Case Summaries 01/2012
(indemnity action and question of whether there is a duty to defend under farm owner’s insurance policy where farmer used his tractor to move a colleague’s trailer home on public road and the actions resulted in significant damage to the trailer home and colleague’s vehicle after tractor stalled on hill and trailer home rolled backward into colleague’s personal vehicle; question involved the “four-corners rule” as to whether insurance policy covered the property damage; court holds when insurance company provides defense, purpose of four-corners rule is met; extrinsic evidence is relevant and can be presented in determining whether coverage exists; policy language ambiguous under the facts of the case, so to be interpreted in favor of coverage; questions of fact regarding whether trailer in care of the insured precludes entry of summary judgment ; court of appeals decision affirmed).
(plaintiff and USDA negotiated agreement that industry appraisals would serve as compensation for plaintiff’s niche breeding stock of colored broiler chickens to be destroyed in government action to eradicate Exotic Newcastle Disease outbreak in California; defendant alleged USDA breached its contract to pay compensation based on industry appraisal, but USDA paid half of lowest appraisal; USDA claimed no contract formed and sought dismissal of plaintiff’s claim; defendant’s motion for judgment on the pleadings for breach of contract claim denied because plaintiff alleged all requisite elements of a contract in the pleadings).
(appellate review of denial of motion for new trial; trial involved questions regarding whether a roll-over contract for Number 2 grade corn existed, costs to cover corn after roll-over contract not fulfilled, claims of errors in admission of evidence, improper closing arguments, juror misconduct, and unsupported damages award; district court affirmed on all counts).
(ongoing class action nuisance suit; current opinion denies multiple motions to intervene filed by multiple insurance companies; insurance companies’ arguments outweighed by untimely filing, which would impede progress of complicated case already set for trial).
(plaintiff claimed an income tax deduction for the costs of installing meteorological tower; tower installed to determine if adequate wind resources on plaintiff’s site to start new wind farm business, which proved site not feasible; deductions not allowable as business expenses to investigate new trade or business ; not deductible start-up costs because no actual trade or business resulted).
(bankruptcy case; debtors granted permission under 11 U.S.C. Sec. 365(a) to reject contracts for growers supplying chickens to an unprofitable plant under Chapter 11 bankruptcy; growers brought claim for damages from the rejected contracts; summary judgment granted in favor of growers allowing claims for damages caused by debtor’s breach of contract; damages to be ascertained).
(property line dispute between adjoining properties; competing surveys unable to decisively establish boundary; court took eastern point agreed to be most accurate and aligned with generally agreed upon western survey point to determine most appropriate and equitable boundary line based on the evidence presented).
(decedent died in early 2003 and executor hired plaintiff to handle estate; plaintiff, attorney, suffered from numerous physical and mental ailments and missed filing deadline for Form 706 by more than three years; return ultimately filed approximately four years after death with payment of $138,179.27; estate’s income tax obligations fulfilled in 2006; withholdings sufficient to satisfy estate tax and income tax liability, but estate challenged imposition of interest and penalties; IRS Appeals Office abated Sec. 6651(a)(2) penalty, but nothing else; abatement of Sec. 6651(a)(2) late payment penalty does not estop IRS from assessing late-filing penalty; IRS not required to credit any income tax withholdings to estate tax).
(petitioners purchased a home in 1974 and claimed to have moved from it, by listing it for sale and moving in with the wife's parents; but, petitioners maintained utility service at old house, often stayed overnight, hosted family events, kept personal belongings in the home, used the Internet at the home (because wife's parents did not have Internet at their home) and maintained mail service; wife renewed driver's license using old home's address and petitioners filed a joint income tax return using listing the old home's address after supposedly moving out; petitioner's sold the home a year after they claimed they had moved out; slightly more than three years after claiming to have moved out, petitioners bought new home and claimed first time homebuyer credit; IRS denied FTHBC on basis that old house was still petitioners' principal residence within three years of purchase of new home; court agreed with IRS based on facts and circumstances test).
(plaintiff claimed that, under 11 U.S.C. § 523(a)(2)(A), debtor’s obligation should not be discharged because loans were obtained under false pretenses; requirement for proof of claim is that debtor made a representation, but representations regarding the financial condition of the debtor are expressly excluded under the statute; plaintiff unable to prove representations that debtor’s business was profitable meet the remaining requirements; court held that, without more, a broken promise to repay does not satisfy the statutory requirements).
(plaintiff charged with self-dealing constituting an unfair or deceptive practice in violation of Packers and Stockyards Act; plaintiff purchased cattle for third party at auction, had them inspected by vet, consigned them for sale at dairy auction, and then repurchased them from his own consignment followed by delivery of some of the cows to the third party; plaintiff showed third party consignment auction price, but disclosed no other facts; ALJ determined that plaintiff had acted as a “dealer” and had engaged in unfair and deceptive practice and had acted as a “market agency”; decision upheld on appeal in 2010 except for imposition of five-year suspension which was changed to 16-month suspension from being a salaried employee of another registrant or packer which was stayed pending appeal; sanction affirmed).
(farm corporation had multi-year lease with an option to purchase the property at the conclusion of the lease; corporation exercised option and immediately sold property to another entity; court concluded subsequent sale was a separate transaction after the corporation exercised its option to purchase under the lease, and was not a prohibited assignment of the option; court concluded that handwritten change written upon the original lease and initialed by representatives from both parties to the lease was valid additional language that both parties had agreed upon; court remanded for a question regarding authority of one party to act as an agent; agreement was also ambiguous regarding when the option was to be exercised, so parol evidence was necessary to determine intent of the parties; case also remanded for factual determination of whether an irrigation system was a fixture or personal property as it was not addressed in the lease and irrigation systems are not fixtures as a matter of law).
(consolidated dispute regarding county’s reclassification of land from agricultural use to vacant land resulting in increase in property tax assessment for landowner; first year reclassification not upheld because notice by county to landowner required to be made by March 1 and cannot be altered after that time without county proving necessity for the delay; reclassification upheld for subsequent year for failure to prove agricultural land was active; mere existence of a lease does not establish property is active as required by statute; proof of some activity must be shown).
(wife entered nursing home and husband purchased annuity that named state as primary beneficiary, and couple's daughter as secondary beneficiary; pursuant to 42 U.S.C. § 1396p(c)(1)(F)(i), an annuity that names the state as a primary remainder beneficiary “for at least a total amount of medical assistance paid on behalf of the institutionalized individual” is not a transfer of an asset for below-market value that triggers disqualification from Medicaid; upon husband's death, state had paid $23,840.51 for wife's care with $75,000 remaining in the annuity; daughter sought court declaration that state’s ability to recover from annuity limited to amount state had paid up to the point of John's death; trial court granted summary judgment for state; on appeal court affirmed - 2006 statutory amendment to statute referenced above created a right in the states to recover as a remainder beneficiary against a community spouse's annuity for costs of institutionalized spouse's care as of date of death of community spouse).
(plaintiff is experienced horse trainer who was training defendant’s horse on defendant’s farm; horse spooked and threw plaintiff to the ground; plaintiff injured in fall; plaintiff sued defendant for failure to maintain safe working environment; defendant moved for summary judgment on basis that state (KY) Farm Animal Activities Act insulated defendant from liability; trial court granted summary judgment for defendant on basis that farm animal’s unpredictable reaction to sound is inherent risk in farm animal activities and defendant under no duty to eliminate such risk; affirmed on appeal).
(farm employee suffered injury and was compensated through workers’ compensation; insurance indemnity case in which the court determined that insureds’ policy excluded coverage for workers’ compensation or employee’s bodily injury; “employer’s liability coverage” within exception does not encompass workers’ compensation coverage).
(plaintiff challenges establishment of defendant and defendant’s authority to act; plaintiff has resisted penalties imposed on him by defendant due to plaintiff’s failure to control weeds on his property for 20 years; trial court’s grant of summary judgment to defendant upheld on appeal).
(2011 worst year on record for new home sales; 302,000 new homes sold in 2011 making 2011 worse than 2010, which had been the worst year on record).
(eminent domain case in which utility granted easement over ranch; plaintiffs failed to comply with deadline for designating experts for just compensation in suit for condemnation and specific performance of Occupancy Agreement; summary judgment granted to utility on just compensation and plaintiffs received award per the terms of the Occupancy Agreement).
(landowners claimed they were bona fide purchasers for value upon discovering that purchased tract of land spanning two contiguous counties had oil and gas lease encumbering property; lease had been filed in only one county; court held that instrument addressing land in contiguous counties need only be filed in one county and is sufficient to establish constructive notice under state (TX) law).
(individual entered nursing home and Medicaid benefit application made; state Medicaid agency required applicant's wife to buy annuity to bring wife's income up to MMMNA allowance; trial court ruled against state; on appeal, court affirmed, but reversed trial court's award of attorney fees Medicaid case; on further review, court determined that federal law does not bar a state from requiring a community spouse to purchase an annuity; attorney fees not awarded).
(decedent died before finalizing his will; mortgage loans to decedent’s nieces and nephews included in inventory of estate; decedent evidenced intention to forgive indebtedness of family members in correspondence with his attorney before death; debtors brought action to strike mortgages from inventory claiming forgiveness of debts were gifts causa mortis; district court agreed with debtors; appellate court overturned lower court decision holding that intention of the decedent was to forgive the loans, but there was never any delivery of the gift to debtors during decedent's lifetime as required for an effective gift).
(decedent's surviving spouse was foreign national that had just become U.S. citizen; prior to becoming citizen, Qualified Domestic Trust (QDOT) created to receive funds from spouse, but IRS not notified of citizenship change; extension of time granted to provide notice due to lawyer for surviving spouse not mentioning that estate tax wouldn't apply to QDOT; good faith reliance present).
(plaintiff challenges establishment of defendant and defendant’s authority to act; plaintiff has resisted penalties imposed on him by defendant due to plaintiff’s failure to control weeds on his property for 20 years; trial court’s grant of summary judgment to defendant upheld on appeal).
(personal injury case involving fall from horse during trail ride; plaintiff had ridden horses on prior occasions and let it be known that she was not comfortable with the horse; horse owner gave assurances that horse was gentle, but plaintiff thrown from horse; defendant moved for summary judgment based on assumption of risk defense; motion denied; issues remained on degree of care that defendants took and knowledge of risk assumed).
(petitioner, stockbroker, could not exclude discharge of indebtedness income attributable to interest on loan forgiven by employer; I.R.C. Sec. 108(e)(2) only excludes from income interest that would have given rise to a deduction; petitioner used loan for income production purposes, but failed to prove deductibility under I.R.C. Sec. 212 as an expense associated with income production; in any event, interest deduction would have been limited by I.R.C. Sec. 163(d)).
(Ener1, Inc. filed Chapter 11 bankruptcy in eastern district of New York listing assets of $73.9 million and debts of $90.5 million; company had received $118 million in taxpayer dollars from U.S. Energy Department to make electric-car batteries).
(case involves dispute over boundary; plaintiff claims ownership over disputed property via adverse possession or via prescription; trial court ruled for defendant on basis that plaintiff's acts of possession were unconnected acts of trespass; trial court judgment affirmed on appeal; plaintiff could not utilize tacking).
(plaintiff purchased foreclosed property from defendant at public sale; sale contract addendum stated that "if purchaser agrees to use the title insurance company utilized by the seller's attorney or agent, then seller agrees to pay for purchaser's owner's title policy"; after purchase, defendant did not honor provision; plaintiff purchased own title insurance policy for $680 and sued for breach of contract and breach of implied covenant; court refused to dismiss case - promise to pay for title insurance is valid exception to merger doctrine for promises that are additional or collateral to main promise to convey and are not inconsistent with deed; promise to pay for title insurance was in addition to delivery of deed; while contract not breached, plaintiff's complaint alleged that defendant barred occurrence of condition precedent "that would have obligated it to pay for the title insurance policy").
(decedent died testate, but predeceased by named beneficiaries; decedent’s will did not name contingent beneficiaries, so estate administration governed by state (SD) intestacy statute; decedent predeceased by parents and only sibling (an Indian residing in Indian Country); sibling’s biological child contacted decedent five years before decedent’s death about her claim that decedent was her aunt; niece submitted to DNA testing to prove paternity at decedent’s request; sibling’s two children from his marriage named co-personal representatives of decedent’s estate and trial court determined that niece did not have standing to claim that she was an heir; trial court ruled that niece failed to comply with SD bastard child statute (SDCL 29A-2-114) in attempt to establish parentage for purposes of intestate succession; court determines that DNA evidence not statutorily listed method for determining paternity; but, niece had petitioned Department of Interior, Bureau of Indian Affairs (BIA) to reopen father’s probate to include her as an heir; such move, if successful, would cause niece to comply with SD bastard child statute; matter remanded to trial court to wait for BIA decision).
(case involves activities of U.S. Border Patrol on private property bordering Mexico and whether agreement by which landowners allowed defendant to install underground motion-sensing devices on property resulted in permanent physical taking rather than a temporary taking; lower court held that such taking was temporary; in early 1990s, plaintiff's predecessors-in-title granted Border Patrol easement along border for patrol purposes; Border Patrol began operating outside easement scope following 9-11-01 and owners sued for taking; while trial court ruled that most claims were time-barred, court ruled that defendant liable for over $3 million in just compensation for temporary physical taking; on appeal, court determined that permanent physical taking occurred because agreement didn't specify removal date; case remanded for recalculation of damages).
(defendant claimed that its security interest in debtor’s 2008 table grape crop was superior to plaintiff’s security interest in same crop; in 2007, plaintiff agreed to finance debtor’s 2007 grape crop to be grown in Mexico and took a security interest debtor’s 2007 grape crop and all future crops and proceeds thereof; plaintiff filed financing statement on 1/18/07 in Washington, D.C. pursuant to A.R.S. Sec. 47-9307(C) because Mexico had no filing or registration system at the time; state (AZ) law said that local law where debtor located governs perfection if debtor located in jurisdiction where local law requires information concerning existence of non-possessory security interest to be made in a public filing, recording or registration system as a condition of obtaining priority over a lien creditor; if no such system in place in debtor’s jurisdiction, creditor to file financing statement in Washington, D.C.; defendant advanced funds to debtor to grow 2008 grape crop after searching public registry in Sonora Mexico; under agreement with debtor, under marketing agreements, defendant obligated to market and sell crop that debtor was financing; debtor granted defendant security interest in 2008 crop and proceeds thereof; in May of 2008, defendant marketed debtor’s 2008 crop and collected and retained sale proceeds after plaintiff notified defendant in April of its security interest; plaintiff sued to enforce its security interest in the 2008 crop; amendments to Mexico law in 2009 created a federal registry for recording security interests; court determined that Mexico law did not satisfy requirements of AZ law in 2007 and 2008 and that filing was properly in Washington, D.C.; defendant liable for conversion because plaintiff had right to sales proceeds and was entitled to immediate possession; plaintiff granted attorney fees).
(plaintiff raises 6,000 acres of pistachios, cotton, almonds and alfalfa on land adjacent to defendant's property on which oil drilling operations were conducted; plaintiff claimed that contamination of groundwater damaged plaintiff's crops; trial court awarded plaintiff $8.5 million in compensatory damages, but later ruled that there would be no trial on punitive damages; appellate court ruled that plaintiff could sue for punitive damages).
(prescriptive easement found for public road used by public for more than 20 years across ranch and formal declaration made as a public road under state law; construction and maintenance of public highway is not type of land use normally subject to permission of a servient landowner; gates across road for working livestock not a permissive use because they did not restrict traffic flow other than for a very limited period; no inverse condemnation when landowner acquired land already burdened by prescriptive easement).
(plaintiff’s homeowner’s insurance policy excludes coverage for plaintiff’s Case 590M tractor under personal property exclusion clause; tractor met statutory definition of “vehicle” and did not fit within exception to exclusion for vehicles not subject to registration because state (Maine) law provides for registration of tractors).
(bankruptcy trustee objected to Chapter 13 debtors’ exemption of debtor wife’s settlement proceeds received for pre-petition loss of consortium claim arising out of automobile accident involving debtor husband; court holds that generally an 11 U.S.C § 522(d)(11)(D) exemption is applicable to a loss of consortium claim; in this case, there was no evidence that the settlement proceeds were paid in settlement of the wife’s claim, so the interest in her claim remains unliquidated and a decision regarding the exemption would be premature).
(trial court granted preliminary injunction barring state of California from enforcing state law which became effective January 1, 2009, that bars selling of pork for human consumption derived from butchered hogs (under threat of criminal penalty) that are too sick to stand on their own and requiring immediate euthanization; trial court determined that Federal Meat Inspection Act (FMIA) preempts state law; federal law requires veterinarian to be on site at time of slaughter and prohibits slaughter of "downer" livestock; trial court order vacated on appeal - state law not preempted and all such animals must be immediately euthanized; states not simply limited to excluding animals from slaughter on a species-wide basis; on further review, U.S. Supreme Court unanimously reversed and remanded, holding that FMIA preempted application of state law against slaughterhouses subject to federal inspection).
(plaintiff sought to remove tree from city lot that was within city right-of-way because it shaded his garden, and applied to defendant for permit to remove tree; permit request denied because tree at issue healthy and beneficial and not dangerous; on appeal Dept. of Parks and Recreation also denied request; trial court dismissed case for failure to state claim upon which relief could be granted; under applicable city ordinance, defendant has discretion to either grant or not grant permit; discretion granted to defendant to deny permit not unconstitutional taking; one judge (Terri Stoneburner) dissented arguing plaintiff entitled to permit).
(adverse possession case; no need to reside on subject property to establish adverse possession, exercise of dominion sufficient; evidence supported trial court determination of sufficient exercise of dominion over subject property via making improvements, paying taxes, renting out a part of the premises and harvesting timber for sale; acts made in public and were hostile).
(homeowners appealed magistrate court decision finding the chain link fence built on their property was in violation of homeowners’ association building and design specifications; on appeal, homeowners allege association’s standards were ambiguous and the design for the chain link fence was not rejected within 14 days as required under the association’s covenants, so the homeowners were justified in believing the fence had been approved; court rejected all arguments finding the restrictive covenants were enforceable; homeowners had notice their fence plans had been rejected, and homeowner’s decision to build unapproved fence violated covenants; court also upheld award for attorney fees for association because covenants specifically allowed for recovery of attorney fees in enforcement of violations; lower court affirmed on all counts).
(case involves public right to use beach located along side of an island; trial court determined that defendant had demonstrated existence of prescriptive easement on public’s behalf and ordered fence to be removed that plaintiff had erected; trial court decision based on presumption of adverse use and that plaintiff had to prove permissive use; reversed on appeal because beach at issue was unimproved and in general state of nature such that presumption should have been that public use was by permission of owner).
(defendant was renting a home from plaintiff and fell behind on rental payments; plaintiff brought a forcible entry and detainer to remove the defendant; defendant argued the agreement was for a contract sale of the property; after trial, magistrate court held the agreement between the parties was for a lease with an option to purchase and awarded back rental payments to the plaintiff; defendant’s fifteen assignments of error on appeal were all found to be without merit; magistrate opinion affirmed).
(court upholds defendant’s determination that plaintiff not exempt from compliance with Workers’ Compensation Act as an agricultural employer; plaintiff employs agricultural labor for purposes of feeding harvesting and managing wildlife and livestock and employed subject person as hunting guide; person injured on job; no evidence that employee intended to do anything other than guide recreational hunters).
(IRS issuance of Final Regulations (Treas. Reg. §1.104-1) concerning whether amounts received for physical injury or sickness are excludible from income under I.R.C. §104; pursuant to the Small Business Job Protection Act of 1996, Final Regulations eliminate requirement that, to be excluded from income, damages received pursuant to legal action or settlement agreement have to be based on “tort or tort type rights” – result of U.S. v. Burke, 504 U.S. 229 (1992),reversed insomuch as the regulations allow the exclusion of damages awarded under no-fault statutes; receipt of non-punitive damages as compensation for personal physical injury or sickness excluded from income).
(plaintiff brought constitutional takings claim based on denial by U.S. Army Corps of Engineers (COE) of plaintiff’s proposal to operate a mitigation bank on its property; plaintiff purchased about 4,000 acres of land in Texas for use as mitigation bank to offset development on other land that impacted wetlands; under mitigation banking program, landowners can apply for mitigation banking instruments to participate in program and then sell credits under the instrument to developers to offset environmental impact of project where CWA Sec. 404 permits granted; plaintiff contacted COE before making purchase and was assured that land would be suitable for mitigation banking; later learned that state had plans to make area a reservoir and COE denied plaintiff’s application because plaintiff land might not exist in perpetuity; reconsideration denied and plaintiff sued for constitutional taking; U.S. Court of Federal Claims dismissed complaint on basis that plaintiff had no property interest that could be taken, but only a hope that plaintiff could create mitigation bank; on appeal, court affirmed on basis that plaintiff did not have recognizable property interest; CWA Sec. 404 permits separate and distinct from mitigation banking program; while denial of CWA Sec. 404 permit can be subject of taking, mitigation bank operators do not necessarily possess such permits; plaintiff never entitled to operate mitigation banking program on its land; court has previously rejected claims of existence of cognizable property interest in government programs where government retains discretionary authority to deny access to the such program where property is subject to pervasive government control or where property entirely product of government regulations; hope and expectation of future property use are not, by themselves, a recognizable property interest).
(case involved issue of whether 10.5-acre real estate tract at issue qualified for tax exemption; petitioner was non-profit corporation that promoted animal rights and would operate shelter and kennel to board pets for a fee; parcel predominantly used as shelter rather than boarding pets; undeveloped portion of parcel used as buffer against neighbor noise complaints; tax exemption allowed).
(plaintiff, recreational, but experienced, horseback rider, assumed inherent risk of being thrown from horse; horse boarded at stable where dogs known to be present that could spook horses; plaintiff’s theory of strict liability based on vicious propensities rejected).
(plaintiff sued the owner of a farm tractor for vicarious liability under the dangerous instrumentality doctrine after sustaining injuries caused by defendant’s tractor; in reviewing a motion to dismiss, the court determined a farm tractor is a dangerous instrumentality because it is defined as a motor vehicle under Florida law; doctrine is not limited to motor vehicles operating solely on public highways and Florida regulations ensure safe operation of farm tractors; court also reasoned that tractors can be dangerous to those who come in contact with them)
(petitioner’s rental income derived from rental of commercial office building to related professional corporation in 2005 and 2007 was properly recharacterized as non-passive income under the self-rental rule of Treas. Reg. Sec. 1.469-2(f)(6) which treats net rental income received by taxpayer for use of an item of the taxpayer’s property in a business in which the taxpayer materially participates as income not from a passive activity with the result that petitioner cannot offset such income against accumulated and unused passive losses; transitional relief not available even though lease entered into before February 19, 1988; determination had to be made whether lease was still in effect for tax years in issue under state (NJ) law; NJ law does not distinguish between a renewal and a lease extension; lease was binding and enforceable at time executed in 1980, but record contained no credible evidence regarding history and enforceability of lease for periods after initial rent term which ended in 1981; for years in issue, parties paid no attention to terms of lease and ignored rent provision and rental arrangement for years at issue completely ad hoc and determined after analysis of petitioner’s financial situation; accuracy-related penalty not imposed).
(USDA’s interpretation of Agricultural Marketing Agreement Act (AMAA) reasonable in drafting the Salmonella Rule (requiring all almonds produced in the United States to be pasteurized or chemically treated to prevent salmonella outbreaks); the rule does not exceed the Secretary’s authority under the statutory Almond Order outgoing quality provision; USDA did not need to hold a hearing and producer referendum in enacting the Rule, so there was no procedural violation; USDA’s motion for summary judgment granted).