consultants are sandburs

Saturday, February 09, 2013

RAMSEY - the city faces dealing with the tail end of the current Landform contract. From within the community, objection has been raised that Landform was brokering and marketing real estate without a real estate license, using disguising terminology such as, "Administrative Compensation," "Incentive Compensation," and "Additional Compensation" claimed now to be, de facto, wrongly and improperly levied brokerage fees, for brokering real estate, with no license permitting such fees to be extracted.

Start at the City Agenda page and read the linked items. Here.

Since I make typos frequently that I do not catch in proofreading, it is a sign of intelligence, and in the opening paragraph under "Background" clearly "preceded" alone was not the intended meaning:

The current Development Management (DM) contract for The COR at Ramsey will be in  effect until March 31, 2013. The current contract has been in effect for two years and preceded [sic] the original contract of April 2010, and preliminary work that was done by Landform starting in 2009.

With "was preceded by" or "followed" as the clear intended thought, the typo is inconsequential, but too little emphasis was put on the 2009 camel's nose under the tent, the front running step taken against future competition via a non-bid contract in 2009, it being the one where then Council member Look was noted in minutes stating that using the firm would be good because "Senator Jungbauer" was affiliated and might be able to finagle a grant of some kind for water management. The point I call "original sin" in the Landform contracting.

So, nobody at Landform has any real estate marketing license, and yet the firm was hired to move the distressed land to situations where buyers would take a plunge. If that's not marketing real estate, it is hard to say what else you'd call it, but do read the prepared and argued items attached to that agenda item, online here, here, here and here, (i.e., listed here in the same order listed by city staff in writing the agenda).

I will check those links for proper function, although in the past linking to LaserFiche WebLink items has proven error prone. Readers might need to go to the original city website and navigate to those four items.

Given that the first two items present the argument that Landform's contracting was tainted, and the third is Landform's response arguing (as expected) that all is honky dory, those are more interesting than the contract itself, the fourth item, presented in its latest form after changes over time.

What the contract says, and what in fact is going on, need not be coincident in that contracts can be drafted in ways intended to obfuscate problematic situations, such as the current example of a claimed actual activity of marketing real estate without being licensed to do so, where a drafting intent would be to word things around the de facto problematic situation. What something is termed, and what in practice it actually is, sometimes do not equate, especially in the eyes of a judge who's seen stuff before. And it could end up before a judge, where the agenda's under $2000 seems an unreasonably paltry amount and penny wise and pound foolish, given that by now something like one and a half million of Ben Dover's dollars have been flowed out of city hall, to Lazan/Landform, and is there more to come or some to recoup to where an artificial and superficial limit of two grand in expected fees is a joke?

Staff recommends ending the contract, there being some grace in the world, but the brokering without a license question goes to too little too late as a consideration. And new faces at the council dais means new thinking about proprieties, with the prior Landform-friendly (and perhaps over friendly) trioka having been voted off the island in November's elections.

Legal opinions are, fundamentally, opinion first and foremost, and if the law were so certain that opinions could not differ there would be no judiciary. Clearly one analysis is the "right" one, and if litigated one would prevail over the other, and in the best of worlds it would be the "right" one prevailing. But judges are simply busy civil servants making what they believe are the best decisions fitting situations brought to them, so that judicial resolution is always a gamble since it is not the best of worlds to have parties disagreeing. Usually disagreement being over money. Someone wanting more than entitled to, or wanting to withhold more than should be paid.

What the city must assure you, me, and Ben Dover the Ramsey taxpayer of, is that the best outside legal minds and talent will be employed to analyze the situation and work from there in the best interest of the public, the citizens, you, me and Ben.

Anything less than the best, would shortchange the public and should not even be considered.

Now, to the extent my opinion is worth stating, it is stated because that is a prerogative of maintaining Crabgrass and posting here; my opinion is a negotiated settlement would be best for everyone with parties then going their own separate ways, but that Landform would have to make real and substantial concessions because of how earlier contracting was done between Nelson and Lazan with too friendly faces on the dais in too many instances, and where Nelson would need to be subpoenaed back were litigation to ensue. The City -- it already has given much, much, much, much money to Landform, and if there is to be reasonable and successful negotiation I see the yielding having to come from the other side, not the city.

Press coverage. I have not seen reporting by Sakry of ABC Newspapers prior to now about the upcoming meeting, but her prompt coverage of meetings is helpful given the time delay of the city in gettings formal minutes prepared and approved for final posting and archiving.

Levy, of Strib has written, online here in original posted form, and in a "print ready" format, here, with the first item having these three short, and in my mind valuable on point comments:

Those are all the Strib comments as of taking the screen capture yesterday evening, and readers are encouraged to comment there instead of Crabgrass, because people read Strib and only a handful of die-hards bother with Crabgrass. The experience has been that those who most strongly disagree with me, or whom I criticize, are the ones keeping tabs.

WRAP UP: My personal impression over time is that the entire Town Center thing was a bad idea from day one, and tons and tons and more tons of further spent city dollars will never alter that. If some private sector buyer shows up, sunk cost might be a factor to consider in pricing it to sell, but in reality no sound business judgment would be based on sunk cost. If sunk cost were a determinant of anything, Mitt Romney's father's Ramblers would still be churning off some already paid-for assembly line, buggy whip firms would have stayed in business, and we'd have kept our MS-DOS computers.

Sunk costs of the Ramsey Town Center fiasco are unfortunate, but Ben Dover has kept smiling, and hopefully the ill-thought-out experiment of socialization of land promotion in Ramsey has run its course. Without Coborns the disaster would be far more apparent, yet that one thing is what stands between full fiasco, and something a step better.

The Norman Castle [aka "Municipal Center"] was a waste, it catalyzed zippo and any sensible mind would have foreseen exactly that, and the disproportionately massive Flaherty thing, long term and even if rented out at the get go, will be a boat anchor pulling down heavily on the city's future. A rail stop serving a handful of commuters at thirteen million dollars in capital cost is a very bad joke. The entire thing should never have been done. We await, still, the dacades old promise of "shoppes and restaurants" coming into being; and good luck folks on that hope. We been had and it is past the time to sensibly have cut and run, but hopefully there is something akin in some way to an upward sloping learning curve in Ramsey city government.

The analysis should not end at Landform. Actions of Landform were facilitated by Cronk, of the Flaherty interests, and by Greeby, who bowed out early but perhaps not early enough. Two lawyers, the City Attorney and Bray were involved, each, presumably, carrying errors and omissions coverage if recoupment comes to that because Lazan/Landform has run through all the money and stands now too thinly capitalized to make good or restitution, should that remedy be attained in the event of litigation.

Not only prevailing, but being able to identify pockets sufficiently deep to allow collection would be the task of any independent outside lawyer/law firm hired, and as such it clearly should be as distinct and distant from the involved lawyers as is feasible. The citizens of Ramsey deserve nothing less, should litigation possibly arise, as is foreseeable, at this stage.

The first item mentions two unpublished cases as helpful. They can be found on the State Law Library site, Bridgeplace, here, and PEMS, here. Google Scholar posts Bridgeplace, here; and PEMS, here. Bridgeplace cites Douglas v. Schuette, 607 NW 2d 142 (Minn. App.2000),online, here.

Since cases may be argued on multiple theories, readers will need to scan-read those items, should they choose to follow the links.

Unpublished cases are not "precedent" per Minn. Stat. Ch. 480A, but if reading such chapter one learns that cases are published only if substantially modifying or explaining the law in new ways or directions. Hence, unpublished case are not published because they so clearly travel the same rail tracks of well established law, and are, hence, informative that way. Douglass v Schuette stands as published authority not inconsistent with the arguments raised against the Lazan/Landform status in dealings with City of Ramsey. Each case is unique to its own facts, and how other cases are argued to bolster or refute a point is a matter of legal training best left to licensed lawyers, just as real estate brokering is best left to licensed brokers.

But people are free to read whatever they like and to take away whatever opinions please them. It's a free country that way, just as any litigant is free to proceed in court pro se. (Ask a lawyer, however, about being "pro se" in the Court of Appeals if your 100% closely held corporation is the actual named party, as trying to equate your personal pro se rights with representation of your owned firm might lead to a surprise. If you find yourself in any such situation, you should consult a lawyer and rely on his/her advice.)

Interestingly, the Shainess letter Landform submits focuses upon wording in the contract, and looks less at what Landform actually did, such as slogging a bunch of officials and Cronk to Las Vegas to promote the Town Center to shopping center conferees where, ostensibly, there'd be no point in going there but to hook a fish.

To hook and land a fish.

Shainess cites American Warehousing and Distributing, Inc. v. Michael Ede Management, Inc, 414 N.W. 2d (Minn. App. 1988),(online here), which is a case about commercial dealings in personal property, goods, among merchants, and has absolutely nothing to do with real estate, nor with real estate brokerage, nor with questions of licensed status of any kind as a precondition to bringing suit, nor with unsophisticated and inexperienced town council members relying upon lawyers and others. In opening, the American Warehousing court stated:

Appellant contracted with respondent to distribute tire pressure monitors supplied by respondent. Respondent in turn had purchased the product from the manufacturer in Europe. The parties signed a written distributorship agreement on April 29, 1982.

Get real. Shainess would have been better off not citing any law at all, vs citing something that far off base. And, Shainess ducked the question of what Lazan/Landform actually was doing all the time it was sucking up town money on a generous monthly basis. The Shainess analysis begs many, many questions.

Whether the entire Landform contract was/is/shall be held as void entirely as against public policy, whereby those professionals engaged in the drafting and review may have to turn to errors and omissions coverage, Shainess is silent, and it sure would be top notch if the City could get its million and a half dollars back from some deep pocket. Even looking at a quantum meruit equitable offset claim, i.e., discounting the one and a half million by some guess at actual value of what Darren did over all that time, the likelihood seems that the substantial amount of money should be recouped if there were to be litigation and recoupment were the judicial decision. Also quantum meruit is a claim in equity, and to attain equity one must do equity, where contracting to broker real estate without a license seems to fly in the face of doing equity.

Again, this underscores the absolutely essential nature of hiring top notch and fully independent counsel at this point, to advise the City in all aspects of rights and possibilities under the facts as they actually played out, with wording of papers being but one aspect of what actually was done, and what the legal consequences favorable to the city and its citizens, to the public interest, might be.

_____________FURTHER UPDATE____________
A brief Google Scholar search under obvious search terms yielded a case that was cited in PEMS, Relocation Realty Services v. Carlson Companies, et al., 264 NW 2d 643 (Minn. 1978), which is sufficiently factually similar to PEMS so that the law on unlicensed brokers being barred from having standing to sue for a commission can be viewed as at least three and a half decades old, as well as clear from the statute presently applicable to real estate brokering.

Google Scholar gives "cited by" and "how cited" information supportive of the suggestion PEMS fits Ramsey's situation with Lazan/Landform. Doubtlessly other interesting and pertinent precedent likely could be found under more thorough research, including reading cases citing Relocation Realty and reviewing how they in turn were cited. However, Relocation Realty, alone, is proof that PEMS was indeed properly unpublished because it did not expand, restrict, or otherwise deviate from long standing law - law in favor of the citizens' challenge to the Lazan/Landform position. Relocation Realty closes with a clear statement of public policy:

It is clear from the nature of Relocation's representations that the recovery of its costs was a factor in determining the fee which it charged. Cost recovery is always a part of the compensation for a real estate broker by way of fee or commission. The limitation of recovery to costs does not change the essential nature of the action. If we were to hold that "action for compensation" did not include the present case it would serve to encourage unlicensed brokerage. An unlicensed broker could operate in this state and be certain that even if its fee was not paid it could always recover costs and interest. This would greatly decrease the risks of doing business by unlicensed brokers and dilute the protections provided to the public.

Id. at 645-46.

______________FURTHER UPDATE______________
There is this marekting solicitation aimed at a buying target group of "developers" giving Lazan and Cronk as the contact persons, complete with a multi-megabyte marketing brochure.

While on the city's website, it appears the item was prepared for posting by Lazan/Landform and that it would never have been posted that way without either the instigation or approval of Lazan and Cronk. Neither is a licensed broker, and Cronk should not be excused from considerations.

Paper can be written saying Yabba-dabba-doo, but when you go and concoct this kind of clear marketing stuff and promulgate it being published by the city, putting yourselves into a position of contact intermediaries, what you do does tend to make Yabba-dabba-doo dimensions shade to a lesser significance. That is a reality a judge can recognize, a myopic judge, even.

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