Annotations 11/2010

(Senate approves on 73-25 vote, Food Safety Modernization Act of 2010; bill must be reconciled with 2009 House-passed version - the Food Safety Enhancement Act of 2009; purported purpose of the law is to give Food and Drug Association (FDA) authority to oversee food marketplace; FDA given mandatory recall authority except over alcoholic beverages; FDA given authority to specify production methods for fruits and vegetables via regulations that would govern such things soil and water usage, hygiene practices, packing of products, and storage temperatures; bill calls for heightened inspections (to increase by a factor of seven over the next five years) of "food facilities" to be paid for by a tax on such facilities, and strict record-keeping requirements; bill requires all "food facilities" to produce "risk-based" preventative controls and undertake periodic hazard analyses; bill's provisions inapplicable to meat, poultry and dairy products; Congressional Budget Office estimates bill requires additional spending of $1.4 billion over the next four years; costs to private sector not yet estimated; legislation passed despite data showing incidence of food-borne illnesses dropping by one-third over the past 14 years). 

(plaintiffs have standing to assert constitutional claims against the individual and employer mandates contained in the Patient Protection and Affordable Healthcare Act, and plaintiffs' arguments ripe for consideration; Anti-Injunction Act which prohibits taxpayers from trying to enjoin collection of taxes does not bar plaintiffs' claims; ruling on merits, court determined that Congress acted within its authority under the Commerce Clause when enacting the mandates; appeal filed with U.S. Circuit Court of Appeals). 

(co-owner of timberland (as immovable property) cannot be held liable to co-owners for treble damages under state law upon harvesting and selling timber without consent of co-owners).

(letter authored by Sen. Feinstein (D-CA) and Sen. Kyl (R-AZ) and signed by 17 other Senators sent to Senate majority leader Reid and minority leader McConnell expressing lack of support for continuation of ethanol subsidy and tariff on ethanol imports which are set to expire at end of 2010; letter calls subsidy of ethanol and associated tariff "fiscally irresponsible and environmentally unwise"; letter also points out that continuing taxpayer support of ethanol and extending the tariff would simply further worsen U.S. dependence on foreign oil). 

(Effective Jan. 1, 2011, Department of Health and Human Services final rule providing Medicare coverage for “voluntary advance care planning” during routine physicals, which is explicitly “based on the definition of ‘end-of-life planning’”; final rule related to provision in 2010 health care bill that was dropped from final bill because of concerns over provision creating "death panels"; update - due to public exposure of the implementation of the rule, the Administration announced on Jan. 3, 2011, that the rule would be revised to delete references to end-of-life planning as part of the annual physical examinations covered under the health care act).

(defendant's Farmland Mitigation Program (FMP) conditioning development approval on dedication of permanent easements on equivalent area of comparable farmland which developer bears sole responsibility to obtain not facially invalid; trial court determination reversed). 

(plaintiff, a farmer, sued for negligence concerning glyphosate damage to corn crop; trial court's grant of summary judgment to defendant affirmed; plaintiff's expert witness testimony did not support a finding that the source of the glyphosate was the defendant's custom herbicide blend, or that had the defendant exercised reasonable care, the blend wouldn't have contained glyphosate; res ipsa loquitor inapplicable; glyphosate contamination not a serious enough problem that if it was present it necessarily implied negligence). 

(New Mexico's domestic well statute that requires State Engineer to issue domestic well permits to draw groundwater for domestic use upon filing of an application without notice or evaluation by State Engineer of any effect on anticipated domestic water use on senior water rights in fully appropriated basin held to be constitutional). 

(U.S. Senate voted on two separate amendments to S. 510 (Food Safety Modernization Act) that would have repealed the 1099 reporting provision (effective in 2012) contained in Patient Protection and Affordable Care Act (Health Care Bill); each amendment requires two-thirds approval and Amendment No. 4713 received only 44 "yes" votes (Sen. Grassley voted "yes" and Senator Harkin voted "no"; Amendment No. 4702 received only 61 votes (Sen. Grassley voted "yes" and Senator Harkin voted "no"). 

(plaintiff was president of religious colony rooted in 16th century Germany (Hutterite tradition) that was an I.R.C. Sec. 501(d) corporation engaged in the business of farming that farmed about 30,000 acres; no members (who were all viewed as part of an extended family) were employees for tax purposes; thus, meal and medical expenses non-deductible; corporation retained control over members and means and manner for farm work and retained right to discharge members for not doing their jobs, even though members not paid a wage). 

(sales and use tax applicable to purchases of radioactive iodine capsule by plaintiff (private vet clinic) that are used in its practice is constitutional; even though tax not imposed on purchased by public university, such exemption is rationally related to legitimate state purpose of promoting research and education).

(court affirms bankruptcy court's judgment revoking defendant's discharge; debtor failed to disclose interests in a Colorado LLC and a Minnesota LLC, and promissory note payments were deposited into debtor's bank accounts via accounts of the LLCs; LLCs sufficiently tied to debtor's solely-owned corporation). 

(ownership of disputed strip of land established via adverse possession). 

(wastewater storage lagoon not exempt from county zoning; lagoon not primarily adapted for agricultural purposes). 

(Defendant unreasonably interfered with natural flow of surface water which damaged plaintiff; trial court also properly denied defendant's claim of adverse possession over disputed strip of land). 

(case involves allegations of fraud and determination of ownership of farm land, property and bank accounts transferred via power of attorney). 

("It is not a good policy to have these massive subsidies for first-generation ethanol."  On reflection, Gore said the energy conversion ratios -- how much energy is produced in the process -- "are at best very small." "One of the reasons I made that mistake is that I paid particular attention to the farmers in my home state of Tennessee," he said, "and I had a certain fondness for the farmers in the state of Iowa because I was about to run for president."; no confession, as of yet, as to whether Mr. Gore has made the same "mistake" concerning "global warming"). 

(defendant's dogs broke into plaintiff's deer pen and killed plaintiff's "breeder deer" who were being bred and raised to produce large racks; deer killed were all hand fed and lacked defensive abilities of wild deer; plaintiff sued for damages under state statute that places liability on dog owner when such dog kills or maims a domestic animal; trial court granted defendant's summary judgment motion that statute inapplicable because deer not domestic animals; reversed on appeal - "domestic animal" in statute not limited to traditional domestic farm animals).

(proceeds of sale of homestead deposited into debtor's savings account held to be exempt via homestead exemption as proceeds of sale of homestead under ND law, including amounts representing proceeds of non-exempt personal property included in sale of homestead; personal property included in sale only at buyers' request and no value attributed to it; no evidence present of debtor's intent to hinder, delay or defraud creditors).

(Defendant unreasonably interfered with natural flow of surface water which damaged plaintiff; trial court also properly denied defendant's claim of adverse possession over disputed strip of land). 

(case involves attempt by single member of LLC to prevent bankruptcy trustee from exercising management rights over LLC by transferring 50 percent of interest in LLC to non-member family member (mother-in-law); transfer occurred after Chapter 11 filed but before coversion to Chapter 7; debtor claimed that trustee could not avoid transfer under 11 U.S.C. Sec. 549 because LLC management rights were not property of bankruptcy estate, just the membership interest and rights to profits and distributions were transferred to bankruptcy estate - trustee only assignee with no right to manage or control LLC; court rejected argument - trustee succeeds to all of debtor's rights, including right to manage LLC). 

(creditor’s motion for relief from imposition of automatic stay denied; property at issue transferred for estate planning purposes and was property of estate, and liens on property were claims against estate that could be dealt with in Chapter 12 plan). 

(boundary line dispute case; deed relies on unidentified location of fence to establish boundary of property and genuine issue of material fact existed as to original location of fence). 

(breach of contract case involving corn futures contract; defendant found to have breached June 2006 contract and plaintiff awarded $15,700 in damages; while plaintiff breached February 2006 contract, defendant did not sustain damages as a result of the breach). 

(farmers' cooperative received a PLR concluding that payments co-op made for purchases of products from members were PURPIMs for purposes of computing co-op's DPAD; co-op not allowed to file claim for refund due to such reclassification; refund tax year distinguishable from payments at issue in PLR; no intent at time payments made to treat them as PURPIMs and they were treated as closed transactions; reclassification not possible because members' tax years now closed, so issuance of amended 1099 PATRs too late).

(easement case; one easement determined to have public access and could not be adversely possessed; other easement not abandoned by non-use). 

(Tax Court decision (132 T.C. No. 9 (2009) affirmed; taxpayer, a corporation involved in the ag industry who manufactured plastic bags, had tax deficiency and penalties of approximately $4.5 million based on losses claimed from two swap contracts that caused economic loss of just over $100,000; transaction lacked economic substance; case involves Jenken’s and Gilchrist tax shelter).

(defendant's conviction of arson for burn-down of tobacco shop that competed with his father's business upheld). 

(plaintiffs are riparian owners on one side of stream at issue across from a business engaged in wood-preserving activities resulting in the emission of hazardous chemicals into the water; EPA asserted jurisdiction and ordered the construction of a log boom which did not touch plaintiffs' property, but did interfere to some degree with plaintiffs' navigation activities; plaintiffs sued for a physical taking, but dismissal of claim affirmed on appeal; defendant did not physically appropriate plaintiffs' water rights and no water actually taken from its source; regulatory taking claim not ripe because plaintiffs lacked standing to bring claim due to non-ownership of subject property at time regulatory taking occurred).  

(petitioner (nurse who was also a real estate broker) can deduct most of the payments made to a loan processor as wages paid; other business deductions not substantiated and deductions denied; accuracy-related penalty imposed). 

(plaintiffs are riparian owners on one side of stream at issue across from a business engaged in wood-preserving activities resulting in the emission of hazardous chemicals into the water; EPA asserted jurisdiction and ordered the construction of a log boom which did not touch plaintiffs' property, but did interfere to some degree with plaintiffs' navigation activities; plaintiffs sued for a physical taking, but dismissal of claim affirmed on appeal; defendant did not physically appropriate plaintiffs' water rights and no water actually taken from its source; regulatory taking claim not ripe because plaintiffs lacked standing to bring claim due to non-ownership of subject property at time regulatory taking occurred).

(complicated set of leases between taxpayers (married couple) and their agricultural freight trucking business lacked economic substance with result that taxpayers could not deduct as business expenses what really amounted to personal expenses; court allowed one entity's deduction of medical and dental expenses paid on taxpayers' behalf as employees; accuracy-related penalties imposed). 

(debtor properly denied discharge and transfers properly avoided as fraudulent transfers; order authorizing trustee to sell debtor's homestead affirmed - homestead not exempt agricultural property under state (MN) law; debtor's animals, farm equipment and supplies not exempt under MN law because debtor not primarily engaged in farming, but rather was primarily engaged in manufacturing and equipment sales).

(HB 2620 which permits the transfer of the state's Agricultural Funds to the state's General Fund is constitutional; no provision of the state constitution limits the legislature's power over the Agricultural Funds; Agricultural Funds not held for the sole benefit for the benefit of crop producers' who paid fees or for any donors who donated monies). 

(plaintiff sued defendant for negligently causing plaintiff’s back fracture injury sustained when plaintiff herded stray cattle onto defendant’s property; defendant not owner of cattle and, thus, plaintiff entered defendant’s property without permission and for no benefit to defendant; plaintiff not licensee and defendant did not breach duty owed to plaintiff as trespasser). 

(losses by casino's premium customers via use of "marker" signifying extension of credit that has been pre-negotiated causes casino to realize the discounted amount of the marker in income; "marker" is promissory note for face amount of "marker" via which casino agrees to accept less than face amount of marker if customer loses). 

(plaintiff's ordinance regulating a township and a conservancy district's ability to remove and sell groundwater located in a local park held to be invalid; plaintiff lacks the express authority to regulate groundwater in aquifers under the Watercourse Statutes, and Home Rule Act does not grant plaintiff the authority to regulate in accordance with its inherent police powers, and plaintiff lacks authority to review, regulate, or impose duties on the defendants' exercise of its power to sell the groundwater under the Park Resources Statute; ordinance's limitation on the defendants' right to sell water is inconsistent with the DNR's regulation of groundwater and there is no statute expressly authorizing plaintiff to regulate the defendants' sale of groundwater;  plaintiff may not interfere with the defendants' common law right to use the groundwater in its aquifers as it deems appropriate).

(durable POA cloaking agent with blanket authority to do whatever principal could do authorized agent to close principal's trust bank account and open a different account with different beneficiary; while state law bars agent from changing disposition of principal's assets at time of death of principal, statute inapplicable to withdrawing funds from principal's account). 

(plaintiff's construction of home on farm ground she believed would be conveyed to her via oral agreement coupled with expenditure of significant amounts of money and labor to maintain farm constitutes sufficient evidence from which jury could conclude that plaintiff's conduct is explainable only by reference to oral contract; denial of defendant's motion for summary judgment seeking dismissal of plaintiff's claim for specific performance affirmed).

(attorney that represented himself in court and prevailed on tax claim not entitled to award of attorney fees because he represented himself).

(vehicle, as well as farm machinery and equipment dealers can use safe harbor set forth in this Rev. Proc. in computing I.R.C. Sec. 263A adjustments; dealers may make two elections to exclude most storage and handling costs from their inventory computation, and such costs can be deducted when incurred instead of when inventory sold; applicable to retail dealers with over $10 million in gross receipts). 

(petitioners had no gambling winnings and, therefore, could not deduct gambling losses of $40,488; "Turbo Tax Tim Geithner" defense not allowed - taxpayers had prepared return utilizing H&R Block's "Taxcut" software which allowed deduction without gambling winnings; taxpayers did not consult Code and simply relied on the fact that "Taxcut" had been approved by IRS; no reasonable cause shown for the underpayment). 

(defendant law firm did not violate plaintiff's rights under Fair Debt Collection Practices Act in its attempts to foreclose on mortgage on which plaintiff was in arrears; defendant commenced non-judicial foreclosure action against homeowner by filing notice and claim required by state (Utah) law).

(IRS reminder to persons who weatherize their homes for winter that there are two possible home energy tax credits available for the 2010 tax year - the non-business energy property credit (30 percent credit of amounts spent on energy-saving improvements capped at $1,500 for the combined 2009 and 2010 tax years) and the residential energy efficient property credit (also a 30 percent credit); IRS notes that not all Energy Star products qualify for the tax credits; note – on the energy credits, sometimes installation costs can be counted in computing the amount of the available credit and sometimes they cannot). 

(out-of-state company's sale of racing tires in Kansas not subject to tire excise tax; tax inapplicable to tires on race cars used only on oval tracks). 

(insurance company could not  treat a $9 million punitive damage judgment as an I.R.C. Sec. 832(b)(5) loss; had company been able to do so, company could have increased its loss reserves by the same amount; judgment held to be "extra-contractual" (thus, deductible as a business loss)because it was not covered by a liability policy, but was the result of the petitioner's own misconduct). 

(U.S. Treasury Department report on government receipts and outlays in October reports that federal receipts were estimated to be $ 146 billion and outlays to be $ 286.4 billion, resulting in a $ 140.4 billion deficit for the first month of fiscal 2011). 

(trial court's declaration of plaintiffs as owners of disputed strip of land via adverse possession reversed to the extent it failed to specify a formal and enforceable property description as part of its judgment).

(landlord sued tenant for commission of waste on leased property; court finds that duty to not commit waste is a tort duty that is independent of the lease agreement; thus, commission of waste does not limit landlord’s recovery to breach of lease agreement; court found evidence of proximate cause and directors of corporation for which tenant worked individually liable for gross negligence in permitting waste).

(plaintiff's conviction of the misdemeanor offense of cruelty to animals upheld).