grantor-grantee index did refer to all three parcels) nevertheless was properly recorded and gave constructive notice despite its imperfect indexing so as to preserve the priority of the mortgage against subsequent purchasers of the property.

9. Myrad Properties v LaSalle Bank, 300 SW3d 746, Texas Dec. 19, 2009.  The Texas Supreme Court held that where a single debt is secured by two separate parcels of property and the foreclosure trustee erroneously conveys only one of them in the foreclosure deed, it is improper to attempt to correct the mistake by way of correction deed, but the equities do justify rescission of that deed so that both parcels may be sold and a windfall to the debtor thereby avoided.

10. Trust for Certificate Holders of Merrill Lynch Mortg. Investors, Inc. v.

Love Funding Corp., 591 F.3d 116 (2d Cir. 2010) and Trust for

Certificate Holders of Merrill Lynch Mtge. Invs., Inc. Mtge.

Pass-Through Certificates, Series 1999-C1 v. Love Funding Corp., 13

N.Y.3d 190, 918 N.E.2d 889, 890 N.Y.S.2d 377, 2009 N.Y. Slip Op. 07323

(2009). Lead attorney Ira Feinberg won these related appeals clarifying

the rights of holders of mortgage-backed securities to pursue

originators of fraudulent mortgages for breach of “no material default”

representations. In this context, the New York Court of Appeals held a

"standard" assignment of a claim does not violate New York's champerty

statute, N.Y. Jud. Law § 489(1).