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Eric
04-14-2009, 08:44 AM
Are there any attorneys on this forum who would be willing to answer some questions about issues in the hobby?

Many legal issues have come up recently. If anyone has the knowledge and is kind enough to share, please email me at ecky3@aol.com

Thanks
Eric

encinorick
04-14-2009, 10:35 AM
Yup, but, speaking as a lawyer and a proud member of the California bar for more than 25 years, don't hold me liable for any advice rendered by me herewithin. I will not represent anyone, including GUU, with my words or deeds, just an opinion (unless there's a lot money involved, that's a different story). Also, remember most, if not all, disputes, are local (just like politics) so I have no knowledge regarding the local laws of various jurisdictions other than California :D

nyjetsfan14
04-14-2009, 10:57 AM
Yup, but, speaking as a lawyer and a proud member of the California bar for more than 25 years, don't hold me liable for any advice rendered by me herewithin. I will not represent anyone, including GUU, with my words or deeds, just an opinion (unless there's a lot money involved, that's a different story). Also, remember most, if not all, disputes, are local (just like politics) so I have no knowledge regarding the local laws of various jurisdictions other than California :D

Yep, you're a lawyer :D

Eric
04-14-2009, 11:17 AM
Richard-
Thanks for agreeing to answer some questions and offering your opinion.

I'll start. I am worried about the number of people around here who are owed money by auction houses. What legal options do people in this situation have to recoup the money owed to them.

In the economic climate we are in, many companies are forced to close up shop. If a company files for Chapter 11, will the people owed money see any of it, or does that get wiped away?

What happens to items that have been sent in for consignment that are in the possession of the auction houses? Do they get returned to their owners?

spartakid
04-14-2009, 12:14 PM
Correct me if I'm wrong Richard, but I'm pretty sure anyone that has money with a company that files ch. 11 is SOL unfortunately. I would assume that you could still sue for any memrobilia that you can prove they have, or better yet they would have to prove they don't have the item(s).BTW, I'm not a lawyer, but wish to be one later in life. Ricardo

encinorick
04-14-2009, 12:24 PM
Eric: It's a pleasure talking with you and other collectors, everyone here should greatly appreciate the efforts GUU uses to support the legitimate sports memorabilia fan.

You ask a complicated question, Eric. First, there's the matter between civil (which you get your money back) and cirminal (the dude ends up in jail like OJ), and then there's bankruptcy, which a federal issue and usually no one wins.

With regard to civil, in California an individual can sue on his own behalf for up to $5,000. Usually, one sues for breach of contract, which allows one to obtain the contract amount, plus costs. The standard of evidence is "preponderance of evidence" which means you show the judge the contract, proof of sale, the fact you contacted the auction house and that no payment was made.

Each instance of breach of contract is a separate lawsuit, so in my estimation, each item should be sued separately, not the total amount owed. If the item is more than $5,000 you have to make a decision whether to eat the additional costs, or hire a lawyer, which can be very, very expensive.

Criminal is different matter. Usually, it never goes to trial, but if you get a local DA or police to get involved because there is some pattern and others have been victimized, as some have done there, you can be successful in putting pressure on the auction to pay. It is my understanding that's been the case with Mastro, Bricol and AMI. The standard is also different, "beyond a reasonable doubt," in that the auction house "intented" to defraud or make some other ciminal act.

Finally, many of these auction house are incorporated (or are LLC, limited liability companies) into separate entities, so if you sue it, the individuals aren't personally liable. Also, if they file bankruptcy, forgetaboutit, it's federal and usually it takes years to liquidate and the credits are usually screwed in the end.

Some here have used the criminal vehicle to obtain results, and I think that's smart, if the local police are interested. But, once the police are involved, it's out of your hands, and if they prosecute, you may be asked to testify whether or not you get your money back and/or wish to do so.

As Warren Buffet said, when the tide goes out, you can finally see who's swimming naked or not. Difficult times makes one appreciate the good guys from the bad guys.

kingjammy24
04-14-2009, 12:30 PM
I would assume that you could still sue for any memrobilia that you can prove they have, or better yet they would have to prove they don't have the item(s)

maybe not. as i understand it, once an entity declares bankruptcy, creditors have different "standing". certain creditors get first dibs and the rest wait in line to see what's left over. the "first dib" creditors would be secured creditors and i'm unsure if consigners qualify as secured creditors.

"..The bankruptcy trustee had moved for bankruptcy court approval of an auction sale of the debtor's assets, including the sale of consigned goods, over the objection of consignment vendors.The consignors claimed the trustee had no right to sell the consigned goods because the consignors owned them. The bankruptcy court approved the trustee's auction sale of the consigned goods. The court held the consignors did not have any protected consignment interest in the goods because they had failed to file UCC financing statements describing their goods. The trustee could sell the consigned goods because they were property of the debtor's bankruptcy estate, and the consignors ended up being relegated to the status of pre-petition unsecured creditors."

"Even if the auction company has been paid by a third party, the auction company may use the proceeds to pay another creditor and not have funds to pay the dealer. Moreover, if the auction company pays a dealer for his equipment and then files bankruptcy, this payment may be subject to a claim by the bankruptcy trustee and may be required to be returned to the bankruptcy estate of the auction company to be shared among all creditors."

in other words, if you've consigned to an auction house and they declare bankruptcy, you really may be SOL. maybe encinorick can elaborate.

rudy.

* i am not a lawyer and nothing i say should be construed as legal advice

kingjammy24
04-14-2009, 12:37 PM
interestingly enough, in late december 2008, victor moreno filed a homestead declaration. one of the purposes of a homestead declaration is that "they prevent the forced sale of a home to meet the demands of creditors".

just sayin'.

rudy.

encinorick
04-14-2009, 12:44 PM
Well, it comes down to money, doesnt' it always? Chapter 11 (unlike Chapter 7 which is a complete liquidation of all assests) is a "re-organization of assests," in other words, the federal law allows for priorites of creditors.

For example, with regard to GM, which will file for Chapter 11 shortly, the stockholders are lower than the common bondholders, and the preferred bonderholders, are, well, preferred and higher on the food chain than the bondholders, and so on.

If you want to hire a lawyer and figure out where you stand in the pecking order, so be it. In the end, the lawyers make most of the money, and I'm speaking as a lawyer.

encinorick
04-14-2009, 12:53 PM
By the way, if y'all interested in Bankruptcy law, that's a different animal. Like I said, that's Federal law. But, there's strange local exceptions, paid for by your local politicians. For example, in Florida, an owner occupied house is exempt from Federal Bankruptcy law which is why OJ moved to Florida from California after the civil trial. It didn't help OJ in the end, because he's in jail, but the house may still be with his rotten children, who know that their father killed their mother.

sarahsdad
04-14-2009, 12:57 PM
Truly outstanding advice from Forum members. Lack of information and/or disinformation from an auction house can be quite frustrating especially if they are in another state where legal recourse can be expensive and time cosuming if nonexistant. Moving forward any one who consigns to some of the auction houses that frequently get mentioned in a negative light such as AMI and Bricol get what you deserve at that point. How many warnings do you need from those already burned? For those who have been burned in the past or are currently getting burned my sympathies. I have been where you are and it sucks. The best way to deal with these entities is simply to stop consigning and stop bidding. I believe that these actions had a negative impact of ESM's (Elite) ability to thrive and as a result I believe they are done. This Forum is powerful and its members not only make a difference in the hobby but have the ability to a certain extent, in dictating who stays in business and who does not.
Sarahsdad

encinorick
04-14-2009, 01:10 PM
Yup, sharasdad, sarah should be proud. For the life of me, I can't understand why people continue to consign with con-artists and the like, it's very, very hard to make a profit, let alone avoid a loss with these criminals. Lawyers aren't the answer, neither is government.

GUU, where are thou? Help us sell our stuff honestly. Look-out for unNaked in a sea of trouble.

treant985
04-14-2009, 01:23 PM
Each instance of breach of contract is a separate lawsuit, so in my estimation, each item should be sued separately, not the total amount owed. If the item is more than $5,000 you have to make a decision whether to eat the additional costs, or hire a lawyer, which can be very, very expensive.

Is it really the case that each item would have to be a separate suit? I understand each item being a separate cause of action, but it still seems like courts would let you could aggregate all claims between the two of you, to keep from having to do a ton of suits on the same basic issue between the same people. Obviously you know infinitely more about CA law than I do, so I'm just seeking a clarification. I just recall the federal rules (obviously not applying unless one of these auction houses owes you a LOT of money and you're from diff states) as tending to want to decrease and compress the # of suits by any and all means possible.

encinorick
04-14-2009, 01:42 PM
I'm an advocate, if I'm representing someone I put the best case forward. So, If you're going to small claims, which in California allows an individual to bring a breach of contract action with 2 years or so within the breach (it's been awhile so bear with me) that's how I do it. To get an result. To win, and win again.

By the way the homestead issue, is local, doesn't apply to Federal Bankruptcy law. So Victor may be having other problems as well.