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Archive for the ‘Bankruptcy’ Category

In the Cashman Law Firm’s Federal Computer Crimes blog, we address a number of issues with regard to federal copyright law and its application to lawsuits dealing with the illegal downloading of movies and songs using the bittorrent protocol.

In the article entitled, “20th Century Fox v. small screenwriter. Suing for copyright infringement appears to be cheaper than advertising.” I mentioned that if the defendant (McIlvaine) is found guilty, she will likely need to file for bankruptcy to discharge her judgment because it is unlikely that if 20th Century Fox prevails in getting their $12 Million in copyright violation damages, McIlvaine will be able to pay it. As a response to my posting, a reader posited that “debts incurred for causing willful and malicious injuries are not dischargeable in bankruptcy,” referring to 11 U.S.C. s.523(a)(6).

The old Supreme Court case describing this issue was Tinker v. Colwell, 193 U.S. 473 (1904). However since that case, the law has been modified and in Kawaauhau v. Geiger, 118 S. Ct. 974 (1998), the Court limited the meaning of “willful and malicious injuries” to intentional torts, e.g., a doctor prescribing the wrong medication causing the patient’s infection to spread and ultimately to have the foot amputated. Thus, since copyright infringement is not one of the intentional torts, the rule preventing discharge for “willful and malicious injuries” would not include copyright infringement.

[Obviously this is not meant to constitute legal advice and one doing research on this topic should consult an attorney before proceeding. If I were to represent McIlvaine in her copyright lawsuit in New York, I would obviously update the case law with more recent cases of that district to confirm and strengthen what I have written above.]

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Being an attorney who grew up in New York and who has roots in The Big Apple, the Twentieth Century Fox Film Corporation v. Patricia McIlvaine case filed in the United States District Court for the Eastern District of New York (Case 2:10-cv-05358-LDW-AKT) is one which I can share a modest opinion.

The facts of the case are pretty simple, and details can be found on a number of sites, including the Moviefone blog, TorrentFreak, or a number of other news sites all parroting the same “talking points.”  In short, the defendant posted a number of movie scripts onto a web site that she created (for the benefit of other screenwriters), likely not realizing that her actions would constitute and enforceable act violating federal copyright laws.

Without 20th Century Fox telling McIlvaine to take down her infringing materials or serving her with some sort of cease and desist letter (they actually have no requirement to do this, although it is a polite thing to do which likely would have inspired compliance), they instead decided to gain some publicity by suing McIlvaine for $12 Million in copyright violations.

Now since hearing about this case from Brian Baker, a commercial real estate attorney in Dallas, TX [who consequently also blogs via wordpress — his blog is http://leaselaw.wordpress.com] and providing me a copy of the initial complaint, I read it carefully and went onto the US District Court for the Eastern District of New York’s PACER site to download copies of other documents filed in the case.  However, contrary to what you hear in the fire of the news stories, things in this case appear to be going slowly, and filings appear to still be only in the initial stages — the NY attorneys for 20th Century Fox are still submitting documents proving that they own the copyrights for the 100+ movies they are accusing McIlvaine of infringing — and to me it appears as if the case is more for show rather than to punish McIlvaine violating their copyrights.

You might ask, “isn’t $15 million punishment enough?” to which I opine that I don’t think she’ll ever get the full $15 million judgment.  If anything, I think she’ll find some attorney to fight the case on her behalf, and the attorney will establish that she didn’t know what she was doing was copyright infringement, and that even if she did, 20th Century Fox (“Fox”) was not damaged by her actions.  I wouldn’t be surprised if she got off for even a few hundred dollars and a slap on the wrist, however you would NEVER hear about it on the news.  That is why it is important to read the case dockets and the pleadings yourselves because they are the most telling of what actually happened in the case without the bias that too frequently skews the actual results of cases such as these.

It’s interesting to note that this was not the first time the script for Deadpool was leaked onto the internet, and I wouldn’t be surprised if Fox’s “shoot, then ask” approach was because they worked so hard to have the first leak contained and removed from the web, and here she goes re-posting it again.  I am sure that made Fox’s legal team quite annoyed, enough so that they [poorly and quickly, in my opinion] draft a complaint and send a few goons to her house to scare her and make her cry.  It’s also interesting to note that McIlvaine is not the source of the leak; Fox does not yet know who these people are, but they have identified them as Defendant Does 1-10 who will be named as discovery reveals who they are.

[As a side note, to all you readers who get all huffy when a plaintiff sues Defendant Does 1 – 10 (or 100, or 5000), this is a perfect example of showing how the practice of naming Does is a perfectly legal and valid practice.  They simply don’t know who they are yet.  Similarly, I have seen many postings about how people recoil at the fact that an attorney (our Cashman Law Firm, PLLC) has uploaded and shared public and legal information through the use of a torrent on a pirate web site.  The use of peer-to-peer was meant for such a purpose, and just as Linux software providers legally share their operating system installation files via torrent (e.g., Ubuntu, etc.), so too can we.]

In short, after reading the complaint, I shrugged my shoulders and thought to myself that there is nothing really so exciting here.  20th Century Fox is trying to make an example of defendant McIlvaine, a woman who “sells flowers to make ends meet” and spends her free time “caring for an elderly relative suffering from dementia, and caring for an infant.”  This is someone who cannot even afford an attorney.

My opinion is that even if they win the full $15 million they are claiming she should pay, do they really think they will ever see a penny from her?  As far as I’m concerned — and I do not know her true financial situation, but I can only posit based on what has been written — she appears to be JUDGMENT PROOF.  She has nothing to lose.  [Even if she was not judgment proof, the bankruptcy laws of New York are such that it would merely require a filing to make such a judgement go away in heartbeat via a Chapter 7 bankruptcy (or less likely, via a Chapter 13), where 20th Century Fox as the supposed judgement holder would get $ZERO.]

All this being said, nobody wants such a lawsuit on their shoulders.  This must be a scary and unnerving proposition for her to figure out how to deal with.  She will likely need to hire an attorney, perhaps one to take the case pro bono, and she will need to defend her case.

If she is smart, she will use this lawsuit to gain notoriety within the Writers Guild of America and other networks of screenwriters so that she can further her career goals and dreams and make them a reality.  However, I doubt she will be writing for 20th Century Fox anytime soon.

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Texas has three methods for lenders to foreclose on homes — non-judicial foreclosures, judicial foreclosures, and quasi-judicial foreclosures.  Since most of the foreclosures these days are non-judicial, that will be the subject of this article.

Generally, Texas has a “one, two, punch!” approach to foreclosing on real estate properties in default.  Lenders first give the homeowner a “Notice of Default” in which they inform you that you have defaulted on your mortgage.  They also at this point give you notice that unless you take action to bring the loan out of default, they will also accelerate the debt (meaning that if you do not bring your account current [or work out a compromise with the bank], it will no longer ask you for monthly payments, and instead it will demand that you to pay the entire amount of the mortgage balance owed).

After 20 days, the lender will send you a second notice — a “Notice of Sale,” telling you the time and place where they will sell your home at a foreclosure sale.  This usually takes place the first Tuesday of the following month.

Two considerations a homeowner should have at this point are 1) there may still be a way to save your home, and 2) if not, there is likely one last alternative to stop the foreclosure sale.

At any point before the foreclosure sale, a home owner can always negotiate what is typically called a “work out” or a “loan modification.”  We are not referring to the federal government’s program which has had questionable results; we are talking about an honest conversation with the bank about what you can pay, and coming up with a mutually acceptable plan which will keep you in the home and will keep them from selling your home at the foreclosure sale.  Regardless of whether you agree to a loan modification where certain terms are altered or extended, or whether you agree to a payment plan to bring your payments current, you always have the chance to save your home.  Remember that at every point, it is advisable to have an attorney at your side at the very least to look over the documents and to advise you because banks typically materially alter the terms of your loan to your detriment when writing up a loan modification agreement.  More on this another time.

The last alternative which often feels extreme and makes the homeowner feel as if they’ve been destroyed and that they are a failure is to file bankruptcy.  From a non-emotional point of view, there is nothing immoral about filing for bankruptcy if all else has failed.  Bankruptcy is a tool that has been used by many both rich and poor to restructure their debts and allow the home owner to have some breathing room to get their finances and their home in order.  As soon as bankruptcy is filed, the foreclosure STOPS, end of story.

However, bankruptcy is not an online form that can be filled out in under four minutes.  It requires a consultation with a bankruptcy attorney who, among other things,  can guide the homeowner through what is called a “means test” to determine how the homeowner will be best advised to proceed under the bankruptcy laws.

Also, a bankruptcy is only useful if the homeowner together with his attorney will be able to create a plan which the homeowner will be able to afford which will allow him to resume payments to the lender, and which will also allow the homeowner to bring the amount the homeowner is behind on his mortgage up to date over time (generally this must be done within a five year period).  The unemotional benefit of bankruptcy here is whatever plan the court approves, the lender is FORCED to accept.  So if the lender is being less-than-cooperative, sometimes going down this path is the responsible way for a homeowner to keep his home and bring his mortgage payments up to date without losing his home to a foreclosure sale.

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