Case Summaries 01/2014

(plaintiffs filed an action against defendant, a poultry farm, arguing that the farm was liable for negligently causing harm to 12 acres of their property through the release of contaminated wastewater; defendant filed a motion for summary judgment and the court decided to address the damages portion of the motion “to allow the parties to engage in meaningful settlement discussions”; in granting, in part, defendant’s motion for summary judgment, the court ruled that any damages awarded to plaintiffs would be limited to the difference in value of their property before the alleged harm and the value of their property after the alleged harm; they could not recover remediation damages because the cost of remediation would be disproportionate to the value of the property and they were unable to show “reasons personal to the owner” for the remediation, such as emotional ties to the land).


(in a Sherman Antitrust Act action alleging an illegal conspiracy in the purchase, sale, and marketing of milk, the district court granted summary judgment for the defendants as to one count of the action, finding that (1) the plaintiffs had failed to establish that the restraint of trade was unreasonable (largely because the district court excluded the plaintiffs’ expert testimony) and (2) that that the plaintiffs had failed to establish the requisite element of antitrust injury; on appeal, the Sixth Circuit reversed, finding that, although the district court had properly applied the default “rule of reason,” rather than the “per se rule” in determining whether the alleged restraint was “unreasonable,” the rule of reason did not necessarily require the plaintiffs to submit geographic market evidence  to defeat summary judgment; the plaintiffs’ allegations were sufficient to shift the burden to the defendants to show some procompetitive benefits of the alleged conduct; the court also found that the district court had erred in excluding the plaintiffs’ expert testimony regarding the relevant geographic market; finally, the court held that the plaintiffs submitted sufficient evidence through expert testimony to survive summary judgment on the question of “antitrust injury”).


(petitioner claimed theft loss deduction attributable to amount transferred to account for education expenses of petitioner's children from prior marriage with signature authority given to wife from prior marriage; petitioner then needed funds in account and claimed that funds should have been placed in revocable trust rather than educational accounts and sued ex-wife for theft; court held that petitioner did not carry burden of proof on theft issue; deduction denied).

(petitioner failed to spend sufficient hours in real estate business to satisfy real estate professional test under the passive loss rules; petitioners, married couple, were involved in pharmacy profession and also owned and managed seven rental properties and incurred losses from the properties that were reported on 2008 and 2009 returns; husband worked 1,500 hours in pharmaceutical sales in 2008 and only 800 hours in rental business and only 715 hours in rental business in 2009; log entries not contemporaneous and no argument made that wife was real estate professional; petitioners' testimony not a reliable estimate of how much time the spent on the rental properties).


(a waterfront property owner farmed oysters on his residential property; he requested an opinion from the local zoning administrator as to whether his operation was permitted pursuant to county zoning ordinances;  the administrator informed him that he needed a special use permit to continue to operate his business, and the property owner appealed. The board of zoning appeals upheld the administrator’s decision, but the circuit court reversed, finding that the property owner’s oyster business was a permitted use under the county ordinances; on appeal, the supreme court reversed, finding that the property owner did need a special use permit to continue his business; the court ruled that the property owner’s oyster farm was not a “principal use” of his property—so as to entitle him to a permit exemption—because the “principal use” of his property was as his residence; the oyster business was also not a listed “accessory use” under the ordinance; thus, to be lawful, the oyster business had to be operated as a “home occupation,” which required a special use permit).


(the debtor, a dairy farm, filed a Chapter 11 reorganization plan under which it  sought to continue its dairy operation in a “modernized, more efficient manner”; a secured creditor’s representative objected to the second amended plan, and the court denied confirmation; the debtor had struggled during the reorganization period, failing to meet its projections and defaulting on regular adequate protection payments; in light of the debtor’s struggles during the case, its crushing debt load, and lack of capital or cushion of any sort, the court found that the plan was not feasible under 11 U.S.C. § 1129(a)(11); the court found that the plan failed the fair and equitable requirement of 11 U.S.C. §1129(b) as well because the plan capitalized any allowed interest in arriving at a new claim amount, but did  not do the same with allowed fees; any allowed fees would thus have been paid in an amount much less than their present value, resulting in inequitable treatment to the secured creditor).


(the trustee in a Chapter 7 bankruptcy sought to sell an entire parcel owned jointly by the debtor and a co-owner as tenants in common; the co-owner challenged the sale, alleging that the trustee failed to show that partition of the property was impracticable,  as was required to allow for the sale of an entire jointly-owned parcel under 11 U.S.C. §363(h); the court found that a small change in value stemming from a partition would not make such partition impracticable; furthermore, the Kentucky state law presumption of indivisibility did not apply in  a federal bankruptcy case; as such, the trustee failed to meet his burden to sell the parcel free of the co-owner’s interest pursuant to §363(h)).


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