2005 Fall, 36. BOGUS LIENS IN NEW HAMPSHIRE Proposed Remedies and Deterrents.

Author:Bar Journal Author - Robert Kolb
 
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New Hampshire Bar Journal

2005.

2005 Fall, 36.

BOGUS LIENS IN NEW HAMPSHIRE Proposed Remedies and Deterrents

New Hampshire Bar Journal Volume 46, No. 3, Pg. 36 Fall 2005 BOGUS LIENS IN NEW HAMPSHIRE Proposed Remedies and Deterrents Bar Journal Author - Robert Kolb

Introduction

So you just lost your divorce case. You lost custody of your children and you feel you were taken advantage of in the process. What do you do now? Well, if you are Ghislain Breton you file fictitious UCC liens against your attorney, your ex-wife's attorney, the attorney representing your children, and the person assigned to oversee your child support.(fn1)

Breton claimed he had a common law copyright on his name and could charge people $500,000 every time they used his name.(fn2) This process, for which there is no legal foundation, is called "redemption" and is from a book called Cracking the Code.(fn3) Breton's liens are bogus for at least two reasons. First, he cannot claim a common law copyright on his name. Copyright laws protect "original works of authorship fixed in any tangible medium of expression."(fn4) According to Nimmer on Copyrights, a persona, a person's name and likeness, are not "original works of authorship" and cannot be copyrighted, even if "embodied in a copyrightable work."(fn5) Second, the UCC registry is for consensual liens, court ordered attachments, and certain other statutory liens.

Breton was eventually charged with improper influence, witness tampering and obstruction of government for filing the liens against Judith Roman (who represented Breton's children during the divorce) and Rafila Stoi (who was in charge of overseeing his child support).(fn6) At trial Breton was found guilty.(fn7) He was sentenced to 18 months in jail with three other sentences being suspended.(fn8)

But for Breton this was not good enough. An associate of his sent the judge and prosecutors letters threatening them with liens.(fn9) When given a chance to lessen the blow Breton was to receive for the latest batch of threatening letters, he told the court he was committed to his cause.(fn10) This led to an additional six-month jail sentence for Breton.(fn11)

The Uniform Commercial Code is meant to facilitate commercial transactions.(fn12) This system allows a lender to easily secure its interest in piece of property through a UCC-1 filing without having to get a judge's order to perfect its interest. A UCC-1 is the financing statement form used by UCC filing offices nationwide. The UCC-1 contains both the debtor's and creditor's names and lists the collateral covered by any security agreement to which the parties have agreed.(fn13) Problems occur when incorrect UCC-1 statements are filed.

Although Breton was eventually stopped and punished, the method for prosecuting him was indirect. Breton was convicted of filing liens against only the public officials, not the private individuals involved in the case.(fn14) The targets of bogus liens must still have them removed at their own expense. Clearly, New Hampshire's current laws in this area are inadequate.

This article explores options that other states have implemented, and advocates the adoption in New Hampshire of a system allowing victims of bogus liens to remove them quickly and cheaply and punishes those that try to abuse a system meant to facilitate commerce.

New Hampshire's Current Law

The cost to a victim of a bogus lien can be high. Removing a bogus lien from the registry requires a court order, which typically entails legal expenses. Under current New Hampshire law, the registry clerk must accept an apparently bogus UCC-1, even if they know it is bogus.(fn15) There are only a few specified reasons why a UCC-1 may be refused (See N.H. R.S.A. 382-A:9-516(b).) The permitted reasons for refusal relate to improper form and inadequate filing fees.(fn16)

There are three options for the victims of bogus liens in New Hampshire. Victims can file a correction statement; file a civil suit for damages; or file a civil suit to cancel the statement. A correction statement can be filed under N.H. R.S.A. 382-A:9-518. But this correction statement does nothing to "affect the effectiveness" of the originally filed UCC-1 statement.(fn17)

There is some relief for the victims of bogus liens found in N.H. R.S.A. 382-A:9-529. This statue defines a fraudulent filing as a financing statement "intentionally or knowingly" filed and not authorized under either RSA 382-A:9-509 or 9-708; or the "financing statement contains a material false statement;" or the "financing statement is groundless."(fn18) If the filing is found to be fraudulent the victim can receive damages of $5,000 (or actual damages whichever is greater), court costs and "reasonable attorney's fees."(fn19)

While receiving $5,000, court costs and attorney's fee may seem like a suitable remedy to the problem, it is not. This remedy involves filing suit in court to ask for the release or cancellation of the fraudulent financing statement.(fn20) This is a potentially expensive and burdensome remedy for the victims of bogus liens. If the person filing the lien is effectively judgment proof, due to a lack of assets, a $5,000 award against them means little.

Even the authors of the Uniform Commercial Code realized the shortcomings in the code's ability to prevent bogus lien filings. Official Comment 3 to U.C.C. 9-518 states that the article "cannot provide a...

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