Justia Business Law Opinion Summaries

Plaintiff sued defendants, the City and the Zoning Board, for violations of the Fifth Amendment Takings Clause and for denying her procedural due process and equal protection under the Fourteenth Amendment. The Board had decided to revoke the permits it had given her to operate her Sno Cone hut at a certain intersection. The court held that the district court was justified in dismissing plaintiff's equal protection claim where plaintiff failed to state a viable equal protection claim. The court held, however, that the district court erred in dismissing plaintiff's procedural due process claim where plaintiff's property right in the business permits the Board granted to her merited the protection of procedural due process before the Board revoked it. View "Bowlby v. City of Aberdeen, Mississippi, et al." on Justia Law

These consolidated cases sought judicial review of notices of final partnership administrative adjustment (FPAA) issued to Bemont and BPB. Following the review of the district court, the government appealed the ruling on the partnerships' motion for partial summary judgment disallowing the 40% valuation misstatement penalty, and the ruling post trial holding that the FPAA issued to Bemont for the 2001 tax year was time-barred. The partnerships appealed the district court's judgment upholding the imposition of the 20% substantial understatement and negligence penalties. The court reversed the judgment of the district court that the FPAA as to the 2001 tax year was untimely; affirmed the judgment of the district court in all other respects including disallowing the 40% valuation misstatement penalty and upholding the 20% negligence penalty for both 2001 and 2002. View "Bemont Investments, L.L.C., et al. v. United States" on Justia Law

This case arose when Mirant, an energy company, sought to expand its European operations by acquiring nine power islands from General Electric. When the power island deal fell through, Mirant made payments pursuant to a guaranty and soon thereafter sought bankruptcy protection. Mirant, as debtor-in-possession, sued Commerzbank and other lenders in bankruptcy court to avoid the guaranty and to recover the funds Mirant paid pursuant to the guaranty. After Mirant's bankruptcy plan was confirmed MCAR, plaintiff, substituted into the case for Mirant. Commerzbank and other lenders, defendants, filed a motion to dismiss based on Rules 12(b)(1) and 12(b)(6). The district court subsequently denied defendants' motion to dismiss based on plaintiff's alleged lack of standing. Thereafter, the district court granted summary judgment for defendants. Both sides appealed. While the court agreed that the district court correctly determined that there was standing to bring the avoidance claim, the court vacated the judgment of dismissal because the district court erroneously applied Georgia state law rather than New York state law to the avoidance claim.

Karen Cook was appointed receiver over the assets of a number of related corporations and individuals, who the SEC alleged violated multiple federal securities laws. Cook discovered that before the SEC filed its civil complaint, the corporate entities involved had made charitable contributions to the American Cancer Society (ACS). Cook moved to recover the donations on behalf of the receivership, arguing that they qualified as fraudulent transfers under Texas' Uniform Fraudulent Transfer Act (TUFTA), Tex. Bus. & Co. Code 24.005(a). The court held that the receiver's attempt to liken the scheme in question to a "Ponzi-like fraud," and therefore reduce her burden to proving "presumed intent to defraud," failed for lack of evidence. Accordingly, the court reversed the judgment of the district court.

Plaintiff sued his employer and one of its owners, defendant, for violating the minimum wage standards under the Fair Labor Standards Act (FLSA), 29 U.S.C. 206(a). Plaintiff argued that as a member of this Texas limited liability corporation, defendant was an "employer" under the FLSA and was therefore personally liable for the employer's violations. The district court granted summary judgment to defendant. Applying the economic reality test to defendant, the court reaffirmed the district court's conclusion that no reasonable jury could have found him to be an employer where defendant was simply not sufficiently involved in the operation of the club. Accordingly, the court affirmed the judgment.

In a bankruptcy adversary proceeding, Capco brought claims of fraud and various business torts against Ryder, Tana, TRT, and Tristone. The claims arose out of a transaction in which Capco purchased from Tana certain oil and gas reserves located in the Gulf of Mexico (the Properties). The bankruptcy court granted summary judgment in favor of Ryder, Tana, TRT, and Tristone and dismissed the claims. The court held that Capco failed to present evidence to demonstrate a genuine issue of material fact about whether Ryder was contracted to provide an independent reevaluation of the Properties and advice at the meeting regarding Capco's decision to close on the Properties. The court also held that because the purchase and sale agreement contained a clear intent to disclaim reliance, the lower courts correctly held that Capco was unable to claim fraudulent inducement based on the prior representations of Tana, TRT, and Tristone. Accordingly, the judgment was affirmed.

IFS and 17 affiliated organizations (collectively, Interamericas) were debtors in a series of Chapter 7 cases. This appeal arose from eight collective adversary proceedings, which a trustee of IFS brought against appellants for avoidance of fraudulent transfers under Chapter 5 of the Bankruptcy Code and Chapter 24 of the Texas Business and Commerce Code. Appellants appealed the district court's affirmance of the bankruptcy court judgment of over $3 million in favor of the trustee. The court held that control could be sufficient to show ownership of what was ultimately a fact-based inquiry that would vary according to the peculiar circumstances of each case. The court also held that the lower courts' findings of ownership were not clearly erroneous and, moreover, comported with precedent and the court's holding today where IFS exercised control over the accounts at issue such that it had de facto ownership over the accounts, as well as the funds contained. The court further held that the record supported the lower courts' findings of fraudulent transfer. Specifically, IFS faced pending lawsuits and mounting debts just as it liquidated nearly all Interamericas' assets and evidence that IFS operated as a fraudulent enterprise at the time of transfer supported this finding of fraudulent intent. Accordingly, the judgment was affirmed.

Plaintiffs-Appellants James and Sandra Lindquist sued the City of Pasadena alleging the City violated their state and federal constitutional rights by exercising "unbridled discretion" in connection with the denial of a zoning waiver. Plaintiffs operated a used-car dealership in Pasadena. In 2003, the Pasadena City Council enacted an ordinance adopting licensing standards for used-car dealers criminalizing the sale of used cars without a license and imposing a number of requirements that dealers must meet as a condition of receiving a license. Two of those requirements were the subject of this appeal: (1) new license locations are required to be a minimum of one-thousand feet from any existing license; and (2) no new licenses could be issued within 150 feet of a residential area. After the ordinance was passed, Plaintiffs considered purchasing two lots to expand their existing dealership. City officials told them that neither lot qualified for a license, but Plaintiffs purchased the lots anyway. Plaintiffs later learned that their competitors purchased a nearby lot, had applied for a license, and were denied for different reasons than those given to Plaintiffs. On appeal, the Fifth Circuit reversed the district court's ruling that Plaintiffs' equal protection claim failed to state a claim for relief. On remand, the district court granted summary judgment to the City after determining Plaintiffs failed to create a genuine issue of fact with respect to their equal protection claim. Upon review, the Fifth Circuit concluded that Plaintiffs could not show that the City Council acted irrationally when it denied their license appeal. Furthermore, the Court found that Plaintiffs failed to preserve their unbridled discretion claim for further review. As such, the Court affirmed the district court's grant of summary judgment in favor of the City.

This appeal was from the grant of summary judgment in a diversity case in which plaintiff was a limited partner in a partnership that received a loan from defendant. The dispute stemmed from a limited guaranty agreement between the Bank and plaintiffs, who became a guarantor of the loan received by the partnership. At issue was whether the guaranty agreement only required payment from the guarantor once the balance of the outstanding loan was $500,000 or less. The district court ruled that the payment was immediately due regardless of whether the balance of the loan had been reduced to $500,000. Because the court found the language of the guaranty agreement ambiguous, the court held that the district court erred by accepting the Bank's interpretation and granting summary judgment. Therefore, the court vacated the summary judgment and remanded to the district court. Further, the court affirmed the district court's denial of the motion for leave to file a supplemental claim. Finally, the court vacated the order awarding attorney's fees.

This case stemmed from petitioners', the sole shareholders of two Subchapter S corporations, India Music and HRI, engagement in the business of importing and selling music, making those entities related parties under Internal Revenue Code, 26 U.S.C. 267. At issue was whether the Commissioner effected a change in a taxpayer's method of accounting for the purposes of section 481 when he required that taxpayer to postpone a deduction from gross income pursuant to section 267(a)(2). The court held that because it concluded that a section 267(a)(2) disallowance constituted a change in a taxpayer's method of accounting under section 481, the court affirmed the judgment of the Tax Court.