law

Description

You’re a little confused to find yourself flying around in a clown suit about roof top level.  But you quickly decide it’s pretty cool to be able to fly!  You swoop down to feel the air rush through your poofy red wig, then you zig and zag around trees, fences and one very startled kid walking a dog.  It probably didn’t help the kid that you squeezed your big round nose to make a loud honking sound. Then, slowly, you realize you’re dreaming.  Coming mostly back to consciousness, you glance at your smart watch and, through the lifting mental fog, you discern that it’s 9:30am.  You have a mild rush of panic, but it quickly dissipates as you remember that you’ve got the day completely off.  You absolutely crushed the pre-trial hearing yesterday, so it’s a well-earned break.  After doing some quick math in your head, you are pleased to realize that you got a whopping 10 hours of sleep last night.  You haven’t slept that long – or this late into the morning – in years! On the way to the kitchen, however, you glance at your cell phone.  Yikes!  There are 37 missed calls from the office.  “Seriously?” you mumble out loud, still not fully awake.  Orange juice in hand, you call back. Forty-five minutes later, you’re all dressed up sitting in a conference room at the office.  So much for a day off!  In front of you is Ulysses Up, the President of Prime Time Property Management.  Like most property management companies, Prime Time contracts with property owners to keep their properties rented and maintained.  This means advertising, vetting renter applications, signing leases, collecting rent, responding to maintenance calls, etc.  Prime Time makes its money by taking 10% of each month’s rent, plus little odds and ends charges for things like traveling to a property to meet repair people. Aside from the mechanics of managing property, Prime Time also holds in trust quite a bit of other people’s money.  When a tenant moves in, Prime Time collects a security deposit.  This money does not belong to Prime Time or to the property owner – it belongs to the tenant.  Prime Time just holds the money in trust until the tenant moves out.  If the tenant doesn’t pay all the rent owed or leaves a giant mess that costs money to clean up or repair, those costs are deducted from the security deposit and whatever is left goes back to the tenant. Many times, maintenance and repair either exceed a tenant’s security deposit, or an owner makes general upgrades to the property between renters.  These costs are paid by the property owner.  Thus, each owner leaves a few thousand dollars in trust with Prime Time to cover these costs.  This ensures Prime Time doesn’t get stuck with a repair bill that an owner refuses to pay. Now, back to Ulysses.  He’s sweating bullets, so you begin to discern why the office bugged you on a day off.  Ulysses starts talking a mile a minute and you just take notes, knowing he’s going to have to unload everything before you can begin to sift through it and give an intelligent response. Here’s the deal.  Ulysses’ CFO is Imelda Czechs and she has been stealing money – nearly a half-million dollars!  Ulysses is not sure what she did with it, but he thinks she ran it through her side business (landscaping) so it would look like legitimate earnings.  What’s worse is that the money wasn’t all coming out of Prime Time’s account – some of it was coming out of owners’ trust accounts (the money belonging to owners that Prime Time holds in trust to pay for repairs and upgrades). Ulysses wants to go after Imelda – make her pay, throw her in jail, whatever.  Ulysses is also worried, however, that all his owners will go to another property management company if they find out what happened.  That would be the end of Prime Time but – worse – Prime Time owes hundreds of thousands of dollars to some of those owners!  Prime Time doesn’t have nearly enough in cash reserves to pay those owners.  Ulysses is pretty sure, though, that, over time, he could slowly put money back into the trust accounts and the affected property owners would never know it was gone.  And, if one of the affected property owners cancels their service with Prime Time, Ulysses thinks he could pay their trust money back out of another owner’s account until he can get all the money put back. Ulysses is a good guy.  He volunteers at the hospital, he’s a foster parent, he serves meals twice weekly at a homeless shelter, and he gives 20% of Prime Time’s profits to charity.  Moreover, he can probably get everyone’s money back into their accounts in six to nine months.  This was not his fault!  Why should he let the business fail over this if he can fix it?  Plus, if it fails, he’ll definitely NEVER be able to pay those owners’ back.  He’s even willing to go without a salary until the money is all paid back. Now that Ulysses has unloaded his burden, you interject a question.  “Has Imelda done anything else besides embezzle owners’ money?”  Ulysses pauses for a minute and rubs his chin thoughtfully.  “Well,” Ulysses responds, “she did get pretty upset when we discovered the embezzlement.  As our security guard escorted her out of the office, she caught him by surprise and knocked him into a phone booth.  She wedged the door shut somehow and then proceeded to yell extreme and outrageous comments at the guard through the glass like she was trying to give the guard an emotional breakdown or something.” “Then,” Ulysses continued, his pace quickening, “she ran back towards the stairs, only to stumble upon another security guard.  She punched that poor guard in the back of the head – the guard never even saw it coming!” Now on a roll, Ulysses pushed ahead.  “To add insult to injury, a few days later, Imelda posted on Facebook some ridiculous lies about how she had spied on those guards in the bathroom and saw them kissing and fondling each other, despite the fact that they’re both married to other people.  She called them out by name and posted a picture of each of them!  Can you believe that?  To take it a step further, I overheard someone say just yesterday that she sued one of those guards for locking HER in a phone booth.” You start to ask another question but, apparently, Ulysses is not done.  “And just this morning, one of our front desk folks saw her slash the tires on one of our company cars.  We told her when she left not to come back on our property, but I’m tellin’ ya, she’s mad as a hornet!” Ulysses stops, but you can tell there’s more to come.  You are right.  After a momentary pause, Ulysses continues.  “You know, now that I think about it, she also wrecked one of our cars last year because she wasn’t paying attention.  She was putting on lipstick and checking text messages while driving, and slammed right into a guard rail.  That set us back about $2,500 – I should’ve made her pay for that.” Ulysses pauses again, pensively, then quickly blurts out, “Oh there’s one more and this one is a hoot!  She lives about twenty miles away across the state border, but she sometimes stays overnight at a friend’s house who lives next door to our offices.  The other weekend, she stayed at the friend’s house and, in a late-night, alcohol-induced frolic, detonated three huge cherry bomb firecrackers at once.  The concussion was large enough that it blew a two-foot hole in the friend’s back yard and shattered two of our $1,000-a-piece office windows.  She didn’t mean for that to happen, but c’mon, they’re giant cherry bombs!  What do you expect?” You wipe away the amusement that filled your face during the blasting caps story and ask another question.  “What kind of organization is Prime Time?” Without missing a beat, Ulysses replies, “We’re a corporation.  So, I have a board of directors I have to answer to.  In fact, one of them is close friends with Imelda.  We also have shareholders, of course, to whom I owe a duty to help Prime Time make as much money as possible.  Of course, we also like to give back to the community and we’ve got about 50 employees whose families count on their wages from Prime Time, not to mention the repair and maintenance contractors we pay to work on our owners’ properties.” Still quite a bit anxious, Ulysses is now ready to start getting some answers.  He asks you some specific questions. “I’ve never sued anyone. Can I sue Imelda?  If so, explain to me, in detail, how a lawsuit works.  How do we start a lawsuit and, then, what are the steps we have to go through during a lawsuit?” “Which court do we use and why? If we win at trial, are we done or can Imelda drag it out further?” “What law is on my side and what can I get from Imelda? I want to make her apologize, pay up, go to jail, everything!” “Are there options I can pursue other than a trial? And if I don’t like how those options turn out, can I still sue?” “I don’t want your legal advice about my plan to put the money back into owners’ trust accounts. And I don’t want your legal advice about my plan to use money from owners’ accounts that Imelda didn’t raid to pay back owners whose accounts Imelda did raid if those raided owners leave before I can repay the money.  I have another attorney looking into all of that.  What I would like, however, is your advice on the ethics of those plans.  What should I be considering, ethically, with regard to owners, employees, shareholders, the community, and the future of the business? “Does anyone else have a claim against Imelda?” Answer each of Ulysses’ questions and, most importantly, identify and explain ALL legal concepts that are fairly raised by these facts.  Remember, your conclusions earn you no points – identifying and explaining relevant law does.