Case Summaries

The plaintiffs were lesbians that were married under Massachusetts law.  They later moved to Florida, a state that, based on the health, safety and welfare of its citizens, enacted a statutory provision barring homosexuals from marrying each other.  Florida also does not recognize as valid homosexual marriages entered into in any other state or other jurisdiction.  One of the couple sought a divorce and the trial court refused to grant it because Florida did not recognize homosexual marriage.  On appeal, the court reversed.  The court specifically noted that granting the divorce would further Florida’s public policy to “prevent, eliminate, discourage or otherwise preclude” homosexual marriage in Florida by reducing the number of such marriages in Florida.  Refusing to grant the divorce, the court noted, would not further Florida’s legitimate public policy of not recognizing homosexual marriage.  Brandon-Thomas v. Brandon-Thomas, No. 2D14-761, 2015 Fla. App. LEXIS 6051 (Fla. Ct. App. Apr. 24, 2015).

The plaintiffs, an assortment of environmental activist groups, petitioned the Environmental Protection Agency (EPA) to "use its power" to control nitrogen and phosphorous pollution" in the Mississippi River Basis and the Northern Gulf Of Mexico.  The EPA chose not to do so, noting that federal rulemaking was not the most effective or practical means of addressing such concerns and that the EPA's policy (consistent with the Clean Water Act (CWA)) was to allow the states to develop and adopt their own standards.  The plaintiffs sued, claiming that the EPA had violated the Administrative Procedure Act and the CWA by declining to make a "necessity determination."  The EPA moved to dismiss the case on the basis that the agency had the discretion to decline to make a necessity determination that wasn't reviewable by the court.  The trial court ruled that it had jurisdiction to review the EPA's decision and ordered the EPA to make a necessity determination.  On further review, the appellate court vacated the trial court's decision.  The appellate court determined that the courts have jurisdiction to review a denial of a rulemaking petition.  The court also determined that the EPA had discretion to decide not to make a necessity determination due to the broad language in 33 U.S.C. Sec. 1313(c)(4)(B).  The court remanded the case to the trial court to decide in the first instance whether the EPA's explanation for why it declined to make a necessity determination was legally sufficient.  The court also informed the trial court that in doing so the court was to give great deference to the EPA and use a rational basis review standard.  Gulf Restoration Network, et al. v. McCarthy, No. 13-31214, 2015 U.S. App. LEXIS 5602 (5th Cir. Apr. 7, 2015).

The defendant operated a dairy farm and had invited a local kindergarten class to the dairy for a field day every year for over the past 20 years.  On the field trip at issue, a mother of one of the students, acting as a chaperone, fell through a floor in a barn and injured herself.  The mother sued the defendant and the defendant asserted the state (IA) recreational use statute as a defense.  The court of appeals agreed, but the Iowa Supreme Court reversed and remanded the case to the trial court (827 N.W.2d 128 (Iowa 2013).  The Iowa legislature quickly vacated the Iowa Supreme Court opinion (unanimously in both the House and the Senate) by amending the statute to specifically include educational activities and related chaperoning activities as covered activities.  On remand, the trial court jury found in favor of the defendant.  On appeal, the Iowa Court of Appeals affirmed based on the evidence.  Sallee v. Stewart, No. 14-0734, 2015 Iowa App. LEXIS 361 (Iowa Ct. App. Apr. 22, 2015).

The petitioner was a doctor that was recruited to work for a hospital in a rural area and was offered a $260,000 loan to work for the hospital with the loan forgiven upon the satisfaction of certain goals.  The goals were met and the loan was forgiven over a four-year timespan.  The petitioner didn't report any income from the forgiveness and the IRS asserted a tax deficiency.  The court agreed with the IRS.  The petitioner argued that because the loan was non-recourse that he wasn't personally liable for repayment and, thus, didn't have income upon forgiveness.  The court noted that the loan terms made him liable and also rejected the petitioner's argument that the nature of the loan meant that he couldn't have cancelled debt income.  While the hospital issued the petitioner a Form 1099-Misc. rather than a Form 1099-C, the court held that was merely a bookkeeping error that had no bearing on the tax effect of the forgiveness.  Wyatt v. Comr., T.C. Sum. Op. 2015-31.

The petitioners, a married couple, owned an S corporation that held real estate and a medical C corporation.  The husband worked full-time for the C corporation and materially participated in its business activity.  The couple did not, however, materially participate in the S corporation and they were not engaged in a real estate trade or business.  For the years at issue, the S corporation lease commercial real estate to the C corporation.  The S corporation had rental income of about $50,000 in each of the two years at issue, which the petitioners reported as passive income, not subject to self-employment tax.  They also offset the rental income with passive losses from other S flow-through entities they owned as well as losses from other rental properties that they owned.  The IRS viewed the rental income as non-passive under Treas. Reg. Sec. 1.469-2(f)(6) (the "self-rental" rule) and disallowed passive losses that exceeded adjusted passive income for the years at issue.  The petitioners, however, argued that I.R.C. Sec. 469 did not apply to S corporations and was invalid.  The court disagreed even though I.R.C. Sec. 469, on its face, does not say that it applies to S corporations because it need not identify S corporation due to the S corporation shareholders are the taxpayers to whom I.R.C. Sec. 469 actually applies.  In addition, the court ruled that Treas. Reg. Sec. 1.469-4(a) validly interpreted "activity" as used in I.R.C. Sec. 469.  Thus, the rental activity was subject to I.R.C. Sec. 469.  The court also held that the self-rental rule applied and rejected the petitioners' argument that the self-rental rule didn't apply because the S corporation, as lessor, didn't participate in the C corporation's trade or business.  As such, the rental income was properly recharacterized as non-passive and couldn't be used with passive losses.  Williams v. Comr., T.C. Memo. 2015-76.      

The petitioner started a photography business by creating a business plan and obtaining a sales tax permit.  However, the business did not show a profit for more than 10 years.  Thus, the state (IA) Department of Revenue (IDOR) could not grant the petitioner the presumption in accordance with I.R.C. Sec. 183 that the activity was engaged in with a profit intent.  Thus, in accordance with the nine-factor test set forth in Treas. Reg. Sec. 1.183-2(b), the activity would be evaluated.  The IDOR determined that none of the factors favored the petitioner other than the fact that the petitioner had expertise in photography.  Thus, deductions associated with the activity were disallowed.  In re Groesbeck, Doc. Ref. No. 15201018 (IA Dept. of Rev. Apr. 8, 2015).

The defendant, an egg producing company, was linked to an egg salmonella outbreak in 2010 that caused illnesses to almost 2,000 people.  The defendant was ordered to pay a $6.8 million fine as part of a plea agreement  Two of the defendant's executives were also fined $100,000 each and ordered to pay $83,000 in restitution.  The court, on the sentencing phase of the case, sentenced the executives to three months of prison time each plus a year of supervised release.  The executives claimed that they had no knowledge of the unclean conditions at the defendant's facility and were not directly involved.  The court pointed out that the defendant's workers knowingly shipped eggs with false processing and expiration dates, and bribed USDA regulators to secure approval of sales of poor quality eggs.  The executives are free pending appeal of the sentence.  United States v. Quality Egg, LLC, et al., No. C 14-3024-MWB, 2015 U.S. Dist. LEXIS 50660 (N.D. Iowa Apr. 14, 2015).

The petitioner donated property (primarily clothing and household items) to various charitable organizations.  He attempted to keep many of the property gifts individually less than $250 on the belief that he didn't need a contemporaneous written acknowledgement from the charity.  For the contributions exceeding $500, the petitioner did not maintain written records and did not get an appraisal for gifts exceeding $5,000.  The IRS denied all of the claimed charitable deduction of $37,000 due to lack of substantiation and the court agreed.  The court, while not doubting that the gifts were made, held that the record was lacking to support the petitioners' statements and the petitioner maintained no written records and failed to have appraisals for the property gifts exceeding $5,000.  The petitioner didn't even maintain receipts for the under $250 gifts and had no evidence that the clothing gifted was "in good used condition or better."  The court upheld an accuracy-related penalty of 20 percent of the underpayment.  Kunkel v. Comr., T.C. Memo. 2015-71.

The debtors, a married couple, filed Chapter 12 bankruptcy on August 7, 2010 and submitted their reorganization plan on February 8, 2011.  The plan was approved with some modifications on March 18, 2011.  The confirmed plan contained a provision treating federal and state tax obligations attributable to the sale of farm assets occurring post-petition in 2010 and 2011 to be "classified, treated and discharged" as unsecured claims in accordance with 11 U.S.C. Sec. 1222(a)(2)(A) with the liability computed under the "marginal" method.  The debtors received a tax refund for the 2010 tax year, and asserted a refund of almost $6,000 for the 2011 tax year attributable to the sale of farm property.  The IRS claimed that the debtors owed over $66,000 of tax.  For the 2012 tax year, the IRS did not issue a $5,706 refund, but rather applied it to the tax liability that IRS was asserting for the 2011 tax year.  In May of 2013, the IRS demanded that the debtors pay the outstanding tax liability (including interest) of over $67,000.  The debtors did not pay the tax claim, but then filed a 2013 return claiming a refund of almost $7,000.  The IRS applied the amount of the refund to the outstanding tax liability and demanded payment in full of the outstanding tax liability of $65,431.85.  The debtors sought to have the IRS held in contempt for violation of the debtors' reorganization plan on the basis that 11 U.S.C. Sec. 1222(a)(2)(A) made the IRS claim an unsecured claim not entitled to priority and subject to discharge.  The court, after determining that it had jurisdiction, determined that the reorganization plan could not bind the IRS as to the post-petition tax claims.  While the law in the Eighth Circuit at the time the tax was incurred was that taxes attributable to the sale of farm assets (and IRS did not challenge that the taxes at issue were attributable to farm assets) were unsecured, non-priority claims subject to discharge, the court held that a U.S. Supreme Court opinion decided in May of 2012 had abrogated the Eighth Circuit opinion.  While the Eighth Circuit opinion was still applicable law at the time of plan confirmation and when the taxes at issue were incurred, the Court held that the U.S. Supreme Court opinion controlled. The court reached this conclusion by reasoning that the U.S. Supreme Court merely clarified what 11 U.S.C. Sec. 1222(a)(2)(A) had meant all along and, thus, had retroactive application.  The court said this was the case "regardless of when the Plan was confirmed."  In re Legassick, No. 10-02202, 2015 Bankr. LEXIS 1260 (Bankr. N.D. Iowa Apr. 13, 2015).   

The decedent hired the defendant to draft an amendment to the decedent's revocable living trust.  The amendment named the decedent's wife and children as beneficiaries.  However, after the decedent's death, two of the children as successor trustees petitioned the probate court to modify the trust amendment on the basis that it didn't carry out the decedent's wishes that the wife not be named as a beneficiary to the decedent's brokerage accounts as well as real and personal property.  The defendant admitted that the amendment did not conform to the decedent's wishes.  The trustees settled the probate court action with the decedent's wife, and sought to amend their complaint to add an allegation that the defendant owed the children a duty.  The trial court did not allow the complaint to be amended because the children lacked privity with the defendant as merely trust beneficiaries.  On appeal, the court reversed.  The court held that the defendant did owe a duty to beneficiaries such as the children at issue in the case that are all named beneficiaries in the trust amendment.  The court reasoned that doing so posed not risk that a random unnamed beneficiary would be making a claim against the defendant.  Paul v. Patton, No. H040646, 2015 Cal. App. LEXIS 304 (Cal. Ct. App. Apr. 9, 2015).

A Nebraska C corporation sold all of its assets.  The sale triggered a substantial gain.  The shareholders sold their shares to a third party upon the third party's agreement to pay the corporation's tax liability triggered by the asset sale.  However, the third party did not pay the tax liability.  The IRS sought to recover the unpaid tax liability from the shareholders.  The court allowed the IRS to recover the tax liability from the shareholders by virtue of transferee liability via the NE Uniform Fraudulent Conveyance Act (UFCA).  The court determined that the transfer was fraud as to the IRS and was for the benefit of the shareholders.  Unmatured tax liabilities constituted "claims" under the NE UFCA and that the shareholders were "transferees" under the NE UFTA.  Stuart, et al. v. Comr., 144 T.C. No. 12 (2015).

The petitioners, a married couple, built a residence on a lot that they had purchased.  They paid cash for the lot and for the residence.  A year later, the petitioners borrowed approximately $1.75 million from a bank, pledging the house as collateral.  The bank transferred the loan funds directly to the husband's wholly-owned C corporation.  The loan was later refinanced for $2.5 million with the residence securing the debt.  In 2008 and 2009, over $150,000 of interest was paid on the loan in each year.  In 2008, the petitioners deducted approximately $7,000 of interest paid on the loan as home mortgage interest, carrying the remaining $166,000 forward as investment interest to 2009.  In 2009, the petitioners deducted $60,000 of the interest paid as mortgage interest and $97,835 as an investment interest expense deduction.   The IRS denied in full the investment interest deduction and made an adjustment to the home mortgage interest deduction.  The court agreed with the IRS because the petitioners did not show that the funds were used for investing as required by Treas. Reg. Sec. 1.163-8T.   Simply depositing the funds in the C corporation's bank account was insufficient.  The corporation's general ledger account treated the mortgage proceeds as a personal loan to the corporation from the husband.  Minchem International, Inc. v. Comr., T.C. Memo. 2015-56.

The plaintiff in this case is a retired Republican Congressman from Michigan whose farm contained a 2.24-acre tract that the defendant claimed was a wetland.  The tract at issue was initially drained and tiled in 1964 and crops were grown on tract through at least 1982.  In early 1980s, drainage on the tract deteriorated.  After the enactment of the Swampbuster provisions contained in the 1985 Farm Bill, the NRCS made wetland determinations on the tract in 1988 and 1993 from which the plaintiff did not appeal.  The plaintiff executed Form AD-1026 in 2008 indicating that he was intending to plant crops on the land for which a highly erodible determination had not been made and conduct land drainage or associated activities that had not been evaluated by NRCS.  The plaintiff also executed another form that authorized the NRCS to conduct a wetland determination on the plaintiff’s property.  In 2008, a wetland determination was made and the plaintiff appealed by requesting reconsideration and mediation.  A mediation agreement was entered into in early 2009 under which the NRCS agreed to make a wetland delineation and allow the planting of crops in spring of 2009.  The NRCS conducted a delineation after spring crops were planted which resulted in a Final Technical Determination that the tract was converted wetland and that the plaintiff was ineligible for farm program benefits.  The plaintiff appealed to the National Appeals Division (NAD) which suspended the appeal while mediation continued.  The mediation failed and the appeal proceeded.  The NAD Hearing Officer upheld the NRCS determination and noted that the tract could not be determined to be prior converted wetland because it had wetland conditions as of Dec. 23, 1985.  The Hearing Officer also noted that plaintiff did not request a minimal effect determination before converting the wetland, but that such a request would have been pointless because USDA-NRCS maintained that the minimal effect exemption only applied where:  (1) there was a subsurface drain in an existing wetland that was necessary to drain adjacent cropland; or (2) there was the passage of a center pivot irrigation system through a wetland.  Neither of those facts were present.  The Deputy Director upheld the NAD Hearing Officer's decision on appeal.  The court upheld the NRCS interpretation of 16 U.S.C. §3822(b)(2)(D) that the status of the land as of December 23, 1985 was determinative of the issue irrespective of whether the was land drained and cropped prior to that date and merely reverted to wetland status as a result of deterioration to drainage work citing Horn Farms, Inc. v. Johanns, 397 F.3d 472 (7th Cir. 2005) and noted that the NRCS determination was entitled to Chevron deference.  On appeal, the court reversed.  The appellate court did uphold the trial court's determination that the "prior converted wetland" exception only applied where the conversion occurred before Dec. 23, 1985, and remained in farming status continuously thereafter and that the USDA was entitled to deference on that determination.  As for the minimal effects exemption, the court determined that USDA-NRCS acted arbitrarily be refusing to consider the plaintiff's "minimal-effect" exemption evidence.  The court determined that the NRCS position had no support in the law, reversed the trial court on this point, and remanded the case to the NRCS to determine whether the effect of the conversion to the surrounding wetland was "minimal."  The appellate court also reversed the trial court for upholding the NRCS position that to qualify for the minimal effect exemption a farmer must agree to a mitigation plan.  That, the court said, is not the law.  The appellate court also determined that the USDA's discretion to adjust applicable penalties was tied to six specific factors contained in 7 C.F.R. Sec. 12.4(c), and could not rely solely on the plaintiff's failure to mitigate.  The court also said that the USDA/FSA was bound by the guidance in its handbook a the time the plaintiff sought penalty reduction, and could not utilize the handbook position that it had created after the plaintiff requested a penalty reduction.       Maple Drive Farms Family Limited Partnership v. Vilsack,  No. 13-1091, 2015 U.S. App. LEXIS 5208 (6th Cir. Apr. 1, 2015), rev'g., No. 1:11-CV-692, 2012 U.S. Dist. LEXIS 176539 (W.D. Mich. Dec. 13, 2012).

In this Chapter 12 case, the debtor took over his father’s 3,000-acre crop and dairy farm upon the father’s retirement.  The debtor got divorced and, as a result, only had 1,000 crop acres at the petition date.   Because the row crop business suffered continual losses, the debtor sold some of the land to his son and began growing berries and raising pheasants for hunting.  The debtor became licensed by the state to acquire and release pheasants.  The pheasants were raised in a barn until fully grown. The incubation period of three weeks required the debtor to ensure that the birds were protected and remained disease-free.  The pheasants were ultimately released for hunts by customers on the debtor's land that had been placed in the CRP. Upon filing Chapter 12, the creditors argued that debtor was not engaged in farming but in a recreational activity.  The court determined that the debtor was engaged in farming under the totality of the circumstances citing  the dissent in Armstrong v. Corn Belt Bank, 812 F.2d 1024 (7th Cir. 1987), cert. den., 484 U.S. 925 (1987) and In re Maike, 77 B.R. 832 (Bankr. D. Kan. 1987).  However, the court determined that the amount of the debtor’s debt was not 50 percent or more related to a farming operation.  This was the result because the court concluded that the debt related to the debtor’s personal residence did not arise out of the farming operation, and there was no evidence presented that the mortgage secured the farm debt.   The court held that the case was to be dismissed or converted to a different chapter.   On appeal, however, the appellate court held that the residence debt, as non-farm related, should be excluded from aggregate debt - both the numerator and the denominator in the calculation set forth in 11 U.S.C. Sec. 101(18)(A).  However, the appellate court determined that the bankruptcy court correctly concluded that the residence debt was not farm-related debt.  Upon recalculation, 93 percent of the aggregate debt arose from a farming operation and satisfied the farm debt test of Chapter 12.  As for the corporation owning the CRP land on which the pheasant hunts were conducted, the court determined that simply having land in the CRP was insufficient to constitute a farming operation by itself without other income from farming.    In re Acee, No. 6:14-CV-0259 (LEK), 2015 U.S. Dist. LEXIS 41055 (N.D. N.Y. Mar. 31, 2015), aff'g and rev'g., No. 12-61632, 2013 Bankr. LEXIS 4789 (Bankr. N.D. N.Y. Nov. 12, 2013).

A third party bought cattle and shipped them to a feedyard for feeding and care until they were sold on the third party's behalf to various buyers. The feedyard deposited the sale proceeds with a creditor for application against its line of credit. The feedyard would then pay the third party an amount equal to the sales proceeds less the feed cost. Several payments to the third party occurred during the year immediately preceding the feedyard's bankruptcy filing during which time the feedyard was insolvent. The bankruptcy trustee motioned to recover the payments made to the third party within a year of the bankruptcy filing, and the bankruptcy court ruled in the trustee's favor. On appeal, the third party claimed that the proceeds were not a "transfer of an interest of the debtor in property" as required by 11 U.S.C. Sec. 547(b) because the funds were not the debtor's property but were held in trust by the feedyard as bailee for the third party. In addition, the third party claimed that the proceeds were not traceable to the funds transferred to the third party because the feedyard used the proceeds to pay its debts and, as such, the state (NE) "swollen assets" doctrine imposed a constructive trust on the funds. On appeal, the court determined that the third party was purportedly a bailor whose bailment property was misused by the debtor-bailee which led to the inability of the third party to recover under the bailment agreement alone. Accordingly, the court determined that genuine issues of material fact remained with respect to the existence of a bailment under NE law that would extend to the proceeds of the cattle sales and, thus, whether the proceeds were the debtor's property.  On remand, the bankruptcy court determined that the trustee was entitled to the proceeds as preferential transfers upon finding that the proceeds were the property of the feedlot.  The court reached that conclusion based on the fact that the creditor had a security interest in any funds in any of the feedyard's deposit accounts and could apply the funds against any loans or other of the feedlot's obligations.  The court also determined that neither the feedlot nor the creditor obtained the funds by fraud or misrepresentation and, thus, a constructive trust could not be imposed.  Because there was no conversion, the "swollen assets" doctrine was inapplicable.  The transactions also did not occur in the ordinary course of business. In re Big Drive Cattle, L.L.C. v. Overcash, No. BK11-42415, 2015 Bankr. LEXIS 991 (Bankr. D. Neb. Mar. 30, 2015), on remand from, No. 4:14CV3064, 2014 U.S. Dist. LEXIS 80853 (D. Neb. Jun. 13, 2014).  

The defendant insurance company filed this declaratory judgment action seeking a determination that it's "motor vehicle" exclusion in a farm insurance policy applied to bar coverage for the plaintiff, a farmer that had purchased the policy for coverage for his farm.  The plaintiff had been sued by a third party for injuries that the third party's granddaughter sustained while driving the plaintiff's all-terrain vehicle (ATV).   The plaintiff owned a farm on which he has cattle.   The plaintiff used the ATV daily to check the cattle and fences.  The ATV was designed to be used off-road.  The plaintiff's 14 year old daughter and her 14 year old friend (the third party's granddaughter) asked to use the ATV, but the plaintiff refused to give permission because he was not going to be home.  However, the girls found the keys and took the ATV for a ride on a public road resulting in the injuries to the granddaughter.  The third party sued the plaintiff for negligence, and the plaintiff asked the defendant to provide the defense and pay the third party's claim.  The policy excluded coverage for bodily injury arising from the use of a "motor vehicle."   However, the exclusionary clause did not apply to farm implements operated on public roads or "mobile equipment."       The trial court ruled in favor of the defendant, finding that the ATV did not qualify as either a farm implement or mobile equipment.  On appeal, the court reversed determining that the policy language of "mobile equipment" could reasonably be construed to provide coverage for the ATV accident.  Partin, et al. v. Georgia Farm Bureau Mutual Insurance Company, No. A14A2025, 2015 Ga. App. LEXIS 213 (Ga. Ct. App. Mar. 27, 2015). 

The IRS has issued another item of guidance stating that Form 1099 need not be issued for income from freight services.  Treas. Reg. 1.6041-3(c) exempts payments for "freight services" from the general requirement for payors to issue Form 1099 to independent contractors and others with which they do business.  Thus, trucking companies need not issue Form 1099s to owner-operators that are under lease for freight hauling services.  The same rule applies to farmers that make payments in connection with the trucking or hauling of livestock, grain or other farm products - no Form 1099 is required.  CCM 20151002F (Jun. 6, 2014).   

The plaintiff contacted the defendant, a veterinary hospital, about the plaintiff's horse used in jumping event about possible treatment.  The horse required a "minimally invasive" surgical procedure which the defendant performed.  The horse, however, developed laminitis, and lived after further extensive treatment.  But, the horse could no longer participate in jumping activities.  The plaintiff sued for fraudulent misrepresentation concerning the services provided and the lack of appropriate equipment available to perform the required surgery.  During surgery, the anesthetist told the veterinarian performing the surgery that "we have to speed it up" and after the surgery stated, "the operation was too long."  No other parties involved in the surgery made any statements at all.  The court dismissed the case because the complaint failed to allege that any false statements were made.  Likewise the court dismissed the claim based on premises liability because missing equipment did not pose a "danger" to others coming onto the premises and the horse did not qualify as a business invitee.  The corporate veil piercing claim was also dismissed because the veterinarian's LLC was not formed for any improper purpose, but for estate planning purposes. Salas v. Wellington Equine Associates, et al., No. 9:14-CV-81483-Rosenberg/Brannon, 2015 U.S. Dist. LEXIS 38477 (S.D. Fla. Mar. 26, 2015).

In 2000, a group of doctors formed an LLC to provide diagnostic testing services to patients in two counties.  They had a post-withdrawal non-compete agreement prepared that included a provision protecting member investments by restricting competition of former members in the two counties in which the LLC operated.  The provision specified that "each member shall...refrain from competing with the Company" within the two designated counties.  About five years later, one of the doctors began constructing a sleep laboratory and was going to operate it in the designated counties.  The LLC informed the doctor that such operation would violate the LLC agreement, so he withdrew from the LLC and operated the sleep lab.  The LLC sued the doctor for breach of the non-compete agreement.  The trial court ruled for the former member, holding that the agreement only applied to current or active members.  On appeal, the court affirmed, holding that the agreement no longer applied to a former member.  The court also held that the withdrawn doctor did not breach any implied duty of good faith and fair dealing and that the LLC had foregone any breach of fiduciary duty claim.  Grants Pass Imaging & Diagnostic Center, LLC, et al. v. Machini, No. A152437 (Ore. Ct. App. Mar. 25, 2015).    

The plaintiff transferred farmland to her son in 1988, reserving a life estate in the 266 acres which entitled her to the rental income of $5,332 annually from the property for her life.  In 1992, the son leased a portion of the farm (including some of the life estate property) to another farmer for $8,200 annual rent, with that rent amount going to the son.  The plaintiff had moved off of the farm by the time she applied for Medicaid in 2011.  The state (ND) Medicaid agency denied the application, claiming that she should be receiving a portion of the $8,200 annual rent.  Due to that, her countable assets exceeded the limit to qualify for Medicaid.  On appeal, the trial court affirmed the agency decision.  On further review, the appellate court affirmed.  While the plaintiff claimed that the rent amounted to an annual gift to the son, the court disagreed.  The court noted that if a gift was intended, the petitioner should have released the life estate and transferred title to the property to her son.  Bleick v. North Dakota Department of Human Services, 861 N.W.2d 138 (N.D. 2015).

The petitioners, a married couple, came into millions of dollars when the husband's family baking company founded by the petitioner's grandfather was sold.  The husband had started working for the business after dropping out of college.  He used the proceeds from the buyout to get involved in raising Arabian horses.  His venture, which is still ongoing, proved overwhelmingly unsuccessful, losing millions of dollars from 2004 through 2007, the years under review.  The IRS denied the losses under the hobby loss rules.  The court weighed the nine factors (not all with the same weight) and ruled for the petitioners.  The court note that the petitioners had made various business moves designed to facilitate the profitability of the horse activity, including borrowing against non-farm investments to channel funds into the horse activity.  The petitioner also sold many investments that resulted in a multi-million dollar capital gain to try to generate funds for the horse activity.  Based primarily on these events, the court determined that the factors weighed in the petitioners' favor and the losses were not limited by the hobby loss rules.  Metz v. Comr., T.C. Memo. 2015-54. 

The debtors filed Chapter 7 in late 2009 and the creditor, a bank, filed four claims that were secured by the debtors' residence.  The bank knew that the debtors received a discharge in early 2010.  The debtors' Chapter 7 case was then converted to Chapter 12  and new payment terms were worked out resulting in a direct assignment of proceeds from the debtors' dairy farm (i.e., milk checks) to the bank along with new interest rates and maturity dates.  The debtors made the required payments for about two months until the checks no longer met the amount required under the new payment terms.  Almost two years later, the bank started foreclosure proceedings.  The debtors filed a contempt motion, claiming that the bank's conduct violated the discharge injunction of 11 U.S.C. Sec. 524(a)(2).  The debtors claimed that the milk payments were involuntary payments.  The bankruptcy court ruled for the bank.  On appeal, the court affirmed.  The court noted that the bank's conduct was exempt from the discharge injunction because the agreement between the parties - (1) involved a situation where the bank retained a security interest in the debtors' principal residence; (2) was entered into in the ordinary course of business between the creditor and debtor; and (3) was limited to seeking or obtaining periodic payments associated the bank's security interest in the residence (11 U.S.C. Sec. 524(j)).  In re Teal, No. 4:14-CV-15, 2015 U.S. Dist. LEXIS 32315 (E.D. Tenn. Mar. 17, 2015).  

The plaintiff was watching her daughter participate in a high school soccer match at the defendant's facility.  After the match, while leaning on a gate to sign the school's required sing-out form for the daughter, the plaintiff fell approximately five feet and injured her ribs and arm.  The plaintiff sued for damages and the defendant asserted the state (TX) recreational use statute as a defense which would limit liability to intentional acts or gross negligence.  The defendant claimed that attending a soccer match was a recreational use covered by the statute.  The court disagreed on the basis that attendance at a soccer match was not a recreational use contemplated by the statute.  University of Texas at Arlington v. Williams, No. 13-0338, 2015 Tex. LEXIS 268 (Tex. Sup. Ct. Mar. 20, 2015).

The plaintiff, a group opposed to wind power stations in residential areas, opposed an Ohio project due to it's projected impact on the Indiana bat, an endangered species.  The U.S. Fish and Wildlife service approved the project's application for an incidental take permit under the Endangered Species Act, and the plaintiff challenged that approval.  The court determined that the approval was appropriate because the permit was granted on the condition that the project lower blade speeds during particular months and be limited to 26 bat takings over a five-year period. The court granted summary judgment for the government on the basis that the Administrative Procedures Act, the Endangered Species Act and the National Environmental Policy Act had not been violated.  The court noted that the government's mitigation requirements for the project fully offset the impact of bat takings and that the court didn't have to determine if the plan was the maximum that could be practically implemented, as the plaintiff claimed was required.  Union Neighbors United, Inc. v. Jewell, No. 13-01435 (RJL), 2015 U.S. Dist. LEXIS 33664 (D. D.C. Mar. 18, 2015).