Fall 2009 Issue

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By Nicole Giardina

Although the concept may seem strange, it is possible to acquire property rights to someone else’s property without the consent of the title owner. It may be for only a few feet along a boundary line or entire acres of property. The common law doctrine of adverse possession is the means by which title to another’s real property is acquired without compensation, by holding property in a manner that conflicts with the true owner’s rights over an extended period of time. The purpose underlying the doctrine of adverse possession is to protect the expectation of those who have used the property for a long period of time. Adverse possession rewards the productive use of land, while punishing the unproductive title owner.

Although the doctrine of adverse possession is strongly rooted in common law, Massachusetts General Law ch. 260, Section 21 provides the statutory period for which an action can be brought. However, there are certain types of property which are not subject to adverse possession actions. These include, but not limited to registered land, state highways, conservation land owned by non-profit corporations land owned by the Commonwealth of Massachusetts or the United States, land owned by railroads, and public burial grounds.

The requirements of adverse possession are:

1. Exclusive Use;

2. Open and Notorious;

3. Adverse to Owner; and

4. Continuous for a period of 20 years

Each requirement is evaluated on a case by case basis, as some elements may be easier to prove than others. The burden of proof is on the possessor of the property to prove each requirement fully.

Under the exclusive requirement, one must enter and use the property of the title owner and the use must be exclusive to him, within his total control and used as if the property were his own. Under the open and notorious requirement, the possession of the property must be visible and open for all to see.

Under the adverse requirement, the possession must be adverse to the title owner’s claim or basically without the consent of the owner. If a title owner has given permission for the use of the property, then the user can not claim adverse possession. However, if the title owner is aware and acquiesced to the use, this does not amount to actual permission. Finally, the possession of the property must for a continuous period of 20 years, by the user and/or his predecessors in title.

The only way to clearly avoid claims of adverse possession is to make sure that if you believe a neighboring land owner is using a portion of your property that you provide him with written permission for the use. Clear written permission will defeat any claim of adverse possession.

The acquisition of property via adverse possession is more common than one might think. For example, if a neighbor erects a fence which is slightly on your land with the intention of taking the property, caring for and maintaining it and you knew and did nothing about it for a period exceeding 20 years, your neighbor will be able to claim your property within the fence line as his own. Your neighbor is only able to claim what he/she has actually had possession of and not your entire parcel of property.


The federal Fair Labor Standards Act (FLSA) provides that employers may not require their employees to work more than 40 hours per workweek unless those employees receive overtime compensation at a rate of not less than one and one-half times their regular pay. The FLSA contains certain exemptions from the overtime compensation requirement, one of which is for employees working in a “bona fide executive, administrative, or professional capacity.” In other words, if an employee works in such a capacity, the employer is exempt from the general requirement of paying overtime pay. Under the FLSA regulations, an employee’s position must satisfy three tests to qualify for this exemption: (1) a duties test, (2) a salary-level test, and (3) a salary-basis test.

The issue before a federal appeals court recently was whether the compensation plans used for management-level employees of a health club chain satisfied the salary-basis test.

Under its bonus plan, in particular, the employer could deduct bonus plan “overpayments” if an employee did not meet certain performance levels. The legal outcome for the employees was affected by the time frame in which the compensation plan was in effect. For the period after August 23, 2004, when a new Department of Labor regulation on the salary-basis test went into effect, employees were entitled to compensation for pay periods in which actual deductions from pay were made. The regulation provided that “[a]n actual practice of making improper deductions demonstrates that the employer did not intend to pay employees on a salary basis.”

Other employees also were entitled to overtime compensation for some pay periods before the regulation’s effective date, even when the employer made no actual deductions, but the employer had in place a policy that made such deductions significantly likely to occur. Under a then-controlling United States Supreme Court ruling, an employee was not paid on a salary basis, and thus was eligible for overtime compensation, if (1) there was an actual practice of salary deductions, or if (2) an employee was compensated under a policy that clearly communicated a significant likelihood of deductions.

In the case before the court, the policy fit within the “significant likelihood of deductions” category. The employer’s compensation plan targeted specific members of management; its policy set out a particularized formula whereby their pay would be in jeopardy; the employer took affirmative steps to demonstrate that the pay-deduction plan would be enforced (including the creation of a “performance pay committee” that made the case-by-case decisions); and it took actual deductions from employees’ salaries not long after the employees stopped meeting their performance goals.

Employers desirous of avoiding a similar outcome, in which overtime pay ultimately is owed to employees generally considered by the employer to have been “salaried employees,” should be cautious about making any alterations to the predetermined pay for such employees. An employee will be considered to be paid on a “salary basis” within the meaning of the regulations only if the employee regularly receives a predetermined amount constituting all or part of the employee’s compensation, and such amount is not subject to reduction because of variations in the quality or quantity of the work performed.


Nicole discovered that someone with a name very similar to hers had stolen her identity and opened fraudulent accounts in her name and under her Social Security number. This was only the beginning of a long and arduous saga in which she took all of the recommended steps to rectify the problem, but nonetheless was beset by financial and emotional stresses over several years before the matter was finally resolved. Ultimately, she secured some relief in the form of a substantial jury verdict against a credit reporting firm. The firm bore no responsibility for the identity theft itself, but it had repeatedly compounded the impact of the theft by mishandling information about Nicole. Nicole sued the firm under the federal Fair Credit Reporting Act (FCRA).

Although it did not do so intentionally, the credit reporting firm had caused Nicole’s ordeal to be more protracted, and to have more consequences for her finances and general well-being, by mistakenly putting her address and Social Security number on credit files set up by the identity thief. What is worse, the firm did this a few times over several years, even after having been informed of the problem. Because of the erroneously adverse credit files, Nicole was sometimes denied credit, such as for a home mortgage. On other occasions, she was offered credit only on very disadvantageous terms because she was perceived as such a high risk. Nicole did have some previous credit problems of her own making, but the “infection” of her credit information by the files created by the identity thief made her look even worse to lenders.

A key issue in the firm’s unsuccessful appeal from the jury verdict was whether Nicole had shown enough to recover a large sum not just for out-of-pocket losses, but also for emotional distress. The federal appellate court left the verdict undisturbed. The jury had not indicated what portion of its total award was attributable to emotional injuries, but, in any case, the court was satisfied that the award was not excessive in light of the evidence offered at trial.

Nicole had been made to spend literally hundreds of hours, often while having to miss work, trying to undo the tangled mess created by the firm. The record showed that as she dealt with the credit reporting service and tried to cope with the rippling effects of its errors, Nicole often was uncharacteristically upset with friends, family members, and co-workers. She was beset by frequent headaches, sleeplessness, and even such symptoms as bad skin and hair loss. In short, Nicole became a wreck emotionally and even physically. For its role in causing it all, the credit reporting firm had to pay.


In October 2008, Congress increased the basic limit on federal deposit insurance coverage from $100,000 to $250,000. The limit is scheduled to return to $100,000 on January 1, 2014.

The temporary limit now in effect has not changed the fact that a customer has various means by which to effectively raise the applicable limit for the customer’s collection of deposits at any one institution. The basic limit applies separately to different ownership categories. A single account in one name is insured up to $250,000; a joint account for two or more people is insured up to the same limit, per owner; certain retirement accounts, such as IRAs, are covered up to the limit; and deposits meant to pass on to named beneficiaries on the death of the owner can be protected up to $250,000 for each named beneficiary. This last category of deposits is a revocable trust account.

There also are other recent changes that favor depositors in insured institutions. For example, it used to be that the only beneficiaries under a revocable trust account who qualified for additional deposit insurance coverage were the account owner’s spouse, child, grandchild, parent, or sibling. Now an account owner can name almost any beneficiary, such as a more distant relative, a friend, or a charitable organization, and each beneficiary will still benefit from the additional coverage.


A business executive was answering questions for an application for a $3 million life insurance policy that named as the beneficiary a company he had started with others. He answered in the negative when asked the common question as to whether he “[e]ngaged in auto, motorcycle or boat racing, parachuting, skin or scuba diving, skydiving, or hang gliding or other hazardous avocation or hobby.” In fact, on about 20 occasions, the executive had gone heli-skiing, which involves skiing down remote mountain trails after being dropped off by a helicopter.

Only three months after the policy was issued, the executive was killed in an avalanche while heli-skiing. The tragedy for his survivors and former business partners was compounded in the courtroom when a federal appeals court upheld the life insurer’s rescission of the life insurance policy on the ground of a misrepresentation on the application.

A reasonable person in the position of the life insurance policy applicant would have known that his heli-skiing avocation constituted a hazardous activity, as that term was used in the application. The applicant clearly was aware of the heightened avalanche risks associated with heli-skiing, as compared to resort skiing. He had routinely signed waivers to that effect whenever he engaged a company that made arrangements for such excursions. It was hardly necessary for the insurer to point out, in making this argument, that heli-skiing commonly involves rescue and survival training and the use of specialized lights and breathing devices meant to increase one’s chances of surviving an avalanche.

About three weeks after the executive had completed the insurance application by telephone, an underwriter making calls for the insurer called him with some follow-up questions, including the same inquiry about “any hazardous activities.” This time, the executive mentioned in the conversation that he enjoyed skiing and golf, among other things, but still there was no mention of heli-skiing. Nor did the executive show any concerns or confusion over what the term “hazardous activities” meant. The beneficiary under the rescinded policy unsuccessfully sought to use this exchange to argue that the life insurer was chargeable with knowledge of the insured’s concealment of his heli-skiing avocation, and thus was precluded from seeking rescission.

The court ruled that the insured’s “skiing” statement, when combined with the negative responses to the general question of whether he engaged in hazardous activities, would not have put a prudent underwriter on notice of the need to investigate further. Otherwise, any report by an applicant of a generally low-hazard recreational activity, such as wrestling, juggling, or fishing, would unreasonably require the insurer to investigate the myriad possible “extreme” variants of such activities.

Instead, to make an insurer legally chargeable with knowledge of an undisclosed fact, generally it must be shown that it had knowledge of evidence indicating that the applicant was not truthful in answering a particular application question. In this case, there was no such “red flag” that might have allowed the policy beneficiary to avoid the consequences of the executive’s untruthfulness.


Tracy Brown is the proud mother of Kaylee Brown born August 2, 2009 who weighed in at 6 pounds, 15 ounces, 19 inches long. Congratulations Tracy! She also has a four year old son, Zack. Tracy plans to be back on the job in October.

Jim Rudolph and his wife, Susan, were recently honored by Cohen Hillel Academy of Marblehead at its 2009 Gala. The Rudolphs were presented the Dr. Bennett I. Solomon Community Leadership Award at a reception with over 300 people after a showing of the Jersey Boys at the Shubert Theatre. All three of the Rudolph children (Billy, Bobby and Katie) attended Cohen Hillel Academy.