Annotations - Last 30 Days

The petitioner was a full time insurance professional and also engaged in various real estate ventures from his home base in North Carolina.  He got involved in cattle breeding with an individual located (at least part of the time) in Indiana.  The cattle breeding venture resulted in numerous breached contracts, unpaid bills and promissory notes and unregistered genetic lines of cattle.   The cattle breeding business was not operated in a business-like manner.  In addition, the cattle breeding venture showed four consecutive years of losses while he was showing a substantial increase in income from this insurance and real estate businesses.  The court determined that IRS prevailed under the I.R.C. Sec. 183 tests and petitioner's cattle breeding venture was deemed to be conducted without a profit intent.  Gardner v. Comr., T.C. Memo. 148.


A corporation's former subsidiary business converted to an LLC with the corporation as it's sole member and the IRS determined that the businesses were separate and distinct trades or businesses under I.R.C. Sec. 446(d) because they were engaged in different activities, had separate books, separate records, were not located near each other and did not share employees except for top-end executives.  Thus, the businesses could use different accounting methods for each of the different businesses.  There was not creation or sharing of profits and losses between the businesses, and income of the businesses was clearly reflected.   This was the case even though the LLC did not elect to be taxed as a corporation and, as a result, was a treated for tax purposes as a division of the corporation.  C.C.A. 201430013 (Mar. 24, 2014).  


The sellers had purchased their home for $450,000 from the estate of a couple who died in a murder/suicide. The murder/suicide was highly publicized. One year later, after investing in many renovations, the sellers listed their house for sale, informing their realtor and consulting with an attorney and the Pennsylvania Real Estate Commission regarding the tragic history of the home. The sellers relied on the advice of counsel and the Commission and did not disclose the murder/suicide as a material defect on their Seller’s Property Disclosure Statement. A California resident purchased the home from the sellers for $610,000. She did not learn of the murder/suicide until after she had moved into the home. She filed an action against the sellers and their realtor, asserting that she never would have purchased the home had she known its history. The trial court granted summary judgment for the defendants, ruling that murder/suicide was not a material defect subject to disclosure. An en banc panel of the Superior Court affirmed, finding that psychological damage to a property cannot be considered a material defect. On appeal, the Pennsylvania Supreme Court agreed. The court ruled that the murder/suicide events were not defects in the “structure” of the house. The sellers’ disclosure duties were designed to address structural defects, not tragic events. The court reasoned that a requirement that such events be disclosed would be impossible to apply with consistency and would place an unmanageable burden on sellers.  Milliken v. Jacono, No. 48 MAP 2013, 2014 Pa. LEXIS 1770 (Pa. Jul. 21, 2014).


The plaintiff was a Mexican citizen and nonresident of the U.S. that brought a tax refund action exceeding $16 million.  He claimed that he was engaged in the trade or business of slot machine gambling in Las Vegas and, as a result, his taxes should be based on his net income in accordance with I.R.C. Sec. 871(b) (nonresident alien is taxed on taxable income connected with trade or business conducted in the U.S.).  The plaintiff had retired from a Mexican potato farming business in 2001 and began his "betting business" at that time, making numerous trips to Las Vegas annually.  For the years at issue, the plaintiff reported a net loss in some years and profit in other years.  On audit, IRS disallowed wagering costs due to lack of trade or business and issued deficiency notice and assessed tax at 30 percent rate pursuant to I.R.C. Sec. 871(a)(1).  Court determined that test set forth in Comr. v. Groetzinger, 480 U.S. 23 (1987) was to be utilized in determining the existence of a trade or business, and that the test was not satisfied because the plaintiff did not engage in gambling activities on a basis that were continuous and regular.  The court turned to the factors set forth in Treas. Reg. Sec. 1.183-2 to determine whether the plaintiff had the requisite profit intent to be deemed to be in the conduct of a trade or business and determined that: (1) he did not pursue his gambling activity for the purpose of making a profit; (2) he couldn't rely on advisors or gain expertise because playing slots is controlled by a random number generator with the outcome based on pure luck; (3) his time spent on the activity was sporadic and did not consume much of his personal time; (4) he had no expectation that the assets used in the activity would increase in value (because there were none); (5) he didn't participate in any other activities that would enhance his success in playing slot machines; (6) the history of income or loss from the activity was a neutral factor; (7) the amount of occasional profits slightly favored the plaintiff; (8) the taxpayer was very wealthy and didn't need income from slots to support himself, and; (9) there were substantial elements of personal pleasure.  Thus, the plaintiff did not engage in playing slots with the required profit intent.  The court upheld the IRS position.  Free-Pacheco v. United States, No. 12-121T, 2014 U.S. Claims LEXIS 666 (Fed. Cl. Jun. 25, 2014).     


The petitioner bought an existing home in January of 2009 that needed substantial repairs to make it habitable.  The petitioner began using the house in May of 2009 after making over $10,000 of repairs.  The petitioner claimed the First Time Homebuyer Tax Credit (FTHBTC) based on the purchase price plus the repair cost.  IRS disallowed the part of the credit attributable to the repairs (note - the house was a low-cost home substantially less than the maximum credit allowed).  While I.R.C. Sec. 36(c)(4) bases the credit on the "purchase price" of the home and defines that phrase as the "adjusted basis of the principal residence on the date the residence is purchased", the court determined that "purchase date" is normally the date when the taxpayer takes legal or equitable title with respect to existing housing.  But, the phrase is the date occupancy is established for a constructed residence based on Woods v. Comr., 137 T.C. 159 (2011).  Here, the court determined that the petitioner did not "construct" the house and that, therefore, the credit was to be computed with respect to the purchase price when he took title to the property and the IRS determination was upheld.  Leslie v. Comr., T.C. Sum. Op. 2014-65.


For death's in 2010 an election could be made to opt-out of the federal estate tax.  Such an election resulted in a modified carry over basis rule being applied to assets in the decedent's estate.  Under I.R.C. Sec. 121(d)(11), property acquired from a decedent (or decedent's estate or trust) can take into account the decedent's ownership and use to determine eligibility for the gain exclusion rule.  In this administrative ruling, the IRS determined that the I.R.C. Sec. 121(d)(11) provision is not repealed for 2010 deaths, but is repealed by P.L. 111-312 (the 2010 Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010) for deaths before or after 2010.  C.C.M. 201429022 (May 27, 2014).


In consolidated interlocutory appeals, defendants (financial companies and accountants) challenged the district court's certification of a class of investors in four funds created and managed by the Fairfield Greenwich Group, which sustained billions of dollars in lost value following the collapse of the Madoff Ponzi scheme. In vacating the district court’s order, the court ruled that the order did not indicate how common evidence could show (1) the existence of a duty of care applicable to the class or (2) reliance by the class on alleged misrepresentations. Both were required to show that individual issues did not predominate and that the class should be certified under Fed. R. Civ. P. 23(b)(3). The court noted that Rule 23 did not set forth a pleading standard, but that the "party seeking class certification must affirmatively demonstrate compliance with the Rule.” A district court could only certify a class if it was “satisfied, after a rigorous analysis,'" that the requirements of Rule 23 were met.  Stephen's Sch. v. PricewaterhouseCoopers Accountants N.V., Nos. 13-2340-cv(L), 13-2345-cv(Con), 2014 U.S. App. LEXIS 11515 (2d Cir. N.Y. Jun. 19, 2014).


The petitioner had substantial income from non-real estate trades or businesses, but tried to qualify as a real estate professional so as to fully deduct substantial rental real estate losses.  The petitioner, however, could not substantiate his activity.  Two commercial rentals were profitable.  The rentals were to two S corporations in which the petitioner was also the president and majority shareholder and an active participant.  While the petitioner claimed that he did not provide any services to the S corporations, the petitioner had also claimed in another lawsuit brought by his children against him (who claimed that the petitioner didn't work enough in the S corporations to justify his large salary) that he was actively involved and was "creating" and "inventing" and was participating in the strategy and growth of the business.  Because the petitioner had taken the position in the other litigation that he was active, the court determined that he was materially participating with the result that the net income from the self-rentals was recharacterized as non-passive.  Schumann v. Comr., T.C. Memo. 2014-138.


The petitioner did consulting and tax prep work out of her home.  She filed a Schedule C on which she claimed deduction for home office expenses.  She said that the percentage of the home used for businesses was 33 percent on Form 8829.  She also paid small amounts of "wages" to three children for work in her business activities that were actually paid to them in the form of credit card purchases for meals and tutoring.  On the percentage issue, the court noted that the petitioner simply took the basement as one of the three levels of her home and took 33 percent as the business use percentage.  The court agreed with IRS and disallowed expenses associated with the home office due to lack of evidence on which the court could base an estimate of the space actually used for business use.  On the deduction for wages, the court noted that two of the children were required to file (their income exceeded the standard deduction) had they not been minors, but that they were compensated for services that were actually household chores.  Thus, no deduction for wages as business expenses was allowed.  Ross v. Comr., T.C. Sum. Op. 2014-68.


The defendant was the nephew of an elderly man who had been cared for by his longtime partner. After his partner could no longer care for him, the defendant moved in with the uncle and began providing him with care. He immediately obtained a power of attorney. During the year that he lived with his uncle, the defendant transferred a number of assets of the uncle to himself through the power of attorney. Shortly before the uncle’s death, the defendant was charged with knowing and intentional abuse of a vulnerable adult, attempted theft by deception, and attempted knowing and intentional abuse of a vulnerable adult. The defendant was convicted on 39 counts of abuse. On appeal,  the court ruled that the evidence was sufficient to show that the uncle was a vulnerable adult and that he had a mental or functional impairment during the time in question. The evidence showed that the uncle could no longer care for himself and that he was consistently confused. A CT scan had revealed that the uncle’s brain had shrunk due to dementia. The evidence established that the defendant used his power of attorney not for the benefit of the uncle, but to assure that he and his siblings would benefit from the uncle’s property.The district court did not give the jury misleading, confusing, or incomplete jury instructions.  State v. Rakosnik, 22 Neb. Ct. App. 194 (2014).


In 1952, the owner of Illinois farmland granted a pipeline operator an easement for two pipelines across the parcel. The first pipeline was built immediately.  The second pipeline, if built at all, had to be within 10 feet of the first pipeline. The operator promised that the land would remain farmable. In 2012, the operator notified the owner (now successor in interest) that it planned to build a second pipeline. The owner responded with a federal diversity quiet-title suit under Illinois law, asking the court to declare that the operator had no right to build a second pipeline—either because the right to do so has expired or because another pipeline would violate the farmability condition of the 1952 contract. The operator replied that the right to build a pipeline has no time limit and that federal law, in particular 49 U.S.C. §60104(c) (safety provision), preempted enforcement of the farmability condition. The district court agreed with the operator and dismissed the suit. On appeal, the court found no reason to think that Illinois courts would call the 1952 contract an option or apply the Rule Against Perpetuities. The district court therefore properly denied the owner's request to quiet title in its favor. That portion of the judgment was affirmed. The remainder of the judgment, however, was vacated because the farmability question was not ripe for decision until the pipeline was built.  Knight v. Enbridge Pipelines Fsp L.L.C. & Ccps Transp., No. 13-3481, 2014 U.S. App. LEXIS 13708 (7th Cir. Jul. 16, 2014).


Plaintiff is a chicken farmer who challenged an EPA Compliance order pursuant to the Clean Water Act (CWA) claiming that rainwater polluted with dander, manure, and other fine particulates stemming from plaintiff’s poultry CAFO was polluting nearby streams.  Plaintiff filed her lawsuit alleging that the discharge constituted "agricultural stormwater," which is exempt from the CWA's permitting requirements. The EPA withdrew its Compliance Order and then sought to dismiss the lawsuit, contending that its withdrawal of the Compliance Order rendered the entire proceeding moot. The plaintiff disagreed, maintaining that the district court retained jurisdiction because the EPA had not altered its position that her farm remained subject to the CWA's discharge permitting requirements. The court denied the EPA's motion to dismiss and granted motions by several clean water advocacy organizations to intervene as defendants. One day after the plaintiff filed her motion for summary judgment, pursuant to the court’s scheduling order, another environmental group filed a motion to intervene pursuant to Federal Rule of Civil Procedure 24(a), and, alternatively Rule 24(b). the district court denied the motion to intervene on the grounds that it was untimely and would unduly delay the adjudication of the other parties’ rights. In affirming the denial, the Fourth Circuit found that the district court had properly determined (1) how far the underlying suit had progressed; (2) the prejudice any resulting delay might cause the other parties; and (3) why the movant was tardy in filing its motion. The environmental group’s strategic decision not to devote its "limited resources" to the matter at an earlier stage, believing the court would grant the EPA's motion to dismiss engendered little sympathy. Alt v. United States EPA, No. 13-2200, 2014 U.S. App. LEXIS 13319 (4th Cir. W. Va. Jul. 14, 2014).


Five states bordering the Great Lakes and an Indian tribe filed an action for injunctive relief based upon the assertion that Asian carp were about to invade the Great Lakes and that they were poised to inflict billions of dollars of damage on the ecosystem. Believing that the U.S. Army Corps of Engineers (Corps) and the Metropolitan Water Reclamation District of Greater Chicago (District) had failed in their task of protecting the Great Lakes, the plaintiffs asked the court to impose measures against the defendants to ensure that the carp were forever blocked from the Lakes. The district court dismissed the action under Fed. R. Civ. P. 12(b)(6), finding that the action failed to state a claim for which relief could be granted. On appeal, the Seventh Circuit Court of Appeals affirmed, finding that the complaint did not plausibly alleged that the Corps and the District were creating a current or imminent public nuisance by their manner of operating the Chicago Area Waterway System (CAWS). The court found that there was a notable lack of factual allegations that Asian carp were passing the barriers that the Corps had established, and that the complaint did not plausibly allege that the Corps could not or would not respond to more urgent threats if and when they would arise. To the contrary, the allegations tended to show that the Corps was taking its stewardship over the CAWS and the carp problem seriously. The states were free to return to court based upon changed circumstances.  Michigan v. United States Army Corps of Eng'rs, No. 12-3800, 2014 U.S. App. LEXIS 13349 (7th Cir. Jul. 14, 2014).


Under the passive loss rules, in a fully taxable transaction, if all of the gain or loss on the disposition of an activity is realized, then the excess of any loss from that activity over any net income or gain from all other passive activities is treated as a non-passive loss.  Here, IRS reached the conclusion that the use of I.R.C. Sec. 121 does not mean that a transaction is not a "fully taxable transaction."  For instance, if a taxpayer sells a rental property that used to be the taxpayer's principal residence, the possibility exists that when the property is sold that the gain on sale could at least be partially offset by the gain exclusion of I.R.C. Sec. 121 (if the use and occupancy requirements are satisfied).  If the rental activity has unused passive losses, the I.R.C. Sec. 121 exclusion does not bar the ability to release the excess losses under I.R.C. Sec. 469(g)(1).  C.C.A. 201428008 (Apr. 21, 2014).


An electrician was installing a sign in a storefront canopy at a shopping center when he fell through the canopy and was injured. He subsequently sued the owner of the shopping center, and the district court granted summary judgment to the shopping center, finding that the shopping center owed no duty of care to the electrician. On appeal, the court affirmed, finding that a landowner does not generally owe a duty of care to a business invitee for dangers that are known or obvious. Even if the canopy design was a hazard, as the electrician asserted, it was an open and obvious one, which should have alerted the electrician to the fact that its bottom was not weight bearing. The electrician testified that he knew the soffit was not weight bearing, and he was a “master sign electrician,” with more than 10 years of experience.  The landowner had no duty to warn him of an obvious hazard integral to his work.  Pinson v. 45 Dev., LLC, No. 13-3327, 2014 U.S. App. LEXIS 13175 (8th Cir. Ark. Jul. 11, 2014).


The plaintiff operated a cattle farm in Iowa. When it considered using an anaerobic digester to dispose of manure on the farm it contacted a corporation specializing in the design and construction of anaerobic digesters to discuss the feasibility of installing a digester on its farm. Because the farm’s manure would not be enough to operate the digester, the corporation calculated that a digester would be economically feasible based upon the availability of 1,000 cubic feet of manure and 250 tons of paper sludge per day. The corporation also agreed to prepare a USDA grant application for the farm. In so doing, it hired an independent consultant to review the technical report and provide an opinion and recommendation. The independent consultant, which did not have a contract with the farm,  composed a certification letter and performed an independent review required by the USDA grant application process. The letter stated that the project was “technically viable.” The farm was awarded the grant in 2008, and the corporation completed construction and installation of the digester. The digester never worked as planned, and the farm stopped using it within 6 to 8 months. The farm sued both the corporation and the independent consultant, ultimately settling with the corporation. The district court granted summary judgment to the independent consultant, finding that it was not “manifestly aware” that the farm would rely on its certification letter in deciding whether to build a digester. It also found that the farm had not actually relied on the letter. In affirming the judgment, the court ruled that the farm could not establish that it justifiably relied on any statements from the independent contractor because it made no statements with respect to the digester that the farm actually built. The farm used a different size and a substantially different substrate mixture than what had been proposed to the independent contractor. These factors were the most important features of a digester. The independent contractor made no representations as to the final design and could not be liable. Amana Society, Inc. v. GHD, Inc., No. 12-3515, 2014 U.S. App. LEXIS 13170 (8th Cir. Jul. 11, 2014).


The States of West Virginia and Kentucky, as well as coal mining companies and trade associations, filed lawsuits, which were consolidated, challenging actions undertaken by the Environmental Protection Agency (EPA) and the Army Corps of Engineers (Corps) in regulating the surface mining of coal. Specifically, the actions challenged the “Enhanced Coordination Process,” which dictated the procedures governing issuance of Section 404 permits (regulating the discharge of dredged or fill materials into navigable waters under the Clean Water Act (CWA))  and a “Final Guidance” document, which governed the issuance of Section 402 permits (regulating the discharge of pollutants into jurisdictional waters). The plaintiffs alleged that the Enhanced Coordination Process violated the CWA and was a legislative rule that should not have been promulgated without notice and comment. They alleged that the Final Guidance violated the CWA and the Surface Mining Controls and Reclamation Act. The district court granted summary judgment to the plaintiffs, and the federal circuit court reversed, ruling that the Final Guidance was not final agency action subject to pre-enforcement review and that the Enhanced Coordination Process was a procedural rule that the EPA and the Corps had authority to enact under the CWA. The “critical feature” of a procedural rule is that it covers agency actions that do not themselves alter the rights or interests of parties, even though it may alter the manner in which the parties present their viewpoints to the agencies. The court found that this description covered the Enhanced Coordination Process. Nat'l Mining Association v. McCarthy, No. 12-5310, 2014 U.S. App. LEXIS 13156 (D.C. Cir. Jul. 11, 2014).


The petitioner operated a consulting business and upon rehiring a former employee gave the employee $33,000 to help him through some tough times.  The petitioner stated to the employee that it was a loan, but no note or contract was executed.  The employee did not pay back the amount and the petitioner claimed a business bad debt deduction on his return.  The petitioner also sued the employee and the case was resolved two years after the tax year in issue when the deduction was claimed.  The evidence was devoid of any indication of either a business or non-business bad debt.  Court noted that even if the evidence had established that the loan was a bona fide debt, the petitioner would not have been able to establish that the bad debt was a business bad debt.  In addition, even if the debt was found to be a business debt, the petitioner would have failed to establish that the debt became worthless in the year in issue.  Dickenson v. Comr., T.C. Memo. 2014-136.  


Under I.R.C. Sec. 163(h), acquisition debt and home equity debt is deductible with the total of the two together not to exceed $1.1 million.  Here, the petitioner purchased a California residence in 2004 and resided in it with his wife and children.  He moved out in 2006 while his wife and children continued to reside in the home through 2012.  The couple was divorced in 2008.  In 2005, however, the petitioner and wife purchased another home with the intent of renting it out for weekly vacations and similar events.  However, the petitioner and spouse weren't able to rent the property out due to substantial repairs that needed to be done in advance of renting the property.  The petitioner lived in the second home while not traveling for work.  On their joint return, the petitioner deducted amounts for mortgage interest with respect to the second home.   IRS disallowed the deduction and the court agreed.  The property was not a rental property and the petitioner continued to reside in the property.  While mortgage interest was deducted on the aggregate loan exceeded $1.1 million, the court disallowed the excess amount attributable to the second home and noted that had the parties (who were divorced during the years in issue) each paid interest expense, each of them would have been able to deduct up to $1.1 million in qualifying debt.  Hume v. Comr., T.C. Memo. 2014-135. 


The defendants built a house on a 72.9 acre tract they purchased in 1992. In 1995, they commissioned a survey of the five-acre homestead portion of their property and in 2005, they recorded a “private road easement” for a 35-foot road leading to the tract. In 2007, the defendants sold all of their property, except for the five-acre homestead tract, to the plaintiffs. The plaintiffs were aware of the roadway easement when they purchased the property. The plaintiffs granted the defendants the right to secure access to the private road (where it met the farm road) with a gate, so long as the gate contained a “buddy lock” to which the plaintiffs were granted access. At some point, the defendants secured the gate with a "non-buddy" lock and failed to give the plaintiffs a key. Consequently, the plaintiffs could not get their hay equipment in and out of their property. After the dispute between the parties escalated, the plaintiffs sought declaratory and injunctive relief against the defendants to prevent the defendants from taking action “inconsistent” with plaintiffs’ use and enjoyment of their property. The trial court entered judgment for the plaintiffs, including statements that the plaintiffs had the right to refuse to have a gate across the easement and that the defendants could never expand the scope of the easement. The defendants appealed, and the appellate court found that the trial court exceeded its authority in granting the plaintiffs the right to refuse the gate and in forever enjoining the defendants from expanding the easement. The plaintiffs had not raised these issues so they were not ripe for review. In all other respects, however, the judgment was affirmed.  Murdaugh v. Patterson, No. SD32619, 2014 Mo. App. LEXIS 758 (Mo. Ct. App. Jul. 9, 2014).


Plaintiff was the son of a man who married the decedent shortly after his first wife (the mother of the plaintiff) died from Alzheimer’s disease. The mother had inherited substantial assets from her parents, and those assets were transferred to the father upon her death. Within a month of the marriage, the father and the decedent entered into a contract to make wills, providing that after the death of the survivor,  one-half of the survivor’s estate would be divided between the plaintiff and the decedent’s grandchild. The contract provided that in the event of the revocation of such a will, the son would be entitled to bring an action in equity seeking specific performance. The father died in 2008 without having revoked his will. All of his assets passed to the decedent. A year after the father’s death, the decedent informed the plaintiff that she did not wish to hear from him again. In 2010, the decedent revoked her will made pursuant to the contract. She died in 2012. The plaintiff did not know of her death for nine months. He immediately filed an action to enforce the terms of the contract against the estate. The decedent’s two children, who were the sole beneficiaries under who new will, filed a motion for summary judgment contending that the statute of limitations had passed because the will had been admitted to probate eight months earlier. In affirming the lower court’s judgment in favor of the estate, the court found that the plaintiff’s action was governed by the three-month limitations period governing will contests. The plaintiff was not a “reasonably ascertainable creditor” of the estate entitled to actual notice and granted nine months to file a claim. The court also rejected the plaintiff’s argument that the three-month limitations period violated his due process rights. A breach of contract to make a will action could be similarly limited as a will contest action. Sufficient notice of the admission of the will to probate was provided by publication.  Markey v. Estate of Markey, No. 89A05-1402, 2014 Ind. App. LEXIS 305 (Ind. Ct. App. July 9, 2014).


The plaintiff is a fiduciary of pension plans, IRAs and employee benefit plans for which it is responsible for withholding federal income taxes.  The plaintiff timely and fully deposited all withheld income taxes, but didn't do so electronically as required by IRS regulations when the deposit exceeds $200,000.  IRS assessed failure-to-deposit penalties of over $250,000 by virtue of I.R.C. Sec. 6656(a).  The court upheld the IRS position based on the plain language of the statute and the fact that the Congress had allowed a grace period from the electronic deposit rule at issue from July 1, 1997 to July 1, 1998, and that no grace period any longer applied.  Commonwealth Bank and Trust Company v. United States, No. 3:13-CV-01204-CRS, 2014 U.S. Dist. LEXIS 91489 (W.D. Ky. Jul. 7, 2014).


The taxpayer had multiple real estate rental activities and owned a real property business.  While the taxpayer engaged in the rental activities for more than 750 hours during the tax year, the taxpayer did not participate in each rental activity for at least 750 hours and did not make an election via Treas. Reg. Sec. 1.469-9 to aggregate the activities into a single activity.  The IRS had previously taken the position that a taxpayer, to qualify as a real estate professional, had to put in more than 750 hours in each activity.  But, here, the IRS determined that whether a taxpayer is a real estate professional for purposes of the passive loss rules is not affected by an aggregation election.  Hence, once a taxpayer qualifies as a real estate professional, the requirements for material participation are applied as to each separate activity absent an aggregation election.  C.C.M. 201427016 (Apr. 28, 2014).


Defendant, a dairy farmer, contracted with a cement supplier to have cement delivered to his property for the construction of a bunk silo. An employee of the supplier delivered the cement in a truck owned by the supplier. After delivering the cement, the employee drove the truck to another area of the defendant’s property so that he could wash the truck. While washing the truck the employee fell from a ladder on the truck, into a ditch. The employee filed an action against the defendant, seeking to hold him liable for the injuries under N.Y. Labor Law §240(1), which provided rights to certain workers and imposed liability on owners having nothing to do with the accident where the worker was employed in the “erection, demolition, repairing, altering, painting, cleaning, or pointing of a building or structure. The defendant filed a motion for summary judgment, which the trial court denied, in part. On appeal, the court reversed, finding that the activity in which the employee was engaged was not the kind of activity for which the legislature sought to impose liability. The employee was engaged in the routine maintenance of his cement truck, not engaged in “construction work” under the meaning of the statute when he fell. Bish v. Odell Farms Partnership, No. 568 CA 13-01811, 2014 N.Y. App. Div. LEXIS 4969, 2014 NY Slip Op 5063 (N.Y. App. Div. 4th Dep't Jul. 3, 2014).


Two sets of ranchers owned property along the Sarco Creek. They each called their property the “Sarco Creek Ranch.” One set of ranchers held a trademark for the name and sought to enjoin the other ranchers from using the name on the grounds that it was a trademark violation. The defendants argued that the trademark was invalid because the name was primarily geographically descriptive. In denying the plaintiffs’ request for a preliminary injunction, the court ruled that the name was primarily geographically descriptive and that, as such, the plaintiffs could not show a substantial likelihood of success on the merits. The general rule was that merchants should remain free to indicate their place of business without unnecessary risk of infringement. The court rejected the plaintiffs’ argument that the creek fell within the “obscurity exception” to the rule. The evidence suggested that those in the place where the plaintiffs did business would associate Sarco Creek as the geographic place where they offered goods and services. Sarco Creek Ranch v. Greeson, No. 6:14-CV-13, 2014 U.S. Dist. LEXIS 91037 (S.D. Tex. Jul. 3, 2014).


The defendant was a vegetable grower who operated a packing shed. He hired guest workers from Haiti to work under H-2A visas (temporary visas issued under the Immigration and Nationality Act, 8 U.S.C. § 1101(a)(15)(H)(ii)(a)) to harvest his peas and beans one summer. The workers filed an action against the defendant, alleging, among other things, that he failed to pay their transportation and visa expenses, as was required under the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201-209, and H-2A regulations, 20 C.F.R. § 655, et seq.  The workers filed a motion for partial summary judgment on the issue of unpaid expenses, and the defendant alleged that he was exempt from the requirements of the FLSA because he ran a small business with fewer than 500 "man days." The defendant also alleged that the workers were not entitled to their expenses because they did not complete 50 percent of their contract. The defendant also alleged that an “act of God” relieved him of liability and that he did not “employ” the workers within the meaning of the FLSA. The district court granted the plaintiffs’ motion, ruling that the defendant was not entitled to the 500 man day exemption because he did not raise it as an affirmative defense. The court also found that the defendant’s contention that the workers abandoned the contract was not supported by the evidence and that the act of God defense was inapplicable. Finally, the court ruled that the defendant was a joint employer of the workers, along with the contractor who brought the workers to America on the defendant’s behalf.  Sejour v. Steven Davis Farms, LLC, No. 1:10-cv-96, 2014 U.S. Dist. LEXIS 89378 (N.D. Fla. Jul. 1, 2014).


Fourteen families filed an action against two logging companies and others, alleging that their properties were damaged by three landslides that occurred near Glenoma, Washington, because of the actions of the logging companies. The plaintiffs asserted claims of strict liability, trespass, nuisance, and negligence. The trial court dismissed all of the claims on summary judgment, except the negligence claim against one of the logging companies. A jury found in favor of the logging company on that claim. The plaintiffs appealed the dismissal of their remaining claims. On review, the court affirmed, finding first that clear-cutting steep, unstable slopes directly above residential properties was not, as plaintiffs alleged, an abnormally dangerous activity subject to strict liability. No court in Washington or elsewhere has imposed strict liability for timber harvest activities, and given the totality of the circumstances, the court concluded that any additional landslide risk caused by logging in a remote area did not favor imposing liability without the need for a finding of negligence.  The court also ruled that the trial court did not err in dismissing the nuisance and trespass claims as duplicative of the negligence claims. The nuisance claim was grounded in the same facts and allegations as the negligence claim, and the plaintiffs had not set forth any evidence of knowledge, which was necessary to prove a trespass claim.  The court also found that the trial court did not err in dismissing the negligence claim against the remaining logging company because there was no evidence indicating that the company breached the duty of care owed by a reasonable logger. Hurley v. Port Blakely Tree Farms LP, No. 71430-9-1, 2014 Wash. App. LEXIS 1609 (Wash. Ct. App. Jun. 30, 2014).


In this case, two ordinances of towns in New York that banned oil and gas production activities within each of the towns were challenged.  The issue before the court was whether state law eliminated the home rule authority of localities to bar such activities via the Oil, Gas and Solution Mining Law (OGSML).  The OGSML specifies that it supersedes all local laws or ordinances relating to the regulation of the oil, gas and solution mining industries, but that it doesn't impact the ability of local governments to maintain jurisdiction over local roads or the rights local governments had under real property tax law.  Despite that language, the court determined that the OGSML did not apply because the towns had completely banned oil and gas activity rather than attempt to regulate operational aspects of oil and gas development.  The court did note, however, that the NY legislature could eliminate the ability of local governments to ban oil and gas development.  The court did not address whether its opinion would result in disaffected owners of mineral estates suing the towns for a regulatory taking of their property right associated with oil and gas development.  In re Wallach, Nos. 130-131, 2014 N.Y. LEXIS 1766 (N.Y. Ct. App. Jun. 30, 2014).   


In litigation pending since 2011, town residents claimed that the defendant’s farming practices generated excessive amounts of dust, and other forms of pollution in violation of Hawaii law. After the court dismissed various nuisance and negligence claims, the plaintiffs filed a motion for preliminary injunction and partial summary judgment for the defendant’s alleged misuse of bee-toxic pesticides.  The court denied the motion, first ruling that the third amended complaint did not allege a claim specifically for injury to bees maintained on any of the plaintiffs’ properties. As such, the court found that the plaintiffs were not entitled to summary judgment on any issues regarding bee-related injuries. The court also found that even if the complaint had alleged bee-related injuries, summary judgment would still be denied. The plaintiffs’ claims were based in negligence and they conceded that questions of fact existed as to causation and damages, both essential elements of a negligence claim under Hawai'i law. The court also found that the plaintiffs had not shown that they were likely to succeed on the merits, so as to be entitled to preliminary injunctive relief.  Aana v. Pioneer Hi-Bred Int'l, Inc., No. 12-00231 LEK-BMK, 2014 U.S. Dist. LEXIS 88564 (D. Haw. June.30, 2014).    


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