SCENE ON THE STREET + IN THE HALLS

LAWYERS AND JUDGES ABOUND
ON THE STREET
and
IN THE HALLS OF JUSTICE

Special to the Readers of Milwaukeeworld.com

By Michael Horne

And The Milwaukee World Hound Dog Team

The interegnum between presidential administrations is considered a relatively quiescent time, legislatively, but bombs continue to explode on the political landscape. For instance, the arrest of the Governor of Illinois was a significant and unusual case even for that state. If convicted, Rod Blagojevich [Pepperdine U '83], would be the fourth governor from that state to go to prison.
Ruminate on that , if you must, but I'll look at the bright side -- fully 90 per cent of Illinois governors aren't imprisoned after serving their term.
The arrogance of power did in Blago, according to Wisconsin Rep. Pedro A. Colon [UW '94], who remembered encountering the Illinois governor at the Democratic National Convention this year. Blagojevich traveled in high state, Colon said, with a full retinue of staff and very large hair. "I thought it was Obama coming into the room," Colon remembered, reflecting on the pomp and excitement of the moment. "But it was this guy. He's not very large, but I remember his hair. I'll never forget his hair."
Colon was speaking at Chez Jacques, 1022 S. 1st St., on Tuesday, December 9th, 2008, where he was hosting a Lame Duck Session Fundraiser amid appetizers and red wines at the Fifth Ward restaurant on a snowy evening.
Former Governor Martin J. Schreiber [Marquette '64], was among the attendees, and I asked him how much a Senate seat would have gone for in his day. All in fun, of course, but Schreiber admitted the Illinois governor is in pretty rough shape, politically, to say the least.
Attorney and former legislator Paul Sicula [U Wisconsin '64] worked the room, telling folks that he and former Sen. Brian B. Burke [Georgetown '81] have formed a lobbying firm called Sicula & Burke Consulting Associates. According to a release issued Monday, December 8th, 2008, "Paul Sicula and Brian Burke are please (sic) to announce" the formation of the firm. "We would be more than happy to consider working on projects in the next legislative session."
Burke's law license was reinstated earlier this year. Unlike his former colleague Gary George [U Michigan '79], who spent Monday pleading to get his license reinstated, Burke's felony conviction was in State, not Federal court, and his misconduct in public office did not extend to personally enriching himself, as was the case with George. The firm has not yet registered with the state, since it doesn't have any clients yet. We'll see when that changes.

The gig also attracted a number of candidates for vacant judgeships in Milwaukee County, including Ellen Brostrom [UCLA '95] and Christopher R. Lipscomb [Marquette '91], (who are to square off in April), along with J.D. Watts [U Wisconsin '77] and Ronald S. Dague [Marquette '90], who must face a primary with Daniel J. Gabler [Marquette '91] in February. Only Gabler was not present at the event.
Watts said he recently received the endorsement of Jane Vinopal Carroll [UW '87], the woman who beat him during his first quest for the bench. Both Watts and Lipscomb already wear the black robe of the judiciary, serving as chief magistrates of the Sovereign Municipal Courts of Fox Point and Glendale, respectively.


One of the nice things about being a Circuit Court or better judge is that the Code of Judicial Conduct prohibits jurists from participating in activities like fundraisers (for others) and political party business. (That's why there were only judicial candidates at Democrat Colon's event, and no judges.) This makes things easy on the pocketbooks of the gavel-and-robe set, but does tend to take otherwise decent people out of circulation.
A former judge of my acquaintance said he thought it best to leave his own home one evening while his wife held an event for a local candidate.
Just to be on the prudent side Judge Charles F. Kahn, Jr. [UW '75], would sit in his car while his wife Patty Keating Kahn made the rounds of political events, as I recollect from personal observation.
The rules exempt municipal judges, and permit judges to attend "as a member of the public," but that would involve going home first, slipping out of the robe and donning civvies. Too much hassle.

Judge John Siefert [UW '74], sued in Federal Court [pdf] to be able to join a political party, to support candidates, directly solicit contributions and allow other judges to do so, too. The current system has certain farcical elements, especially considering the recent election of Michael Gabelman [Hamline U '93], to the Supreme Court, an effort that was partisan in every respect but name.

DEVELOPER AND BANK SPAR OVER $1.6 MILLION PREPAYMENT PENALTY

Judge Kahn has an interesting real estate case in his courtroom that might wrap up early next year. It's 2007CV013392,
BV B1 LLC v. Investorsbank, and there was a motion hearing Wednesday, December 10th, 2008, in his Branch 24 courtroom that I checked out.
Unlike most real estate cases these days, this one is not about a bankruptcy or a deal gone bad, but rather a case where a developer and the bank are arguing about whether the developer should be penalized for paying off a loan ahead of time, and how much. The case has to do with a Pick 'n' Save in Fond du Lac developed by Robert E. Schmidt III [Boulder Venture] and his partners.
Even a well-educated lay person has virtually no clue as to what goes into the development of a grocery store, as a morning in Judge Kahn's court made clear quite rapidly.
Did you know that grocery stores involve "negotiated subordinated ground leases," where the very earth is leased, subleased and sub-subleased? There are also numerous agreements and covenants involving calculations of the future and present value of money, interest rate indices and significant penalties for deals that cannot be consummated for one reason or another.
Investorsbank issued a 10-year mortgage loan to the developer for a principal sum of $4,850,000 at 6.75% interest in February, 2005.
When BV BI LLC found a buyer for the property, in September, 2007, Investorsbank was instructed to prepare a payoff statement. The bank sent one indicating no prepayment penalty would be due, and then amended it one day before the closing that to say the penalty would be $1,630,909.90. A further amendment dropped the sum to $797,111.38.
Rather than stiff the bank on the penalty and risk an even greater loss in the event the deal fell through and the buyer would sue for his losses, BV B1 paid the penalty with "reservation of rights," (a.k.a. "under protest"), saying the penalty should be zero. The developer now now wants its money back.
The bank takes a contrary position, wouldn't you know. Complicating matters is that the bank's president died without being deposed in the case.
The bank's attorney, Dean Laing, [Marquette '83] thinks it is a simple case to be determined solely within "the four corners of the contract," he told Kahn (I like that imagery).
Opposing counsel Kathy L. Nusslock [Marquette '85], assisted by Gregory J. Sell, [U Wisconsin '75], asked Kahn to rule that she should be able to review other commercial real estate loans issued by the bank. She said the$1.6 million penalty worked out to a 19.5% effective annual yield for the bank, which she indicated by inference would be rather high for a current, fully secured commercial real estate loan. In fact, the developer should have just put the thing on his credit card at those rates.
In the end, Judge Kahn ruled that the bank should make one year's worth of commercial real estate loan documents available to the attorneys, thus permitting the additional discovery asked for by Nusslock. Laing said it was irrelevant what any other customer may have paid in penalties.
Before ruling, Kahn said judges are instructed by appeals court precedent to act slowly and deliberately when a summary judgment is requested, as was the case here. He said he would rather err on the side of fairness, adding, "I'm not as strict on rules and deadlines [as some other judges] ... let's get all the information, and allow the amendments and the additional discovery." The case will eventually culminate in a trial in January should the parties not come to a settlement beforehand.

Well, at least they're arguing about money that exists, rather than the imaginary stuff.
Before court began, Judge Kahn informally was chatting about some developments he's seen in his court where a property assumed to be worth a quarter million dollars came back with an appraisal of $50,000 -- an "underwater mortgage," if there ever was one.
He said he felt obliged to drive out to the property on Sherman Boulevard just to see it for himself before he signed off on whatever the issue was with that particular property. "It was a nice three story building," he said. It probably was worth a quarter million -- but if there is no money to be had --. Scary thoughts for scary times ahead.
--Michael Horne