Case Summaries 10/2011

(state tax court denied personal residence exemption for petitioner; appellate court reversed; facts involved petitioner's 10-acre parcel contiguous to property where home located; 10-acre parcel contained abandoned school building and was zoned residential; petitioner's planted garden on 10-acre parcel and fenced it, and planned to convert school building to art center; personal residence exemption sought for 10-acre parcel; parcel was not occupied, zoned residential and was adjacent to actual dwelling unit of petitioners; case remanded with instructions to grant exemption).


(plaintiff drafted house plans, gathered estimates and constructed home for defendant; plaintiff filed a mechanic's lien after defendant refused to pay; mechanic's liens are tied to equity; creditability of the parties are given substantial weight in reaching the conclusion; burden of proof is on party asserting lien; defendant refused to pay due to additional mark-up on materials; court found the agreement met all the elements of a contract; plaintiff's evidence proved existence of contract and substantial performance; de novo review affirmed enforcement of mechanic's lien).


(adverse possession case; claim vested in 1973 before 1995 statutory requirements enacted which included payment of taxes; additional statutory requirements not applied retroactively and did not apply). 


(administrator appealed denial of equitable defenses for Medicaid reimbursement; administrator filed a separate tort action seeking damages; case has not been resolved; Department of Human Services filed a claim against the estate for reimbursement to recover Medicaid payments made; estate sought declaratory judgment; estate's request was denied; court stated case is not ripe since adverse claims exist and are based on speculative facts; court reversed and remanded with directions; if the estate receives fund from the underlying claim, the issue would be ripe and can be resolved at that time).


(after executing will in 2002, decedent and wife executed post-nuptial agreement in 2007; decedent died while couple still married; agreement stated that parties waived "all rights" on multiple occasions; surviving spouse claimed that agreement allowed her to receive bequest under decedent's will, but agreement unambiguously addressed property transfers occurring after agreement entered into; decedent had children from prior marriage, and prior wife challenged bequest to surviving spouse; agreement only inapplicable to will executed after post-nuptial agreement signed). 


(rancher arranged cattle to be sold at auction; cattle transported to agent's holding pen and agent took custody upon delivery; calf was trampled during sorting and tagging and assumed dead, but later regained consciousness; calf wandered roughly one-half mile onto a highway where it was initially hit by another vehicle and then plaintiff's vehicle; trial court ruled that livestock owner had no liability, but plaintiff asserted genuine issues of material fact existed that would preclude summary judgment; court affirmed trial court's decision).


(plaintiff sought to condemn defendant's land to create private road access to plaintiff's property, but trial court granted summary judgment for defendant because state (MT) law required proof of existing farm or residence before state's eminent domain statutes could apply; plaintiff's property included a cabin; cabin had no windows, doors, running water, or sanitary system and was deemed uninhabitable and not considered a residence; court stated that had there been disputed issues of material fact about the cabin, a jury would resolve the factual issues, but plaintiff failed to establish genuine factual issue as to the existence of "residence" under state statute (Mont. Code Ann. Sec. 70-30-102(36)) because cabin had not been inhabited for several decades; court affirmed summary judgment for defendants).


(estate tax lien of I.R.C. Sec. 6324(a)(1) attaches to property on date of decedent’s death and taxes assessed when estate tax return filed; plaintiff, as executor of decedent’s estate, brought quiet title action eleven months after decedent’s death; statute of limitations for quiet title action begins running upon assessment of estate tax, not when estate tax lien attaches because it is not known at time lien attaches whether lien will be necessary – indeed four to six months after estate tax return filed, IRS provides estate with closing letter which indicates whether lien necessary; plaintiff’s claim had to be filed within six years of date taxes assessed (when return filed); claim timely). 


(Order relating to Motions on pleadings; bank had security interests against livestock owned by rancher individually and in family corporation; rancher sent livestock from Oklahoma to out-of-state feedlot in Nebraska; bank had filed U.C.C. financing statements and an EFS in Oklahoma only; defendant sold livestock, deducted costs, and remitted checks (in yrs. 2006-2007) to rancher as single-payee, who deposited checks into his Bank revolving loan account; Bank sued (in yr. 2010) to recover proceeds from the sale of cattle when rancher defaulted on revolving loan; plaintiff Rule 12(f) objection on outside matters was granted; plausibility standard for Rule 8(a) pleading is not applicable to defendant's affirmative defenses; bank's objection to defendant's evidence to supplement pleadings sustained; defendant's motion for leave to amend affirmative defenses granted in part; plaintiff's objection to defendant's motion for leave to amend is sustained in part on redundancy in affirmative defenses; defendant's motion for leave to supplement affirmative defenses granted; court noted that bank had to file EFS under Nebraska law to gain the protection of Nebraska’s special law about common law defenses to conversion (Note:  OU Law Professor Drew Kershen was one of the attorneys of record for the defendant)).


(plaintiff was a North Carolina farm laborer employed by defendant, a California private investigation firm; defendant has never had an office in N.C.; plaintiff was on defendant's payroll, but worked on owner's farm; plaintiff filed a workers' compensation claim; defendant's insurance policy limited to the CA workplace; workers' compensation commission lacked jurisdiction over claim under state law (N.C. Gen. Stat. §97-13(b); Order and Award by Commission was affirmed).


(Senate majority leader Reid (D-NV) used procedural move known as "filling the tree" (loading bill with amendments until limit is reached) to block Republican attempt to bring President's Job's bill to vote in Senate; majority leader confirmed that Senate Democrats not fully supportive of President's bill; bill has no co-sponsors in either House or Senate).


(married couple subject to accuracy-related penalty for not reporting income that husband received as majority shareholder in family’s funeral home business; while wife’s non-employee compensation received was reported it was not reported as subject to self-employment tax and should have been). 


(married couple bought beachfront property (vacant lot) in Florida in 2006;  before construction of home could begin, permit had to be obtained; building contract entered into in 2007 and construction permit application filed in June of 2007 and considered complete in late September of 2007, and permit granted in early 2008; additional bank loan needed to cover cost of construction, but could not be obtained due to drop in real estate market; property sold in 2009 at $825,000 loss; taxpayers deduction home mortgage interest for 2006 and 2007, which IRS denied on basis that it was not “qualified residence interest” under I.R.C. Sec. 163(h); court held for taxpayers on basis that Treas. Reg. 1.163-10T(p)(5)(ii) which specifies that a residence that is under construction is a qualified residence for up to 24 months if the residence becomes a qualified residence as of the time the residence is ready for occupancy; taxpayers purchased property with intent to build qualified residence; taxpayers were equitable title holders at time existing home on lot demolished and property cleared for construction of new home and that work constitutes beginning of construction; taxpayers also completed extensive planning and preparatory work as part of construction permitting process such as surveys and drilling; mere fact that property sold before completion of residence not determinative of deduction issue inasmuch as Treas. Reg. allows qualified residence interest to be deducted for 24 month period after construction begins; events beyond taxpayers’ control in years after 24-month period not to be considered on deduction issue; mortgage interest deduction allowed for 2006 and 2007). 


(defendant, manager of large-scale cattle feedlot that met definition of a confined animal feeding operation, denied permit to inject "clean" winter runoff into a deep well to be pumped onto fields in summer; investigator on "routine waste inspection," found "main waste pond" washed out, waste running into ditch, and an uncapped pipe next to pond with waste running out into ditch; information received from "main irrigator" at facility; water in ditch from ruptured waste containment pond; two wells had reversal of anti-backflow valves for injection; inspector notified that valves had to be changed before end of day; defendant denied findings and gave false statements; while government failed to prove that defendant polluted the environment in violation of the Clean Water Act, court found government not required to prove injected water's adverse impact on drinking water; state permit requirement is part of Safe Drinking Water Act; applicant must show injection is safe or SDWA requires denial; Commerce Clause gives government broad authority on injections to protect the nation's drinking water; defendant knowingly made false statements to investigator within 18 U.S.C. §1001(a)(2); court affirmed conviction).


(case involves adjudication of water rights by state of New Mexico and court rejects challenge to water rights priority determination in the Nambe-Projoaque-Tesque river system; matter has been ongoing since 1966; deadline for priority filing missed by 6-months with no explanation; plaintiff argued denial of motion to vacate was appealable under the collateral order doctrine; doctrines three elements (conclusively determined disputed question, resolved important issue separate from merits of case, and effectively unreviewable on appeal from final judgment) must be shown; plaintiff did not meet the unreviewable requirement; timeliness of a priority objection is a procedural issue; issue can be resolved after final judgment in the case; court held collateral doctrine did not apply).  


(petitioners, married couple, not entitled to deduction for donated facade easement on petitioners' home; "qualified appraisal" not obtained; issues of material fact remain with respect to donation of home's unused development rights and whether such donation was perpetual in nature). 


(IRS disallowed short-term capital loss and capitalization of improvements that petitioner made to home before selling it; petitioner entitled to short term capital loss and increase in basis with respect to certain expenditures; petitioner liable for penalties associated with failure to file return, but no accuracy-related penalty). 


(case involves adjudication of water rights by state of New Mexico and court rejects challenge to water rights priority determination in the Nambe-Projoaque-Tesque river system; matter has been ongoing since 1966; deadline for priority filing missed by 6-months with no explanation; plaintiff argued denial of motion to vacate was appealable under the collateral order doctrine; doctrines three elements (conclusively determined disputed question, resolved important issue separate from merits of case, and effectively unreviewable on appeal from final judgment) must be shown; plaintiff did not meet the unreviewable requirement; timeliness of a priority objection is a procedural issue; issue can be resolved after final judgment in the case; court held collateral doctrine did not apply). 


(unemployment rate dropped to 9.0 percent, which is 12.5 percent higher than what Obama Administration promised it would peak at if 2009 "stimulus" bill passed; rate is 40.1 percent higher than what Obama Administration projected unemployment would be in October of 2011 if "stimulus" bill passed, and 28.6 percent higher than what Obama Administration projected unemployment would be in October of 2011 if "stimulus" bill not passed; 80,000 jobs created in October (significantly down from September); number of jobs created must be 125,000 each month and labor market must add 285,000 jobs monthly for the next 4.25 years to achieve pre-recession unemployment rate by 2016; labor force participation rate was 64.2 percent; unemployment rate dropped from 9.1 percent in September to 9.0 percent in October because 2.6 million persons had stopped looking for work in the four weeks preceding the survey and were not counted as unemployed; at same time, USDA reported that number of persons on Food Stamps has risen sharply to a total of 45.8 million people, including 12.9 percent of the population of Iowa). 


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