services provided in the same field. Service marks consist of letters, words, symbols, and other devices that help inform consumers about the origin or source of a particular service. Roto- Rooter is an example of a service mark used by a familiar plumbing company. TRADEMARKS,by contrast, are used to distinguish competing products, not services. Whereas trademarks are normally affixed to goods by means of a tag or label, service marks are generally displayed only through advertising and promotion. Service marks are regulated by the law of UNFAIR COMPETITION. At the federal level, service mark INFRINGEMENT is governed by the LANHAM TRADEMARK ACT of 1946 (15 U.S.C.A. § 1051 et. seq.). At the state level, service mark infringe- ment is governe d by analogous INTELLECTUAL PROPERTY statutes that have been enacted in many jurisdictions. In some states, service mark infringement may give rise to a CAUSE OF ACTION under the COMMON LAW. Because service marks are a particular type of trademark, the substan- tive and procedural rules governing both types of marks are fundamentally the same. The rights to a service mark may be acquired in two ways. First, a business can register the mark with the government. Most service marks are eligible for registration with the U.S. PATENT AND TRADEMARK OFFICE .Severalstategovernments have separate registration requirements. Once a service mark has been registered, the law typically affords protection to the first mark filed with the government. Second, a business may acquire rights to a service mark through public use. However, a mark must be held out to the public regularly and continuously before it will receive legal protection. Sporadic or irregular use of a service mark will not insulate it from infringement. To receive protection, a service mark must also be unique , unusual, or distinctive. Com- mon, ordinary, and generic marks rarely qualify for protection. For example , a professional association of physicians could never acquire exclusive rights to register a service mark under the name “Health Care Services.” Such a mark does little to distinguish the services provided by the business and tells consumers nothing about the HEALTH CARE practitioners involved. The law could give full legal protection to these same doctors, however, if they were to apply for a mark under the name “Snap and Jerk Chiropractic Services.” Once a business has established vested rights in a service mark, the law forbids other businesses from advertising their services with confusably similar marks. Service mark in- fringement occurs when a particular mark is easily mistaken for other marks already estab- lished in the same trade and geographic market. Greater latitude is given when businesses that share similar marks are in unrelated fields or offer services in different consumer markets. For example, a court would be more inclined to allow two businesses to share the same mark when one business provides pest control services in urban areas, while the other provides film developing services in rural areas. Two remedies are available for service mark infringement: injunctive relief (court orders restraining defendants from infringing on a plaintiff’s service mark) and money damages (compensation for any losses suffered by an injured business). Both remedies are normally available whether a claim for infringement is pursued under state or federal law. However, the LANHAM ACT allows an injured business to recover significantly greater damages for infringement of a federally registered mark than it could recover under comparable state legislation. Service marks protect the good will and reputation earned by businesses that have invested time, energy, and money in bringing quality services to the public. Service marks also encourage competition by requiring businesses to associate their marks with the quality of services they offer. In this way, service marks function as a barometer of quality upon which consumers may rely when making de cisions to purchase. However, service marks are often infringed, and consumers grow leery when inferior services are passed off as a competitor’s through use of too similar a mark. Thus legal protection of service marks can save consumers from making improvident expenditures for services of dubious or unknown origin. Since the late 1990s, service marks have been registered in connection with the con- struction of sports stadiums and arenas. In 2005 sports stadium and arena construction projects reached a total cost of approximately $10 billion. Apart from their expensive costs, sports facilities are receiving public attention for another reason, specifically the involvement of major corporations with regard to naming rights. Generally, the sale of a naming right GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 128 SERVICE MARK grants a private entity the right to license the sports stadium the entity’s name in exchange for monetary payments over a certain period of time. The sale of naming rights provides a major source of funds for expensive construc- tion such as the National Football League (NFL) stadium in Denver, Invesco Field at Mile High, which cost about $400 million. Some companies use naming rights not only to build brand awareness but also to extend legal protection for their service marks. Gener- ally corporate sponsors register their service in the international class 041 (“Education and entertainment”). The registered service marks of the corporate naming rights sponsors typically consist of their previously established service marks plus the term “Field,”“Stadium,” “Park,” or “Center.” The registrations usually contain a disclaimer for the affix; for example, “no claim is made to the exclusive right to use ‘Stadium’ apart from the mark as shown.” The corporate sponsors have registered different descriptions of their services, but two general expressions have been widely used: providing stadium facilities for sports and entertainment and providing entertainment in the nature of sporting events. Examples of service mark registrations include: BUSCH STADIUM, “Providing a sporting and entertainment facility for the enjoyment of others,” owned by Anheuser- Busch, Incorporated; UNITED CENTER, “En- tertainment services; namely providing and leasing stadium facilities for sporting events ,” ownedbyUnitedAirlines,Inc.;INVESCO FIELD AT MILE HIGH, “Providing f acilities for sporting events, namely f ootball ga mes and soc cer Matches. ” ownedbyAmvescapPLCCompany United Kingdom; Some legal observers have questioned the validity of these service marks, especially when they are registered by a company that ordinarily sells products and not services. PepsiCo, for example, sells beverages and snack products. So what legal purpose is served by allowing the company to register a service mark for the naming rights it owns in the Pepsi Center in Denver, Colorado? The answer is that PepsiCo negotiated the right to pour its Pepsi products to customers for all events at the Pepsi Center plus the first option for in-arena vending rights and concession trade for PepsiCo’s subsidiary food product division, which at the time PepsiCo registered its service mark included Taco Bell, Pizza Hut, and Kentucky Fried Chicken. In determining the validity of any service mark, the PTO will consider each case on its own merits. The PTO has typically made its determi- nations in conjunction with traditional service businesses such as laundries, insurance compa- nies, telephone companies, and railroads. It remains to be seen whether the PTO will encounter any thorny legal challenges to this relatively new type of service mark. CROSS REFERENCES Consumer Protection; Trademarks. SERVICE OF PROCESS Delivery of a writ, summons, or other legal papers to the person required to respond to them. Process is the general term for the legal document by which a lawsuit is started and the court asserts its jurisdiction over the parties and the controversy. In modern U.S. law, process is usually a summons. A summons is a paper that tells a defendant that he is being sued in a specific court that the plaintiff believes has jurisdiction. Served with the summons is a complaint that contains the plaintiff’s allega- tions of wrongdoing by the defendant and the legal remedy sought by the plaintiff. The summons also informs the defendant that he has a specified number of days under law to respond to the summons and complaint. If the defendant does not respond, the plaintiff may seek a default judgment from the court, granting the plaintiff the legal relief specified in the complaint. Rules of CIVIL PROCEDURE and CRIMINAL PRO- CEDURE determine the proper form of legal pro- cess and how it should be served. The rules vary among federal and state courts, but they are meant to give the defendant notice of the proceedings and to command him to either respond to the allegations or to appear at a specified time and answer the claim or criminal charge. The concept of notice is critical to the integrity of legal proceedings. DUE PROCESS forbids legal action against a person unless the person has been given notice and an opportu- nity to be heard. Process must be properly served on all parties in an action. Anyone who is not served is not bound by the decision in the case. A person GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION SERVICE OF PROCESS 129 who believes that proper service has not taken place may generally challenge the service without actually making a formal appearance in the case. Whether service was proper is usually deter- mined at a pretrial hearing. A defendant must request a special appearance before the court. A special appearance is made for the limited purpose of challenging the sufficiency of the service of process or the PERSONAL JURISDICTION of the court. No other issues may be raised with- out the proceeding becoming a general appear- ance. The court must then determine whether it has jurisdiction over the defendant. Methods of Service Three basic methods are used for service of process: (1) actual, or personal, service, (2) substituted service, and (3) service by publica- tion. Although each method is legally accept- able, PERSONAL SERVICE is preferred because it is the most effective way of providing notice and it is difficult for the defendant to attack its legality. Personal service means in-hand delivery of the papers to the proper person. Traditionally personal service was the only method of service allowed by law because it was best suited to give the defendant notice of the proceedings. Substituted service is any method used instead of personal service. Forms of substituted service vary among different jurisdictions, but all are intended to offer a good chance that the defendant actually will find out about the pro- ceedings. If a defendant is not at home, many states permit service by leaving the summons and complaint with any person at the defendant’s home who is old enough to understand the responsibility of accepting service. Some states permit service by affixing the summons and complaint to the entrance of the defendant’s home or place of business and then mailing a copy of the papers to that individual at his last known address. This method is often called “nail and mail” service. A number of states allow service simply by mailing the papers to the defendant’s actual address; registered mail is generally required. States also consider service valid if the defendant’s property is attached, or legally seized, within the state and the papers are then mailed to him. Under the laws of some states, substituted service may be used only after diligent efforts to effect personal service have failed. Some forms of substituted service may have to be tried before others can be used. Other states permit substituted service at any time or after a single attempt to find the defendant and serve the papers personally. A third method of service is publication of a notice in a newspaper. Publication is also called constructive service because the court construes it to be effective whether the defendant actually reads the notice or not. Generally, service by publication is allowed only by leave of the court, which usually grants permission only when the plaintiff can show that no other method of service can be effected. Usu ally the legal notice must be published in at least one newspaper of general circulation where the defendant is likely to be found or where the court is located, or in both places. Ordinarily the notice must be published on more than one occasion, such as once a week for three weeks. In truth, courts realize that defendants rarely read notices published in newspapers, but the effort must be made when the defendant cannot be found and served in any other way. Plaintiffs prefer not to use publication because it is expensive and a court might later find that the defendant could have been served personally. Where Process May Be Served Legal papers may have to be served within the geographical reach of the jurisdiction, or authority, of the court. If the service itself is the basis for the court’s jurisdiction over the defendant, then the service usually must be made within the state. For lower-level courts, service may have to be made within the county where the court is located. Trial courts of general jurisdiction usually permit service anywhere within the state. Service of process for an action in a federal district court may be made anywhere within the state where the court sits or, for some parties, any place in the United States that is not more than one hundred miles from the courthouse. A variety of statutes permit state courts to exercise authority over per sons not physically present within the state. These are called LONG- ARM STATUTES. They specify factors, other than the defendant’s physical presence within the state, that provide sufficient justification for the court to exercise jurisdiction over the defen- dant, such as doing business within the state or GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 130 SERVICE OF PROCESS having an automobile accident within the state. When one of thes e f actors exists, the prospec- tive defendant can be served with legal process outside the state because the service itself is not the basis of the court’s jurisdiction. Substituted or constructive methods of service may be used on a defendant who comes within the long-arm jurisdiction of the state. For example, many states permit a plaintiff to serve an out-of-state resident who was involved in a traffic accident in the state by serving legal process on the attorney general of the defen- dant’s state and then sending copies to the defendant at his residence. The statute makes the attorney general the agent for the service of process on out-of-state drivers. Such a statute is based on the theory that a nonresident driver has consented to this method of service by using the highways and facilities within the state. Who Must Be Served Service of process is effective only if the right person is served. When the defendant can be described but not named, service by publication can be made with a fictional name like Richard Roe. Where the defendant is not a natural person but a corporation, statutes generally provide for effective service on a managing agent, a director, an officer, or anyone designated an agent in the corporation’s application for a charter or a license to do business within the state. If the person to be sued is a child or a person incapable of managing his own legal affairs, service may be made on a parent, guardian, or someone else entrusted with the defendant’s care or affairs. The plaintiff may ask the court to designate a proper person when there is doubt. An estate can be sued by service of process on an executor or administrator. The plaintiff may ask the court to appoint suc h a person if none has yet been named. When more than one person is being sued, each of them must be served. For example, if a partnership is sued, each partner must be served. When Papers Can Be Served The proper time for service of process depends on the law of the jurisdiction. Service must be made within the time that the STATUTE OF LIMITATIONS allows for starting that particular kind of action because it is service that starts the lawsuit. Many states have long prohibited personal or substituted service on Sunday. Service is also prohibited on legal holidays in some states. Process Servers Every jurisdiction specifies who may serve process. Many states take a simple approach and allow service by any person over the age of 18 who is not a party to the suit. Under federal law service of anything other than a summons, complaint, or subpoena must be made by a U.S. marshal, a deputy marshal, or someone else appointed by the court. Some states also follow this procedure and designate that such qualified service shall be by a sheriff or similar peace officer. In some jurisdictions anyone who serves more than a specified small number of sum- monses a year must be licensed. Laws generally provide for fines or imprisonment of a process server who fails to obtain a required license. A court will not dismiss cases started with service by an unlicensed process server. For the most part, courts have allowed process servers to use any means necessary to serve papers on reluctant defendants as long as no law is broken. For example, a process server can knock on the defendant’s door and state that he has a package for the defendant. If the defendant opens the door, the resulting service of process is valid. A defendant cannot avoid the service of process by refusing to accept delivery of the papers. Many cases have upheld service where the process server dropped the papers at the defendant’s feet, hit the defendant in the chest with them, or even laid them on the defendant’s car when he refused to get out or open the door. Invalid Service The tricks of serving process papers can, however, reach a point that the courts will not tolerate because they subvert the purpose of service or threaten to disrupt the administration of justice. The most intolerable abuse is called sewer service. It is not really service at all but is so named on the theory that the server tossed the papers into the sewer and did not attempt to deliver them to the proper party. Sewer service is a FRAUD on the court, and an attorney who knowingly partici- pates in such a scheme can be disbarred. Anyone who serves process must file an AFFIDAVIT of service with the court, giving details GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION SERVICE OF PROCESS 131 of the delivery of the papers. If the facts in an affidavit of service falsely assert that the papers were delivered, the person who swears to them can be prosecuted for the crime of perjury. In addition, the plaintiff’s action will not have commenced. If the statute of limitations has expired by the time the true facts of the improper service are disclosed, the action is completely barred and the plaintiff has lost the right to sue. Service is also invalid if the defendant has been enticed into the jurisdiction by fraud. Courts have ruled that luring a potential defen- dant into the state in order to serve him with process when no other grounds exist to assert jurisdiction over him in that state violates the individual’s right to due process of law. Service of process by fraud is null and void. Immunity from Service of Process Courts typically grant IMMUNITY from process to anyone who comes within reach of the authority of the court only because he is required to participate in judicial proceedings. The purpose of this immunity is to ensure a fair trial by encouraging the active and willing participation of witnesses and parties. If a witness was discouraged from coming into a state because of the risk of being sued in that state, justice would not be served. Immunity also protects nonresident attor- neys, parties, and witnesses from being served with process in unrelated actions while attend- ing, or traveling to, criminal or civil trials within a state. This immunity has been extended to protect out-of-state parties who enter a state not for trial but to settle a controversy out of court. Diplomatic personnel, ambassadors, and con- suls who are in the United States on official business are also immune from process. SERVICEMEMBERS CIVIL RELIEF ACT Congress passed the first Soldiers’ and Sailors’ Civil Relief Act in 1918 (50 App. U.S.C.A. § 501 et seq.). This act was designed to protect the CIVIL RIGHTS and legal interests of individuals in the ARMED SERVICES during WORLD WAR I and ensure that they would not be distracted by legal obligations at home. The act did not prevent persons from suing servicemembers. Rather, it allowed a court to stay civil proceedings against them. The act authorized a court to suspend legal actions against a member of the armed forces during his time of service if the court determined that he was unable to defend himself i n court because of active duty. Congress passed a revised version of the act in 1940, authorizing courts to postpone pro- ceedings against servicemembers beyond the time of active duty and until they were capable of protecting their interests. The 1940 amend- ments had three objectives concerning service- members: to suspend civil judicial actions until they could appear in court, to provide them peace of mind du ring their fighting, and to give them time to return home after service to protect their endangered interests. Congress amended the act several times since 1940, usually to keep courts from interpreting the act too narrowly against servicemembers. In addition, Congress has expanded coverage of the act to include all members of the armed forces including reservists. In 2002 Congress brought members of the National Guard under the provisions of the law when “under a call to active service authorized by the President or the Secretary of Defense for a period of more than 30 consecutive days for purposes of respond- ing to a nation al emergency declared by the President and supported by Federal funds.” In 2003 Congress rewrote the act and renamed it the Servicemembers Civil Relief Act. The act provides servicemembers with three types of relief from judicial proceedings. They may request a stay of proceedings, a reopening of a DEFAULT JUDGMENT, or a stay of execution against a judgment. To obtain any relief, a court first must find that the servicemembers’ ability to defend their cases was affected by their service. Servicemembers may postpone proceedings during service or within 60 days after service. Servicemembers or acquaintances of service- members may apply for a stay of proceedings with the court, or the court may decide on its own to issue a stay. If a stay is issued, the case remains postponed until the court determines that the servicemember’s ability to defend against the suit is no longer affected by his or her military service. If servicemembers fail to obtain a stay of the proceedings and the trial court issues a default judgment, servicemembers may reopen the case. To reopen a default judgment, service- members must apply with the trial court while still on active duty or within 90 days of discharge. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 132 SERVICEMEMBERS CIVIL RELIEF ACT Congress has allowed servicemembers to reopen only those default judgments that were rendered during the servicemembers’ terms of service or within 30 days after discharge. Reopening a default judgment gives a servicemember an opportunity to present his or her defense to the lawsuit. If a servicemember is unable to obtain a stay or reopen a default judgment, he or she may stay the execution of the judgment. This does not eliminate the default judgment; rather, it gives the servicemember time to appeal the judgment and prevents authorities from taking the property of the servicemember in satisfac- tion of the judgment during the appeal process. In 2003 Congress completely revised the act and renamed it the Servicemembers Civil Relief Act (SCRA), Pub.L. No. 108-189 (2003). This was the first complete revision of the law since 1940. The SCRA sought to clarify statutory language, incorporate decades of judicial inter- pretations of the act, and update the provisions to reflect accepted practices and new develop- ments in U.S. society. FURTHER READINGS American Bar Association. 2007. The Judge Advocate General’s School Guide to the Servicemembers Civil Relief Act. Chicago: ABA. Cushing, Peter C. 2004. “Protecting Military Families: The New Servicemembers Civil Relief Act.” Florida Bar Journal 78 (December). CROSS REFERENCES Military Law; National Guard. SERVICEMEN’S READJUSTMENT ACT OF 1944 See GI BILL. SERVITUDE The state of a person who voluntarily undertakes the role of being a servant to another or who is involuntarily forced to be a servant to another; in property law, a charge or burden resting upon one estate for the benefit or advantage of another. INVOLUNTARY SERVITUDE, which may be in the form of SLAVERY, peonage, or compuls ory labor for debts, is prohibited by the THIRTEENTH AMENDMENT to the U.S. Constitution. Article I, Section 9, of the original Constitution had given Congress the power to restrict the slave trade by the year 1808, which it did, but slavery itself was not prohibited until the Thirteenth Amendment was enacted in 1865. The slave trade had begun in the American colonies in the seventeenth century and involved the forcible taking and transport of Africans and others to sell as slaves. The Thirteenth Amendment’s prohibition against slavery encompasses situations where an individual is compelled by force, coercion, or imprisonment, and against his or her will, to labor for another, whether he is paid or not. The term servitude is also used in PROPERTY LAW . In this context, servitude is used with the term easement, a right of some benefit or BENE- FICIAL USE out of, in, or over the land of another. Although the terms servitude and easement are sometimes used as synonyms, the two concepts differ. A servitude relates to the servient estate or the burdened land, whereas an easement refers to the dominant estate, which is the land benefited by the right. Not all servitudes are easements, because they are not all attached to other land as appurtenances. (An APPURTENANCE is an append- age or something that belongs to something else.) All servitudes affecting lands are classified as either personal or real. Personal servitudes are established for the benefit of a particular person and terminate upon the death of that individual. A commo n example of a personal servitude is the use of a house. Real servitudes, also called “landed servitudes,” benefit the owner of one estate through some use of a neighboring estate. At CIVIL LAW, real servitudes are divided into two types: rural and urban. Rural servitudes are established for the benefit of a landed estate; examples include a RIGHT OF WAY over a servient tenement and a right of access to a spring, sandpit, or coal mine. Urban servitudes are established for the benefit of one building over another; some examples are a right of support, a right to a view, and a right to light. Despite the name urban servitude, the buildings do not have to be in a city. Servitudes are also classified as positive and negative. A positive servitude requires the owner of the servient estate to permit some- thing to be done on his or her property by another. A negative servitude does not bind the servient owner in this manner but merely restrains him or her from using the property in a manner that would impair the easement enjoyed by the owner of the dominant estate. CROSS REFERENCES Slavery; Thirteenth Amendment. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION SERVITUDE 133 SESSION The sitting of a court, legislature, council, or com- mission for the transaction of its proper business. A session can be the period of time within any one day during which the body is assembled and engaged in business. In a more extended sense, the session can be the whole space of time from the first assembling of the body to its adjournment. A joint session is the convening of the two houses of a legislative body to sit and act together as one body, instead of separately in their res- pective houses. As applied to a court, the word session is not strictly synonymous with the word term. The session of a court is the time during which it actually sits each day for the transaction of judicial business. A term of a court is the period fixed by law—usually amounting to many days or weeks—during which it is open for judicial business and during which it can hold sessions from day to day. The two words are, however, frequently used interchangeably. SET ASIDE To cancel, annul, or revoke a judgment or order. SET DOWN To list a case in a court calendar or docket for trial or hearing during a particular term. SET-OFF A demand made by the defendant against the plaintiff that is based on some transaction or occurrence other than the one that gave the plaintiff grounds to sue. The set-off is available to defendants in civil lawsuits. Generally, civil actions are brought by plaintiffs seeking an award of damages for injuries caused by the defendant. In customary practice the plaintiff files the suit and the defendant answers it. The defendant may assert a counterclaim against the plaintiff based on an event or transaction other than the event or transaction that forms the basis of the plaintiff’s suit. A set-off is a counterclaim with the particular goal of defeating or diminishing the amount the defendant will have to pay if the plaintiff’s suit succeeds. The set-off has two distinctive features. It must be based on an entirely different claim from that of the plaintiff, and it must be a valid legal claim that the defendant could bring as a separate suit. For example, a stereo store sues a customer for $700 due in outstanding payments on a home theater system. However, the customer’scarwas damaged in the store’sparkinglotwhenthe store’s delivery van backed into it, and the repairs cost $500. As the defendant, the customer has the right to assert a counterclaim for damages to the car; if the customer is successful, the set-off reduces the amount owed to the plaintiff store so that the defendant owes the plaintiff only $200. The remedy of recoupment is similar in effect to a set-off but differs from it in several respects. Whereas a set-off is based on a different claim, recoupment is a common-law remedy based specifically on the contract between the plaintiff and defendant that gave rise to the suit. It allows defendants to claim damages against the plaintiff under two conditions: where the plaintiff has not complied with some contractual obligation or where the plaintiff has violated some duty that the law imposed in the making or performance of the contract. Recoupment usually occurs in cases where the plaintiff has performed only a portion of the contract and sues for compensa- tion for the partial performance. For example, the defendant in the stereo store’sactionmight demand recoupment for the store’sfailureto service the stereo under its WARRANTY. Like all counterclaims, set-off and recoup- ment seek to achieve justice by BALANCING the plaintiff’s and the defendant’s rights. They are designed to prevent a plaintiff from recovering complete damages from a defendant who has suffered injury or damages caused by the plaintiff. They can also save time and money. By combining the entire controversy within one action, recoupment and set-off prevent the courts from being inundated with multiple lawsuits. SETBACK A distance from a curb, property line, or structure within which building is prohibited. Setbacks are building restrictions imposed on property owners. Local governments create setbacks through ordinances and BUILDING CODES , usual ly for reasons of public policy such as safety, privacy, and environmental protec- tion. Setbacks prevent landowners from crowd- ing the property of others, allow for the safe placement of pipelines, and help to preserve GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 134 SESSION wetlands. Setbacks form boundaries by estab- lishing an exact distance from a fixed point, such as a property line or an adjacent structure, within which building is prohibited. Generally, prospective buyers learn that land is subject to setback provisions when they are considering purchasing it. This information is important to future development plans, because setbacks remain in effect until changed by law or special action of a local government. Setbacks can significantly affect a property owner’s right to develop land or to modify existing structures on the land. For this reason they can influence property values; severe restrictions on land can decrease its value. Violating setback provisions can lead to legal action against a property owner, and penalties can include fines as well as an order to remove noncompliant structures. Property owners whose desire to build is stymied by setbacks have few remedies. They can petition their local government by applying for a variance—a special permission to depart from the require- ments of ZONING ordinances—but variances are generally granted only in cases of extreme hardship. Litigation over setbacks is common. CROSS REFERENCE Land-Use Control. SETTLE To agree, to approve, to arrange, to ascertain, to liquidate, or to reach an agreement. Parties are said to settle an account when they examine its items and ascertain and agree upon the balance due from one to the other. When the person who owes money pays the balance, he or she is also said to settle it. A trust is settled when its terms are established and it goes into effect. The t erm settle u p is a colloquial rather than legal phrase that is applied to the final collection, adjustment, and distribution of the estate of a decedent, a bankrupt, o r an insolvent corporation. It includes the processes of colle cting the property, paying the debts a nd ch arges, a nd remitt ing the balance to those entitled to receive it. SETTLEMENT The act of adjusting or determining the dealings or disputes between persons without pursuing the matter through a trial. In civil lawsuits, settlement is an alternative to pursuing litigation through trial. Typically, it occurs when the defendant agrees to some or all of the plaintiff’s claims and decides not to fight the matter in court. Usually, a settlement requires the defendant to pay the plaintiff some monetary amount. Popularly called settling out of court, a settlement agreement ends the litigation. Settlement is a popular option for several reasons, but a large number of cases are settled simply because defendants want to avoid the high cost of litigation. Settlement may occur before or during the early stages of a trial. In fact, simple settlements regularly take place before a lawsuit is even filed. In complex liti- gation, especially CLASS ACTION suits or cases in- volving multiple defendants, a settlement requires court approval. Civil lawsuits originate when a claimant decides that another party has caused him or her injury and files suit. The plaintiff seeks to recover damages from the defendant. The defendant’s attorney will evaluate the plaintiff’s claim. If the plaintiff has a strong case and the attorney believes defendant is likely to lose, the attorney may recommend that the defendant settle the case. By settling, the defendant avoids the financial cost of litigating the case. Trial s are often extremely expensive because of the amount of time required by attorneys, and even alternatives to trials, such as mediation and ARBITRATION, can be costly. In deciding whether to settle a claim, attorneys act as intermediaries. The parties to the suit must decide whether to offer, accept, or decline a settlement. The cost of litigation is only one factor that encourages settlement. Both plaintiffs and defen- dants are often motivated to settle for other reasons. For one thing litigation is frequently unpleasant. The process of discovery—in which both sides solicit information from each other— can cause embarrassment because considerable personal and financial information must be released. Litigation can also have a harmful impact on the public reputation of the parties. Employers, for example, sometimes settle SEXUAL HARASSMENT claims in order to avoid unwanted media exposure or damage to employee morale. Like litigation itself, settlement is a process. Generally, the easiest time to settle a dispute is before litigation begins, but many opportunities for settlement present themselves. As litigation advances toward trial, attorneys for both sides GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION SETTLEMENT 135 communicate with each other and with the court and gauge the relative strength of their cases. If either of the parties believes he is un- likely to prevail, he is likely to offer a settlement to the other party. Litigation ends when a settlement is reached. The plaintiff typically agrees to forgo any future litigation against the defendant, and the defen- dant agrees to pay the plaintiff some monetary amount. Additionally, settlements can require the defendant to change a policy or stop some form of behavior. Often, the exact terms of settlements are not disclosed publicly, particularly in high-profile cases where the defendant is seeking to protect a public reputation. In high-profile cases, settle- ments are often followed by a public statement by the defendant. It is not unusual for a large com- pany to settle with a plaintiff for an undisclosed amount and then to issue a statement saying that the company did nothing wrong. In some forms of litigation, settlement is more complex. In class actions, f or example, attorneys represent a large group of plaintiffs, known as the class, who typically seek damages from a company or organization. Courts review the terms of a class action settlement for fairness. Complexities also arise i n cases involving multi- ple defendants. In particular, when only some of the defendants agree to settle, the court must determine the share of liability that accrues to those defendants who choose to pursue litigation. FURTHER READINGS Menkel-Meadow, Carrie and Andrea K. Schneider. 2006. Negotiation: Processes for Problem-Solving. New York: Aspen Publishers. Practising Law Institute (PLI). 1996. Class Action Settlements, by Roberta D. Liebenberg, Ralph G. Wellington, and Sherrie R. Savett. Corporate Law and Practice Course Handbook series: Financial Services Litigation, PLI order no. B4-7153. ——— . 1996. Settlement, by Norma Polizzi. Litigation and Administrative Practice Course Handbook series: Liti- gation, PLI order no. H4-5247. ——— . 1995. Damages and Settlements in Sex Harassment Cases, by Richard G. Moon. Litigation and Administra- tive Practice Course Handbook series: Litigation, PLI order no. H4-5213. SETTLEMENT STATEMENT A breakdown of costs involved in a real estate sale. Before real estate is sold, federal law requires both the buyer and seller to provide a settlement statement. This official document lists all the costs involved in the sale. A settlement state - ment is typically prepared by either a lender or a third party known as an escrow agent, who must follow the regulations set forth in the Real Estate Settlement Procedures Act of 1974 (RESPA) (12 U.S.C.A. § 2601 et seq.). RESPA is a CONSUMER PROTECTION law enforced by the federal HOUSING AND URBAN DEVELOPMENT DEPART- MENT (HUD). Historically, the secondary costs in real estate transactions have been expensive. These costs include broker’s fees and appraiser’s fees, some of which are required by lenders in real estate deals. Buyers and sellers have not always known the full extent of these costs in advance. Responding to the maze of hidden costs during the early 1970s, both the secretary of HUD and the administrator of Veterans’ Affairs petitioned Congress on behalf of reform that would reduce the likelihood of unpleasant surprises for consumers. RESPA set forth four goals. First, it attempted to improve advance disclosure of settlement costs to home buyers and sellers. Second, it sought to eliminate corruption in the form of kickbacks or referral fees that unfairly inflate settlement costs. Third, it aimed to reduce the amounts home buyers are required to deposit in an escrow account—in this case, a bank account established to ensure the payment of real estate taxes and insurance. Finally, Congress wished to modern- ize an outmoded system of local record keeping of land title information. Besides a full accounting of sale costs, RESPA requires lenders to keep settlement statement records for five years or until they dispose of the loan. It provides no civil penalties for lenders who fail to properly disclose information. However, section 8, which includes anticorruption measures, sets forth criminal and civil penalties for illegal referral fees: it is designed to keep intermediaries in the deal from cheating consumers by piling up costs. In the 1990s the scope of RESPA expanded. Initially RESPA had only covered home purchase loans, but it grew to include refinances and subordinate lien loans with the enactment of the Housing and Community Development Act of 1992 (Pub. L. No. 102-550, 106 Stat. 3672). These changes took effect in 1994 after HUD amended its rules (24 C.F.R. pt. 3500). As a result, lenders providing EQUITY or second mort- gage loans, home improvement financing, and GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 136 SETTLEMENT STATEMENT Settlement Statement A. Settlement Statement U.S. Department of Housing OMB Approval No. 2502-0265 and Urban Development B. Type of Loan 6. File Number: 7. Loan Number: 8. Mortgage Insurance Case Number: 1. ٗ FHA 2. ٗ FmHA 3. ٗ Conv. Unins. 4. ٗ VA 5. ٗ Conv. Ins. C. Note: This form is furnished to give you a statement of actual settlement costs. Amounts paid to and by the settlement agent are shown. Items marked “(p.o.c.)” were paid outside the closing; they are shown here for informational purposes and are not included in the totals. D. Name & Address of Borrower: E. Name & Address of Seller: F. Name & Address of Lender: G. Property Location: H. Settlement Agent: Place of Settlement: I. Settlement Date: J. Summary of Borrower's Transaction K. Summary of Seller's Transaction 100. Gross Amount Due From Borrower 400. Gross Amount Due To Seller 101. Contract sales price 401. Contract sales price 102. Personal property 402. Personal property 103. Settlement charges to borrower (line 1400) 403. 104. 404. 105. 405. Adjustments for items paid by seller in advance Adjustments for items paid by seller in advance 106. City/town taxes to 406. City/town taxes to 107. County taxes to 407. County taxe s to 108. Assessments to 408. Assessments to 109. 409. 110. 410. 111 411. 112. 412. 120. Gross Amount Due From Borrower 420. Gross Amount Due To Seller 200. Amounts Paid By Or In Behalf Of Borrower 500. Reductions In Amount Due To Seller 201. Deposit or earnest money 501. Excess deposit (see instructions) 202. Principal amount of new loan(s) 502. Settlement charges to seller (line 1400) 203. Existing loan(s) taken subject to 503. Existing loan(s) taken subject to 204. 504. Payoff of first mortgage loan 205. 505. Payoff of second mortgage loan 206. 506. 207. 507. 208. 508. 209. 509. Adjustments for items unpaid by seller Adjustments for items unpaid by seller 210. City/town taxes to 510. City/town taxes to 211. County taxes to 511. County taxes to 212. Assessments to 512. Assessments to 213. 513. 214. 514. 215. 515. 216. 516. 217. 517. 218. 518. 219. 519. 220. Total Paid By/For Borrower 520. Total Reduction Amount Due Seller 300. Cash At Settlement From/To Borrower 600. Cash At Settlement To/From Seller 301. Gross Amount due from borrower (line 120) 601. Gross amount due to seller (line 420) 302. Less amounts paid by/for borrower (line 220) ( ) 602. Less reductions in amt. due seller (line 520) ( ) 303. Cash ٗ From ٗ To Borrower 603. Cash ٗ To ٗ From Seller Section 5 of the Real Estate Settlement Procedures Act (RESPA) requires the following: • HUD must develop a Special Information Booklet to help persons borrowing money to finance the purchase of residential real estate to better understand the nature and costs of real estate settlement services; • Each lender must provide the booklet to all applicants from whom it receives or for whom it prepares a written application to borrow money to finance the purchase of residential real estate; • Lenders must prepare and distribute with the Booklet a Good Faith Estimate of the settlement costs that the borrower is likely to incur in connection with the settlement. These disclosures are manadatory. S ection 4(a) of RESPA mandates that HUD develop and prescribe this standard form to be used at the time of loan settlement to provide full disclosure of all charges imposed upon the borrower and seller. These are third party disclosures that are designed to provide the borrower with pertinent information during the settlement process in order to be a better shopper. The Public Reporting Burden for this collection of information is estimated to average one hour per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. This agency may not collect this information, and you are not required to complete this form, unless it displays a currently valid OMB control number. The information requested does not lend itself to confidentiality. [continued] A sample settlement statement. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION SETTLEMENT STATEMENT 137 . an AFFIDAVIT of service with the court, giving details GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION SERVICE OF PROCESS 131 of the delivery of the papers. If the facts in an affidavit of service. not served is not bound by the decision in the case. A person GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION SERVICE OF PROCESS 1 29 who believes that proper service has not taken place may generally. doing business within the state or GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 130 SERVICE OF PROCESS having an automobile accident within the state. When one of thes e f actors exists, the prospec- tive