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Pursuant to previous discussions:<br>
<br>
- At one level this is normal, on another it implies somewhat a
lack of equality in the law, pointing to intimate association of
Firms and State in the US, relevant on contracting (particularly
shrink wrap for eg) and consumer liberty, vs corporate liberty as
raised by Gurstein on this list with the related Ralph Nader
article. This is the ecology in which Multistakeholderism will
operate and consideration of how to balance public interest with
corporate ones is important.<br>
- this points to the credibility/legitimacy/plausibility of the
internationalisation positions of Mueller as well McTim; raising the
question of why should anyone outside the US be happy with US
control over key elements of the CIR.<br>
- Legitimacy of both libertarian and market friendly views - if the
terrain is unequal and there is differential treatment what is to
preclude the marginalisation of foreign interests in similar cases
if ICANN were to mess up for instance on its Intellectual Property
decisions regarding new domains?<br>
- this raises the serious question of third world countries that
seek to promote their large firms, which start from a bigger
disadvantage, may be more ruthless and opportunistic than more
established rich country firms... I guess no predictive value here,
as it also all depends...<br>
<br>
Riaz<br>
<h2 class="date-header">Friday, May 31, 2013</h2>
<h3 class="post-title entry-title"> <a
href="http://www.nakedcapitalism.com/2013/05/more-market-state-in-action-consumers-treated-differently-under-the-law-than-businesses.html">More
Market State In Action: Consumers Treated Differently Under the
Law Than Businesses</a> </h3>
<div class="entry">
<p>You thought corporate personhood was a bad thing? Think twice.
You should be so lucky as to be a corporate person. They don’t
just get treated like you and me, they are increasingly being
treated better than you and me.</p>
<p>Bear with this very specific and for non-laywers, legally dense
illustration, that I received earlier in the week:</p>
<blockquote>
<p>I am Michael Morgan, the pro se plaintiff in Morgan v. Ocwen
<span class="IL_AD" id="IL_AD5">Loan Servicing</span>, LLC, et
al., 795 F.Supp.2d 1370 (N.D.Ga. 2011). This is one of two
extremely well-written decisions in which Judge Amy Totenberg
ruled that, in Georgia, a non-judicial <span class="IL_AD"
id="IL_AD3">foreclosure</span> must be brought by the <span
class="IL_AD" id="IL_AD4">secured creditor</span> and that
the identity of the secured creditor must be revealed. The
other case is Stubbs v. Bank of America, 844 F.Supp.2d 1267
(N.D.Ga. 2012).</p>
<p>I was wondering if you have seen You et al. v. JP Morgan
Chase Bank, N.A., et al., Case No. S13Q0040, Georgia Supreme
Court. <a
href="http://www.gasupreme.us/sc-op/pdf/s13q0040.pdf">http://www.gasupreme.us/sc-op/pdf/s13q0040.pdf</a></p>
<p>In the You et al. case, the Georgia Supreme Court held that,
in Georgia, (a) the holder of a security deed could be
considered a secured creditor and could initiate a
non-judicial foreclosure, despite the fact that it did not
hold the note or otherwise have any beneficial interest in the
debt underlying the security deed, and (b) the identity of the
secured creditor did not need to be revealed in the
foreclosure notice. In so holding, the Georgia Supreme Court
was interpreting O.C.G.A. Section 44-14-162.2(a), which
requires that the foreclosure notice be sent by the secured
creditor. See also O.C.G.A. Section 44-14-162, which requires
that the security instrument or an assignment thereof vesting
title in the secured creditor be filed in the real estate
records of the appropriate county prior to the foreclosure
sale.</p>
<p>While not expressing it in precisely this manner, the Georgia
Supreme Court held, in effect, that the relevant provisions of
the Georgia <span class="IL_AD" id="IL_AD2">Uniform
Commercial Code</span>, O.C.G.A. Section 11-1-101, et seq.,
yield to and are superseded by O.C.G.A. 44-14-64(b). This code
section provides that the transfer of a security deed is
sufficient to transfer the indebtedness, even when the
indebtedness is evidenced by a note.</p>
<p>N.B. O.C.G.A. 11-10-103 requires precisely the opposite
result; i.e., this code section specifically provides that
provisions included in Article 3 of Chapter 14 of Title 44
(which includes O.C.G.A. Section 44-14-64(b)) yield to and are
superseded by the Georgia UCC. (Appellants’ counsel did not
refer to O.C.G.A. Section 11-10-103 in either of the two
briefs which he submitted to the Court. I have not yet
confirmed that there is no reference to this code section in
any of the six other briefs submitted in the case, but I do
not expect to find such a reference.)</p>
<p>If it makes any difference, pursuant to O.C.G.A. Section
1-1-9, the effective date of both the current version of the
Georgia UCC and O.C.G.A. Section 44-14-64(b) was November 1,
1982. Appellees apparently argued that O.C.G.A. Section
44-14-64(b) prevailed over the Georgia UCC, because the
corresponding provision in the 1933 Georgia Code (Section
67-1305.1) was adopted after Georgia first adopted its version
of the UCC. (With limited exceptions, the 1933 Georgia Code
has been repealed in its entirety.)</p>
<p>I believe that it is readily apparent that the effect of the
ruling in You et al. could wreak havoc in commercial markets,
if the decision is taken seriously in contexts other than
non-judicial foreclosures. Warehousing lenders, e.g., have
relied upon possession of the original note as security, and
the security deed is never assigned to them. However, under
the rationale of You et al., an assignment of a Georgia
security deed to a third party, while the warehousing lender
held the corresponding note, would transfer the indebtedness
to that third party. Many other scenarios can be envisioned in
which this rationale would have devastating effects upon
commerce.</p>
<p>I here am only trying to inform you about this decision, in
the event that you are not aware of it. It does not yet seem
to be receiving the attention that it deserves.</p>
</blockquote>
<p>I ran this message by Georgetown law professor Adam Levitin,
who is arguably the top US expert on mortgage securitizations.
He gave the ruling a quick read and said it did appear that
there appeared to be an inconsistency, that the Georgia court
found that the note follows the mortgage, rather than the
mortgage follows the note. They failed to reconcile the statute
that says note follows the mortgage with the UCC Article 9
provision that says the opposite. Oops.</p>
<p>But this is where it gets interesting, and ugly. It’s clear
that the conclusion the court reached in the consumer case would
be untenable if you had two banks dealing with each other.
Levitin speculated that what would happen in Georgia was not
that some later court would come down one way or the other on
this rather basic question. Instead, he anticipated that the law
would be applied one way for consumers when banks want to
foreclose and the opposite way for warehouse lending.</p>
<p>The implications of this are very serious. The basic premise of
the law has for a very long time been that justice is blind,
that judges will rule without reference to who is making the
argument, unless the party gives reason for that to be made an
issue (for instance, one of the parties has a history of bad
faith behavior). Of course, any black person will tell you
that’s nonsense, that blacks are found guilty and get far more
severe punishments in similar fact sets than whites. But that’s
seen by most commentators as symptomatic of how deep seated
prejudice is in American society as much as a serious
shortcoming of our legal system (studies continue to find ample
evidence of discrimination in hiring, promotion, treatment by
salesmen, etc). Similarly, small fry who go up against people
with better, meaner lawyers usually fare badly in court, but
again, the outcome is a result of their access to resources, not
to their demographics. </p>
<p>By contrast, this sort of outcome that Levitin anticipates in
Georgia illustrates a serious erosion in the role of the
judiciary, that the law has become pliable and will be twisted
in knots if that’s what it takes to serve commerce. Contract law
has for some time been moving in a direction that gives
businesses the upper hand. IN consumer cases, take it or leave
it contracts (“adhesion contracts”) are treated in litigation as
if the consumer had bargained over terms, while in a business to
<span class="IL_AD" id="IL_AD1">business case</span>, the court
would typically look to see if the parties really had negotiated
terms in making a ruling. Another example is binding mandatory
arbitration. That gets forced on consumers all the time as a way
to prevent class action litigation and to <a
href="http://www.afj.org/assets/resources/connect-with-the-issues/mandatory_binding_arbitration.pdf">stack
the deck overwhelmingly in their favor when disputes arise</a>.
What good is having a contract when it is certain to be
interpreted in a one-sided manner?</p>
<p>I’ve used the term “market state” for this practice, but as
Lambert flagged in his earlier discussions, it’s not clear if
this expression is adequate. One of the problems is that we are
struggling for terminology to describe our new social/political
order. The old frames don’t fit well. Even “neofeudalism” is too
generous, since peasants weren’t subject to a surveillance state
and the nobles actually were expected to fight. By contrast, one
of the salient characteristics of our emerging social order is
covert coercion. There are all sorts of things you can’t do if
you refuse to have a credit card, or a broadband account (and
the surveillance that goes with it) or a cell phone (ditto). You
mark yourself a weirdo and hurt your employability. Most people
don’t think about what they submit to in participating in modern
life, and that’s because, for many, they can’t function and earn
an income otherwise. </p>
<p>I’d very much welcome reader input on both more examples of
this phenomenon and better ways to describe it. </p>
</div>
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<span class="post-author vcard"> Posted by <span class="fn">Yves
Smith</span> </span> <span class="post-timestamp"> at <a
class="timestamp-link"
href="http://www.nakedcapitalism.com/2013/05/more-market-state-in-action-consumers-treated-differently-under-the-law-than-businesses.html"
rel="bookmark" title="permanent link"><abbr class="published"
title="2013-05-31T03:15:20+00:00">3:15 am</abbr></a> </span>
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