Annotations 09/2009

(plaintiff sued alleging that defendant engaged in false and misleading labeling and advertising in violation of state law with respect to sales of "Nature Valley" crunchy granola as "100% natural" even though product contained high fructose corn syrup; plaintiff's state law claim not barred by "field preemption" of FDA; plaintiff's claims not impliedly preempted by doctrine of conflict preemption because FDA has deferred taking regulatory action with respect to the term "natural"; application of primary jurisdiction doctrine inappropriate; but, plaintiff has not pleaded fraud with the required particularity under Rule 9(b); plaintiff's complaint dismissed without prejudice).

(federal government must compensate two regional water authorities for diversion of water for alleged environmental preservation purposes because such diversion breached existing water contracts between Bureau of Reclamation and water districts; contracts only allow government to deliver less water than contractually required only when circumstances are beyond control of federal government and Act of Congress (1992 Central Valley Project Improvement Act) is within control of the federal government; court did not rule on whether government must compensate water contractors for underdeliveries resulting from attempts to protect endangered species).

(will construction case; will contained latent ambiguity and decedent intended to devise only 43-acre tract of farmland). 

(Canadian retirement account containing holdings in U.S. corporations not subject to U.S. estate tax; Canadian mutual funds holding stock in U.S. corporations are deemed to be Canadian corporations under the I.R.C. Sec. 301 regulations).  

(plaintiffs' common law nuisance claim against defendant energy and utility companies that they have allegedly contributed to "global warming" which has allegedly diminished the Arctic sea ice that protects the Kivalina coast from winter storms dismissed for lack of standing and barred under the political question doctrine). 

(plaintiff challenged decision of National Appeals Division under Administrative Procedures Act and filed motion for summary judgment  on issue of whether they were overpaid by insurance company on their crop loss claim; insurance company placed in liquidation and claim transferred to Federal Crop Insurance Corporation (FCIC) which determined that plaintiff had been overpaid; NAD upheld overpayment decision and plaintiff argued that FCIC had no authority to revise claim determinations made under private insurance contract; court disagreed and held that NAD has jurisdiction).  

(breach of contract case involving construction of soybean biodiesel plant). 

(plaintiff's motion for preliminary injunction concerning Pennsylvania Dog Law denied; plaintiff alleged that certain provisions of the Dog Law require the promulgation of additional regulations).

(construction of pond was single act the created a continuing trespass; four-year statute of limitations inapplicable).

(petitioner did not satisfy the material participation test for passive loss purposes with respect to losses incurred in horse breeding and raising activity; accuracy-related penalty applied).

(parent corporation's redemption of stock held by subsidiary not subject to excise tax because parent and subsidiary not part of unitary business relationship).

(court refused to certify class of plaintiffs that claimed defendant (insurance company) provided them with negligent tax advice connected with defendant's conversion from mutual insurance company to stock insurance company; certification allowed on other non-tax claims).

(taxpayer not given extension of time to make mark-to-market election under I.R.C. Sec. 475(f); request for relief filed late and lateness gave taxpayer benefit of several months of hindsight to review and consider whether results of securities trading transactions would benefit from the election).

(petitioner failed to substantiate deductible vehicle expenses as required by I.R.C. Sec. 274(d) and 280F(d)(4)).

(petitioner subject to accuracy-related penalties related to underpayment of tax attributable to unreported income resulting from failure to report income IRA distributions; reliance on information obtained by Google search not substantiated so no reasonable cause for failing to report income from distributions).

(helicopter used in production agriculture for aerial surveillance and pollination may qualify for farm machinery and equipment exemption from retailers' occupation tax under 86 Ill. Adm. Code Sec. 130.305).

(taxpayer not given extension of time to make mark-to-market election under I.R.C. Sec. 475(f); request for relief filed late and lateness gave taxpayer benefit of several months of hindsight to review and consider whether results of securities trading transactions would benefit from the election).

(while debts arising from willful and malicious injury by the debtor are not dischargeable, debtor did not damage plaintiff's interests as fellow heirs because debtor's father had deeded oil and gas interests to debtor during his lifetime).

(buyer of farm property failed to carry burden of proof to show lawful and beneficial use of water, or due and sufficient cause for non-use; substantial evidence existed that prior owner had failed to use without cause for statutorily required five-year period).

(excavator cut electrical and telephone lines while digging fencepost holes which created an electrical "surge" and caused damages to an adjacent business - a tanning salon; excavator liable on negligence per se theory for violation of state statute which required excavators to notify Ohio Utilities Protection Service (OUPS) before digging; statute not intended for sole benefit of OUPS and imposes a specific, non-delegable duty on excavators with purposes of protecting the public and underground utilities; trial court judgment against landowner for $13,378.50 in compensatory damages and $500 in punitive damages upheld, but trial court judgment finding excavator not liable reversed and case remanded).

(buyer of farm property failed to carry burden of proof to show lawful and beneficial use of water, or due and sufficient cause for non-use; substantial evidence existed that prior owner had failed to use without cause for statutorily required five-year period).

(defendant's signs declaring "Thank God for dead soldiers" and "Fag troops" displayed at funeral of Marine killed in Iraq are protected speech under the First Amendment - statements were rhetorical hyperbole that could not reasonably be interpreted as factual; court unanimously vacated trial court's $5 million verdict against defendant).

(60-foot emergency public access and utility easement over defendant's property is valid and enforceable against defendant, and Notice of Invalid Easement filed in Recorder's Office is invalid and of no legal effect).

(decedent created a trust and "pour-over" will; trust divided into two trusts upon death for benefit of surviving spouse; upon death of surviving spouse remaining assets of trusts combined with 50% passing in trust to the then-living descendants of the decedent's two children; however any descendant who married outside of the Jewish faith or whose non-Jewish spouse did not convert to Judaism within one-year of marriage would be deemed deceased as of the date of the marriage and such share would revert to such descendant's parent (child of the decedent); clause language upheld - decedent entitled to distribute his property as he deemed appropriate and favor grandchildren who made choices of which the decedent approved).

(IRS considering application of automobile standard mileage rate rules to motorcycles).

(plaintiff failed to show, by preponderance of the evidence, that enforceable contract existed between parties for sale of 25,000 bushels of soybeans pursuant to hedge-to-arrive contract; plaintiff failed to timely send confirmatory memo memorializing telephone conversation, and defendant did not admit existence of contract).

(indebtedness secured by interest in entity that owned real estate is deemed to be secured by the real estate under I.R.C. Sec. 108(c)(3)(A); debt must be allocated between qualified acquisition debt and non-qualifying debt).

(debtors (married couple) opened Section 529 Education Savings Plan for daughter and deposited $14,500 into account; daughter's grandmother later added $40,000 to account with debtors filing Chapter 7 bankruptcy two weeks later; debtors did not list the account in Schedule B or on their exemptions; debtors held to have a legal interest in account as of petition date and account was property of bankruptcy estate and not excluded under 11 U.S.C. Sec. 541(c)(2) because that exception concerns restrictions on transfer "of a beneficial interest of the debtor in a trust" and there was inadequate proof of a qualifying trust interest of debtors; even if debtors had a contingent interest in the account due to potentially becoming a beneficiary, account does not contain requisite anti-alienation and anti-assignment provisions required under non-bankruptcy law that is recognized by 11 U.S.C. Sec. 541(c)(2); account also not excluded under 11 U.S.C. Sec. 541(b)(6); because that provision only excludes Sec. 529 accounts on a sliding scale - contributions made more than 720 days before filing are excluded and contributions made between 365 and 720 days before filing are excluded to extent below $5,475, and any amounts contributed within one year are not excluded; $40,000 contributed by daughter's mother also estate property - exclusion from estate for certain Sec. 529 funds based on timing of contribution rather than source of contribution). 

(non-refundable child tax credit is not exempt property under Colorado law; debtor's claimed exemption for child tax credit disallowed and debtor ordered to turn over prepetition portion of 2008 income tax refund to bankruptcy estate).

(plaintiff, environmental activist group, challenged adequacy of environmental impact statement issued by defendant, state Department of Natural Resources involving reactivation of taconite mine and tailings basin on grounds that EIS failed to address impact of reactivation on “climate change” among other things; court affirmed trial court’s validation of EIS because no reliable model of measuring greenhouse gas emissions existed).

(plaintiff foreclosed on its security interests in defendant's farm collateral and sold the collateral at auction; statute of limitations did not bar foreclosure, no subrogation to superior lien position in some of the equipment warranted, attorney fees awarded to plaintiff).

(based on all of the facts and circumstances, petitioner's horse-breeding and boarding operation was an activity engaged in for profit under I.R.C. Sec. 183 for the years at issue). 

(on cross motions for summary judgment, plaintiff showed that defendant's unconditional deregulation of Roundup-Ready sugar beets violated the National Environmental Policy Act (NEPA) by failing to examine the likelihood and effects of gene transmission on conventional farmers and consumers of sugar beet seed or of gene transmission to the related crops of red table beets and Swiss chard; potential elimination of farmer's choice to grow non-genetically engineered crops, or consumer's choice to eat non-genetically engineered food has a significant effect on the "human environment"; defendant's reasons for concluding that the potential for gene transmission of the genetically engineered gene is not significant are not convincing and do not satisfy required NEPA standards; court need not determine whether defendant further violated NEPA by failing to sufficiently address whether deregulation would cause the proliferation of glyphosate-resistant weeds or whether APHIS had an obligation to address the cumulative effects of increased use of glyphosate; defendant must prepare an environmental impact statement before approving the petition to deregulate Roundup Ready sugar beets).

(plaintiff, potato chip maker, failed to timely pay for potatoes delivered by defendant under supply contract which plaintiff accepted, and defendant terminated the contract; on motions for summary judgment, plaintiff failed to produce specific facts to demonstrate any genuine issue of material fact concerning plaintiff's failure to pay for potatoes delivered under the contract and defendant entitled to judgment as a matter of law; genuine issues of material fact remain as to whether potato shipments are covered under the Perishable Agricultural Commodities Act).

(plaintiff's claims for negligence, trespass, nuisance and inverse condemnation arising from defendant's installation of underground interstate natural gas pipeline dismissed; plaintiff sold defendant 50-foot wide permanent right-of-way easement and plaintiff signed a release which released defendant from all claims and damages of every kind whatsoever, present and future, to interests of the undersigned arising from or related to the surveying, preparation, laying and construction of a pipeline and appurtenances under, upon, and across the plaintiff's land).

(in reversal of trial court, court holds that plaintiff states may bring common law public nuisance claim against electric utilities in attempt to force reductions in carbon dioxide emissions to combat supposed "global warming"; emissions need not be "poisonous" or "noxious" in nature or capable of producing immediate harm to be challenged in court; issue not merely a political question).

(taxpayer not entitled to first-time homebuyer credit on purchase of home from grandmother; no analysis given as to why not).

(a corn silage and manure supplier, as an unsecured creditor, brought an adversary complaint against a  secured creditor seeking a declaratory judgment that the unsecured creditor’s claims were executory in nature which debtor must accept or reject, and to establish unsecured creditor’s  right to an administrative claim and secured creditor moved to dismiss claim court determined that contracts were not executor because unsecured creditor had performed its part of the contracts, and only the payment by the debtor remained to be performed; unsecured creditor did not hold administrative claim because interval of time significantly greater than 20 days had passed between the unsecured creditor's performance and the debtor's petition date; unsecured creditor needed to bring adversary proceeding to avoid secured party’s interest in the property). 

(limited partner, as co-tenant, must share cost of subdivision preparations for partnership asset (350-acre showplace cattle farm) with other limited partners; expenses incurred with intent to maximize sale value of farm by dividing it into a 68-lot subdivision and rule of contribution among co-tenants applies and the securing of preliminary subdivision plan was a permanent improvement; plaintiff did not consistently oppose pursuit of subdivision plan and alleged procedural defects in application for subdivision plan does not provide plaintiff grounds for asserting that other limited partners acted with unclean hands).

(statute requiring estates in land be conveyed by deed or will inapplicable to conveyance of easement (easement is not an "estate"); but deeds at issue along with plat which was incorporated for descriptive purposes did not contain operative words manifesting an intent to grant an easement).

(state legislature repealed plaintiff's authority to impose occupational tax).

(court upholds trial court's award of preliminary injunction for plaintiff so that plaintiff can have more time to argue its case and avoid immediately paying $120 million to defendant; dispute between parties arose from sale-in-lease-out (SILO) transaction established between the parties in 2002 as a tax shelter for the defendant, but deal soured when a partner had its credit rating downgraded).

(decedent, long-time chairman and CEO of Delta & Pine Land Seed Co. retained possession and enjoyment of stock he transferred to two FLPs and did not transfer the stock in a bona fide sale for adequate and full consideration with the result that the value of the stock was included in the decedent's estate; decedent also made indirect gifts to his children of interests in various LLCs upon transfer to trusts of limited partnership interests in an FLP and transferred to the FLP interests in the LLCs; decedent also made various direct and indirect gifts to his children in the last three years of his life; various deductions for the estate disallowed pursuant to I.R.C. Sec. 2053(c)(2) and other deductions may not exceed the value of estate property subject to claims).

(petitioner can deduct mileage expenses related to petitioner's auto parts delivery business because petitioner maintained adequate records, but no deduction allowed for mileage expenses related to commuting to and from home; no deduction allowed for wife's mileage expenses incurred in connection with business deliveries and her income is not excludible).

(bottled beverage comprised mostly of water and without sweeteners (Evolv) is considered food for human consumption that is exempt from sales tax).

(even though Chapter 12 does not create a bankruptcy estate separate from the debtor, Chapter 12 debtor may treat postpetition income taxes triggered during pendency of case as administrative expense under 11 U.S.C. Sec. 503; debtors' pre-petition sale of slaughter hogs constitute sale of a "farm asset" that is "used in the debtor's farming operation under 11 U.S.C. Sec. 1222(a)(2)(A) - dissenting opinion on this point based on plain language of the statute and that 11 U.S.C. Sec. 1222(a)(2)(A) better analyzed by Internal Revenue Code capital gain provision than by Bankruptcy Code provision that operates in different context; marginal method is the correct method to determine the allocation of taxes between priority and non-priority claims under 11 U.S.C. Sec. 1222(a)(2)(A) - dissent on this point noted that U.S. Supreme Court has rejected the notion that the Bankruptcy Code is a "remedial statute" that should be construed liberally in favor of debtors).

(defendant applied wrong legal standard concerning "active engagement" test so as to deny plaintiff farm program benefits; defense of laches generally inapplicable against government and would not have applied in any event; case remanded to defendant for application of the correct legal standard).

(upon division of land into multiple parcels, a division for property tax assessment purposes occurs upon county assessor completing process of identifying and valuing the new parcels rather than at the time of sale).

(estate not entitled to charitable deduction under I.R.C. Sec. 2055(a) for amounts paid to charitable trust under settlement agreement with decedent's son; charity lacked enforceable right under state law to amount received; will failed to dispose of residuary of estate and son claimed residue but charity argued that omission was scrivenor's error and that decedent intended charity to receive residue; IRS took position that residue passed by intestacy and that court would not substitute residuary beneficiary to fill the omission, thus charity had no enforceable right to residue and estate could not claim deduction for amounts charity received via settlement between parties). 

(petitioner entitled to charitable deductions for conservation easements donated to trust; petitioner's valuations accepted and 5 percent discount applied).