Industry Papers

DO YOU HAVE TRUST ISSUES? THE SURETY’S USE OF TRUST FUND RIGHTS IN BANKRUPTCY

Introduction

It has been said “where large sums of money are concerned, it is advisable to trust nobody.”3 Yet trusts abound in statutes, indemnity agreements and contracts, and trusts are even implied by law under certain circumstances. The question that arises is what rights flow from such trusts in the bankruptcy context and the corollary question is how can the surety use such rights to its advantage. To address these questions, this paper will first look at the nature of trusts in general, their characteristics and elements, the duties and obligations of the parties and the rights of the beneficiaries in general. Forming a solid understanding of the law of trusts is essential for the surety to be able to identify and assert such rights in the myriad of circumstances which may arise. Next, the paper will focus on the various forms of trusts, such as statutory trust funds, contractually created trusts and trusts at common law.

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HOW TO MINIMIZE UNNECESSARY AND MISLEADING DISCOVERY DISCLOSURES— DOCUMENTS AND DEPOSITIONS (FUNDAMENTALS OF ELECTRONIC DISCOVERY AND THE NEW FEDERAL RULES)

Introduction

Discovery of electronically stored information has been an issue for decades, but there has been renewed interest in the topic of late due in large measure to the 2006 amendments to the Federal Rules of Civil Procedure which became effective on December 1, 2006. The issue has also risen in stature because of some recent high profile cases signaling the courts’ willingness to tackle the issues and the general fact that electronic technology has become so fully integrated with how we live and work that discovery of electronic information has become a necessity instead of mere theory.

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Introduction

The seemingly simple requirement that a surety answer a claim within 45 days after receipt of such claim (hereinafter referred to as the “45 Day Period”) as required under the AIA A312 Payment Bond (1984) has engendered much controversy and concern within the surety industry and has spawned much discussion. The controversy was generated by certain courts that have taken an extremely harsh and myopic view of the surety’s obligations under the A312 bond. According to these handful of courts, if a surety fails to respond to a claim within the 45 Day Period as required by the bond the surety’s defenses to the claim can be waived! Obviously, a loss of defenses can be a serious issue for any surety and surety claims professional and such a circumstance deserves significant scrutiny. However, perhaps equally important is the impact and effect that the “waiver interpretation” of the 45 Day Period may have on the handling of claims under the AIA A312 for surety claims professionals.

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