Department of Justice asks Supreme Court not to intervene in Trump classified records fight

Department of Justice asks Supreme Court not to intervene in Trump classified records fight

WASHINGTON — The Department of Justice urged the Supreme Court in a filing Tuesday not to weigh in on an ongoing fight with former President Donald Trump over classified documents, arguing that Trump “has not even attempted to explain” how he is harmed by an appellate court decision not to allow a special master to […]

Read More –>

Texas Tax Round Up (September 2022)

Texas Tax Round Up | September 2022

Hiya, folks! Nice for y’all to come visit again at the Texas Tax Round Up! We got another installment chock-full of Texas tax action, so let’s get started!

Court Cases

Sales and Use Tax

Manufacturing Exemption

Hegar v. Tex. Westmoreland Coal Co., Case 21-1007 (Tex. Sept. 30, 2022)—In this case, the Texas Supreme Court denied the Comptroller’s petition for review, leaving the decision of the Third Court of Appeals in favor of the taxpayer in place.  The Court of Appeals had held that equipment used to break apart lignite coal from a coal formation qualified for the manufacturing exemption from sales and use tax.[1] The Court of Appeals disregarded the Comptroller’s argument that the manufacturing exemption didn’t apply because the equipment was used on real property to create tangible personal property, holding that there was no basis in the statute for any requirement that an input to the manufacturing process had to be tangible personal property.

Franchise Tax

Apportionment

Citgo Petroleum Corporation v. Hegar, 21-0997 (Tex. Sept. 30, 2022)—The Texas Supreme Court denied the taxpayer’s petition for review in this case, so the decision of the Third Court of Appeals in favor of the Comptroller remains the law of the land. The Court of Appeals had held that only the net proceeds of sales of commodity futures contracts and options on commodity futures contracts could be included in the calculation of the taxpayer’s apportionment factor for purpose of calculating Texas franchise tax.

Rules

Adopted Rules

Collections

34 Tex. Admin. Code § 3.16 (Delinquent Taxpayer Financial Records; Information Exchange) (published at 47 Tex. Reg. 5339 (Sept. 2, 2022))—This rule implements House Bill (H.B.) 1258, 87th Leg., R.S. (2021), which requires financial institutions to provide data to the Comptroller quarterly to facilitate the matching of names of delinquent taxpayers with the names of account holders.

Proposed Rules

Sales and Use Tax

34 Tex. Admin. Code § 3.334 (Local Sales and Use Taxes) (published at 47 Tex. Reg. 6158 (Sept. 23, 2022))—Here we have the latest development in the ongoing saga regarding the sourcing of Texas local sales and use taxes, particularly with regard to orders placed over the internet.

In its 2018 decision in South Dakota v. Wayfair, the U.S. Supreme Court decided that states could impose tax collection requirements on out-of-state sellers lacking physical presence in the state as long as the requirements didn’t impose an undue burden on interstate commerce. In light of this decision, The Comptroller determined that the then-existing Rule 3.334 was inadequate to explain Texas’ local sales and use tax consummation statutes.[2]

However, the Comptroller’s proposed amendments to the rule in January 2020 met with backlash from cities and businesses. A public hearing was held on February 4, 2020, and the Ways and Means Committee of the Texas House of Representatives held an interim hearing to discuss the proposed amendments on February 5, 2020.[3]

Nevertheless, the Comptroller pressed ahead and finalized the amendments in May 2020. Shortly thereafter, the Comptroller amended the rule in 2020, the Cities of Round Rock, Coppell, DeSoto, Humble, and Carrolton sued, challenging the amendments’ validity.[4] Ultimately, a district court in Travis Count at least partially agreed with the cities, finding that the Comptroller failed to substantially comply with procedural requirements for notice of proposed rule.[5] The court remanded the rule to give the comptroller the opportunity to either revise or readopt it through established procedure.[6]

Thus, the Comptroller is now reissuing proposed Rule 3.334 with fuller explanation of the proposed rulemaking.[7]

At the heart of the debate over proposed Rule 3.334 is the sourcing of internet sales. The proposed rule would define the term “place of business of the seller” as “an established outlet, office, or location operated by a seller for the purpose of receiving orders for taxable items from persons other than employees, independent contractors, and natural persons affiliated with the seller.”[8] The location would have to be staffed by one or more sales personnel and these sales personnel would have to accept at least three orders of taxable items at the facility during the calendar year.[9]  The term “place of business of the seller” wouldn’t include “a computer server, Internet protocol address, domain name, website, or software application.”[10]

This change in the definition of “place of business of the seller” places out in proposed Rule 3.334(b)(5), which would provide that “[a]n order that is not received by a salesperson is received at a location that is not a place of business of the seller. Examples are orders received by a computer server through a shopping cart software program and orders received by an automated telephone ordering system.”[11]  This would cause orders that were placed on the internet that were not fulfilled at a place of business of the seller in Texas to be sourced to the location of the purchaser.[12] Currently, some taxpayers have taken the position such orders are received at a place of business of seller, which would mean that these sales would be sourced to that place of business.

Notable Additions to the State Tax Automated Research (“STAR”) System

Sales and Use Tax

Enterprise Zones

Comptroller Decision No. 117,512 (2022)—The ALJ found that a taxpayer that operated a petrochemical production facility that was designated as a Project as part of the Texas Enterprise Zone Program (the “Program”) was not entitled to a refund of sales and use taxes because not enough employees of the Project were residents of an Enterprise Zone.

The Program requires at least 35% of the new permanent jobs of the Project be held by residents of an Enterprise Zone or by economically disadvantaged individuals.[13] An area automatically qualifies for designation as an Enterprise Zone if the area is “designated by the federal government as a Federal Renewal Community, a Federal Empowerment Zone, or a Federal Enterprise Community, including any developable area approved by the federal agency responsible for making that designation.”[14]

The taxpayer identified several of the Project’s employees as residents of the Gulf Opportunity Zone (“GO Zone”). The GO Zone was created pursuant to the Gulf Opportunity Zone Act (Act), signed into law by President George W. Bush in 2005 in the wake of Hurricanes Katrina and Rita. The Act designated certain areas as “disaster areas” affected by the hurricanes, created the boundaries of the GO Zone, and established tax benefits for businesses and individuals in the GO Zone. The GO Zone was not designated by the federal government as a Renewal Community, Empowerment Zone, or Enterprise Community. Congress did not designate the GO Zone as a Renewal Community, Empowerment Zone, or Enterprise Community, and no federal agency designated or approved the GO Zone as such.

Thus, the ALJ found that the GO Zone wasn’t an Enterprise Zone and that the Project failed to meet the employee residency requirement.

Medical Devices

STAR Accession No. 202208009L (Aug. 15, 2022)—In this private letter ruling, the Comptroller determined that a device used by medical providers in the diagnostic evaluation and monitoring of patients experiencing unexplained symptoms such as dizziness, palpitations, chest pain, and shortness of breath was a therapeutic device and not a prosthetic device or orthopedic appliance.[15] Therefore, the device was exempt from sales and use tax when sold to a patient with a prescription, but was taxable when sold to a medical provider for use in a nontaxable medical service unless and exemption applied.[16] According to the Comptroller, the device:

  • was not a prosthetic device, because it didn’t replace a missing part of the body or perform the function of a vital organ, could be removed as soon as the medical provider obtained a diagnosis from the device, and only had a battery life of 3 years;[17]
  • was not an orthopedic appliance, because it wasn’t used to treat a deformity or disease of the skeleton, joint, or spine;[18] and
  • was a therapeutic device, because it is used as a diagnostic medical tool designed for use in patients with heart conditions.[19]

The Comptroller also ruled that the person selling the device couldn’t accept resale certificates from medical providers because the medical providers were using the devices to perform a nontaxable service.[20]  However, an exemption certificate could be accepted from a medical provider that qualified as an exempt organization under Tex. Tax Code §§ 151.309 (Governmental Entities) or 151.310 (Religious, Educational, and Public Service Organizations).

Credit Reporting Services

STAR Accession No. 202208011L (Aug. 22, 2022)—In this memo to Audit, Tax Policy states that it’s Comptroller policy that credit ratings of legal entities are subject to sales and use tax as a credit reporting service, while credit ratings of debt obligations aren’t taxable.[21]

The analysis hinges on the definition of a “credit reporting service” as “the assembly and furnishing of credit history or information relating to any person.”[22] According to the Code Construction Act, which specifically applies to Title 2 of the Texas Tax Code (which is where the state sales and use tax is found), a “person” includes a “corporation, organization, government or governmental subdivision or agency, business trust, estate, trust, partnership, association, and any other legal entity.”[23]

Thus, the Comptroller takes the position that while the credit rating of legal entity involves the assembly of credit information of a person within the meaning of the definition of a credit reporting service, the credit rating of a debt obligation doesn’t because a debt obligation is not a “person.”

Motor Vehicle Sales, Rental and Use Tax

Apportioned Registration

Comptroller’s Decision No. 117,430, 117,431 (2022)—The ALJ found that a taxpayer who purchased two trucks, registered them with non-apportioned plates, but then later obtained apportioned registration for the vehicles wasn’t entitled to a refund of the motor vehicle sales tax that he had paid on those vehicles.[24]

The ALJ noted Comptroller policy that the registration of a vehicle with non-apportioned plates creates a presumption of intrastate use that must be rebutted to prove the exemption. For instance, this presumption could be rebutted with evidence demonstrating that a vehicle was not operated prior to obtaining apportioned registration. The taxpayer did not produce any such evidence.

The ALJ also rejected the taxpayer’s claims of detrimental reliance on advice from Comptroller personnel, finding that the taxpayer didn’t show that any such advice was provided in writing in a private letter ruling or that any specific advice was incorrect.[25]

Gross Receipts Rental Tax

STAR Accession No. 202207023L (July 15, 2022)—In this private letter ruling, the Comptroller determined that a car-sharing app that enabled vehicle owners to list their personal vehicles as available for sharing to others was not responsible for collecting and remitting gross receipts rental taxes.[26]

For purposes of the motor vehicle sales, rental and use tax, a “rental” means in relevant part “an agreement by the owner of a motor vehicle to give for not longer than 180 days the exclusive use of that vehicle to another for consideration . . . .”[27]  The “owner of a motor vehicle” means “a person named in the certificate of title as the owner of the vehicle . . . or . . . a person who has the exclusive use of a motor vehicle by reason of a rental and holds the vehicle for re-rental.”[28]

Under the facts presented in this ruling, car-sharing app was not the owner of the vehicles being rented, because it was not on the certificate of title of the vehicles. Nevertheless, the people who used the app to rent their motor vehicles to others would have to collect and remit gross receipts rental tax as required under Tex. Tax Code § 152.045 (Collection of Tax on Gross Rental Receipts).

Franchise Tax

Forfeiture of Corporate Privileges / Officer Liability

Comptroller’s Decision No. 117,522 (2022)—The ALJ found that an officer of a corporation was liable for an International Fuel Tax Agreement assessment that the Comptroller had made against the corporation for the periods when the corporation’s corporate privileges were been forfeited due failure to file a franchise tax report.[29]

The officer didn’t argue, and therefore didn’t establish, that the debt was created or incurred over his objection or without his knowledge and that the exercise of reasonable diligence to become acquainted with the affairs of the corporation wouldn’t have revealed the intention to create the debt—which would constitute an exception to officer and director liability.[30]

The ALJ dismissed the officer’s argument that the corporation’s liability for the assessment was in error by noting that a person who is assessed personally as the officer or director of a corporation may not challenge the underlying corporate liability that is administratively final.

Mixed Beverage Taxes

Depletion Analysis

Comptroller’s Decision Nos. 117,651, 117,652 (2022)—The ALJ determined that there was no error in auditors presuming that all alcohol purchased by a bar during an audit period was sold during that period when the bar didn’t provide any documentation establishing opening and closing inventory.[31] The ALJ further found that allegations “that the auditors consumed alcohol during the pour observation, that the pour test observation sheet was forged, and that the lead auditor attempted to bully and intimidate [one of the bar’s owners] do not present justiciable issues for the ALJ to consider in the contested case hearing.”

 

********

Freeman Law International Tax Symposium

Readers may be interested in the Freeman Law International Tax Symposium scheduled to take place virtually on October 20 and 21, 2022.  Attendees will qualify for CLE, CPE, and CE and the slate of presenters includes well-recognized speakers and panelists, such as the IRS Commissioner, a prior Chief Counsel of the IRS, a former Acting Assistant Attorney General of the U.S. Department of Justice Tax Division, and many others in government and private practice.

To Register for the Freeman Law International Tax Symposium, please visit www.its2022.freemanlaw.com.

 

********

 

[1] Tangible personal property directly used or consumed in or during the actual manufacturing, processing, or fabrication of tangible personal property for ultimate sale qualifies for the manufacturing exemption if the use or consumption of the property is necessary or essential to the manufacturing, processing, or fabrication operation and directly makes or causes a physical change to the product being manufactured, processed, or fabricated for ultimate sale.  Tex. Tax Code § 151.318(a)(2).

 

[2] 47 Tex. Reg. 6158.

 

[3] See id. at 6158-6159; Hearing on Interim Charges, Ways & Means, Tex. House of Representatives (Feb 5, 2020).

 

[4] Id. at 6159.

 

[5] Id.

 

[6] Id.

 

[7] Id.

 

[8] Id. at 6159.

 

[9] Id.

 

[10] Id.

 

[11] Id. at 6161.

 

[12] Id.

 

[13] Tex. Gov’t Code §§ 2303.003(6), 2303.402.

 

[14] Tex. Gov’t Code § 2303.101(2).

 

[15] A therapeutic device is a “device that is designed to alleviate pain or for use during the treatment or cure of human sickness, disease, suffering, or deformity.”  34 Tex. Admin. Code § 3.284(a)(14) (Drugs, Medicines, Medical Equipment, and Devices (Tax Code §151.313)).

 

[16] Tex. Tax Code § 151.313(a)(6) (Health Care Supplies); 34 Tex. Admin. Code § 3.284(d)(11)(C).

 

[17] See id. § 3.284(a)(13) (defining a “prosthetic device” as “an item that is artificial and replaces a missing part of the body, performs the function of a vital organ or appendage of the human body, or is permanently implanted in the body.”).

 

[18] See id. § 3.284(a)(12) (defining an “orthopedic appliance” as an “appliance or device designed specifically for use in the correction or prevention of human deformities, defects, or chronic diseases of the skeleton, joints, or spine.”).

 

[19] See id. § 3.284(a)(14).

 

[20] See Tex. Tax Code § 151.006(c) (“Sale for Resale”) (“A sale for resale does not include the sale of tangible personal property or a taxable service to a purchaser who acquires the property or service for the purpose of performing a service not listed as a taxable service . . . .”).

 

[21] A credit reporting service are a taxable service. See Tex. Tax Code 151.0101(a)(7) (“Taxable Services”).

 

[22] Tex. Tax Code § 151.0034 (Credit Reporting Service) (emphasis added).

 

[23] See Tex. Gov’t Code §§ 311.002 (Application), 311.005(2) (General Definitions); Tex. Tax Code § 101.002 (Construction of Code).

 

[24] A tax is 6.25% is imposed on the retail sale of a motor vehicle in the state. Tex. Tax Code § 152.021(a) (Retail Sales Tax). However, certain interstate motor vehicles are exempt from this tax. Id. § 152.089 (Exempt Vehicles). An “interstate motor vehicle” is “a motor vehicle that is operated in this state and another state or country and for which registration fees could be apportioned if the motor vehicle were registered in a state or province of a country that is a member of the International Registration Plan.” Id.

 

[25] See 34 Tex. Admin. Code § 3.10(c) (Taxpayer Bill of Rights):

Detrimental Reliance Policy. The comptroller will give relief to a taxpayer who follows erroneous advice given to the taxpayer by an agency employee. The taxpayer, however, must have provided complete and accurate information to the agency employee. . . .

(1) Unless otherwise provided by this section, a taxpayer must affirmatively prove and provide records as requested by the comptroller to show that it meets all four parts of the following test:

(A) the substance of the information or advice and its direct communication to the taxpayer must be in writing in accordance with §3.1 of this title;

(B) the taxpayer followed the information or advice;

(C) the taxpayer gave sufficient information to have resulted in correct advice and did not misrepresent information or withhold or conceal information that would affect the advice; and

(D) the taxpayer has suffered, or will suffer, harm based on the erroneous advice unless the comptroller provides relief to the taxpayer.

 

[26] Gross rental receipts from the rental of a motor vehicle are taxed at a rate of 10% if the rental is for 30 days or less or at a rate of 6.25% if the rental is for longer than 30 days. Tex. Tax Code § 152.026(a), (b) (Tax on Gross Rental Receipts).

 

[27] Tex. Tax Code § 152.001(5)(A) (Definitions).

 

[28] Id. § 152.001(9).

 

[29] A corporation’s failure to file a franchise tax report can result in the forfeiture of corporation’s corporate privileges.  Tex. Tax Code § 171.251 (Forfeiture of Corporate Privileges).  One consequence of the forfeiture of a corporation’s corporate privileges is that each of the corporation’s directors and officers becomes liable for each debt of the corporation created after the date on which the report is due and before corporate privileges are revived. Id. § 171.255 (Liability of Director and Officers).

 

[30] See id. § 171.255(c).

 

[31] Although not cited by the ALJ, see 34 Tex. Admin. Code §§ 3.1001(o)(3)             (Mixed Beverage Gross Receipts Tax) (“In the event records are not made available, the comptroller will presume all alcohol purchased was sold.”), 3.1002(c)(3) (Mixed Beverage Sales Tax) (potentially making the presumption in 34 Tex. Admin. Code § 3.1001(o)(3) applicable to the mixed beverage sales tax).

The post Texas Tax Round Up | September 2022 appeared first on Freeman Law.

Read More –>

Examining the Fallout from a U.S. Supreme Court Bankruptcy Ruling a Year Later: City of Chicago v. Fulton

In City of Chicago v. Fulton, the U.S. Supreme Court held that creditors do not violate the automatic bankruptcy stay when they merely retain property they took before the bankruptcy petition was filed. Now, as this decision has been legal precedent for over a year, stakeholders are beginning to learn how courts are interpreting and applying the Supreme Court’s decision.

The Supreme Court’s Holding in City of Chicago v. Fulton

In Fulton, the city of Chicago seized vehicles of various persons, for unpaid parking tickets. Several of those persons (unrelated) later filed for bankruptcy protection. When each debtor filed for bankruptcy, an automatic stay went into effect. In those cases, the debtors requested the city return their car. The city refused, and each of the debtors filed a contested motion claiming Chicago violated the automatic stay by refusing to return the car. In bankruptcy cases, the automatic stay requires that creditors refrain from taking any further actions to collect on their debts once a bankruptcy petition is filed, among other things.

Several similar cases were consolidated on appeal. In overturning the bankruptcy courts and the Court of Appeals, the Supreme Court ruled in favor of the city of Chicago relying upon a literal reading of federal bankruptcy laws to hold that retaining property that was seized prior to a bankruptcy filing does not constitute an “act” that would violate an automatic stay. As such, the city of Chicago was not immediately obligated to return the debtor’s car. Writing in a separate concurrence, Justice Sonia Sotomayor noted the grave impacts the decision could have on debtors and called on policymakers to institute rules that could alleviate the situation.

Courts have now been left to apply the Supreme Court’s holding in Fulton under various factual scenarios. Debtors continue to file motions alleging violations of automatic stays. In considering the Fulton precedent, courts have had to determine whether the case applies to different factual situations. Even if courts are uncomfortable with what seemed like a harsh ruling (without a car, debtors may not be able to get to work to improve their financial situation), federal bankruptcy courts are obligated to follow Supreme Court precedent.

Courts Have Largely Applied Fulton Without Distinguishing It

Fulton has been applied by courts in numerous instances beyond those involving impounded cars. For example, the Ninth Circuit applied Fulton in allowing a creditor to maintain garnishments of the debtor’s bank accounts that were made prior to the bankruptcy filing. The appeals court used the same logic that the creditor was not required to reverse the status quo that existed right before the automatic stay took effect.

In most Bankruptcy Court cases since the Supreme Court’s holding in Fulton, judges have applied the holding with little question. After all, the Supreme Court’s unanimous decision announced practically a bright-line rule and left little to be doubted.

The Outer Limits of Fulton

However, there have been some outer limits on how far courts have been willing to take the holding in Fulton. For example, one bankruptcy court specifically noted that the Supreme Court in Fulton did not disturb another line of cases that may require someone to take an affirmative action to prevent something from happening. An omission after the automatic stay has gone into effect could be the same as an overt act when it comes to violating the automatic stay.

In that case, a debtor had filed an adversary proceeding (lawsuit within a bankruptcy case) against an attorney who represented a trust that bought the debtor’s property in a foreclosure auction. The debtor filed for bankruptcy protection six days before a previously scheduled eviction proceeding. Between the time of the bankruptcy petition date and the eviction, the debtor’s counsel contacted the attorney for the trust to attempt to repurchase the property. Although the attorney for the trust made one phone call, he did not delay the eviction before it happened post petition. The debtor asserted in the adversary proceeding that the attorney violated the automatic stay by failing to stop the eviction. The attorney argued that the Supreme Court’s holding in Fulton meant that he did not need to do anything to halt the eviction since it was already scheduled.

The bankruptcy court granted a motion for summary judgment in favor of the trust’s attorney, but it disagreed with attorney’s argument that he did not have to do anything based on Fulton. The court distinguished between the failure to take an affirmative action that would maintain the status quo and the failure to take an action that would change the status quo. According to the court, there are still instances in which someone would have an affirmative duty to act in order to avoid violating the automatic stay. Here, the attorney for the trust was not the person with that affirmative duty. Nonetheless, the court cautioned about reading Fulton too broadly to disturb another long line of cases that remains valid law.

The Practical Implications of Fulton

Fulton is one of the Supreme Court’s most consequential bankruptcy decisions in recent years. Applying the “most natural reading” of the federal bankruptcy code, the Supreme Court’s decision makes a debtors’ timing for filing for bankruptcy protection even more important. Debtors may be quicker to file for bankruptcy in situations where they might lose property, while creditors may be less willing to continue to work with debtors, knowing that the debtors may be on the verge of bankruptcy.

If anything, the Supreme Court’s decision in Fulton would encourage a creditor to become more aggressive in repossessing or seizing property when it appears the debtor may be nearing bankruptcy proceedings. Creditors would seemingly have an easier time maintaining the status quo than having to defend an action they took after the bankruptcy petition was filed. Given an expected surge in bankruptcy filings as a potential fresh recession nears, creditors should proactively evaluate accounts to determine whether they should take action. Nonetheless, given the consequences of violating the automatic stay, creditors should consult with an attorney in any close cases.

The post Examining the Fallout from a U.S. Supreme Court Bankruptcy Ruling a Year Later: City of Chicago v. Fulton appeared first on MehaffyWeber.

Read More –>

Credit For Marital Home Mortgage Payments

If you are going through a divorce, do not pay expenses for your soon-to-be-ex-wife, such as marital home mortgage payments, and expect the court to give you credit for it later.

The following case study example is loosely based on the facts from a recently released Appellate Court decision in Nebraska.

The Facts

Jack and Jill decided to get divorced. They had two children. Jack had worked during the marriage and was the main income earner. Jill worked part-time but, for the most part, spent her time raising the children.

When they separated, they were able to work out the short-term financial details themselves. Jack would move out and the kids would stay with Jill in the marital home.

Jill would start working a bit more. Jack kept making the mortgage payment, but didn’t pay temporary child support or temporary alimony. Jill never asked the court for any temporary support. Jack and Jill agreed they would continue on like this until the house sold.

Eventually the case went to trial. At trial, Jill asked for spousal support (also known as alimony). She also asked for child support. At the time of trial, the marital home hadn’t been sold.

At trial, Jack asked the court to give him credit for all the marital home mortgage payments that he had been making from the time of separation until the trial. He asked that future alimony be reduced by the amount of mortgage payments he had previously made.

The Ruling

The court ruled that Jack would not be given credit for making the mortgage payments.

Jack and Jill had made an informal agreement. When the agreement was made there was no indication that Jack would stop making the mortgage payments at a specific time, other than when the house sold.

Furthermore, Jack did not pay any temporary child support or alimony and this was due, in part, because he was making the mortgage payment.

Parting Words

Jack wasn’t happy with the ruling, but maybe he shouldn’t have been all that upset. Remember, if Jack had been making court-ordered temporary child support and alimony payments, it very well could be that his court-ordered payments might have been more than the mortgage.

Your divorce attorney will almost never be able to tell you, with precision, what a trial judge will do. Your divorce lawyer can give you educated guesses, but in the end, it is important to remember that trial judges can, and do, make surprising rulings.

Before you enter into an “agreement” with the opposing party, discuss the terms thoroughly with your divorce attorney. Don’t forget to tell your lawyer all of your assumptions regarding the agreement.

Your divorce attorney should be asking you questions about the agreement, but it is your job as a client to fill in the blanks, as well. Communication with your divorce lawyer is essential.

Divorce Lawyers For Men:

Contact Cordell & Cordell

The post Credit For Marital Home Mortgage Payments appeared first on Dads Divorce.

Read More –>

Who owns rights to store oil in an underground salt cavern?

Last June the Corpus Christi Court of Appeals decided that the right to store oil in a salt cavern belongs to the surface owner. In Myers-Woodward, LLC v. Underground Services Markham, LLC, et al., No. 13-20-00172-CV, the court addressed a dispute between Myers-Woodward, which owned the surface estate and a royalty on minerals, including salt, in a tract in which Underground Services owned the salt. Underground Services mined and sold salt by solution-mining from a salt cavern under the land. Myers-Woodward disputed how Underground calculated its royalties on the salt. Underground also asserted that, as owner of the salt, it has the right to use the resulting salt cavern to store hydrocarbons. The court ruled in favor of Underground on its method of determining the royalties owed, but it ruled in favor of Myers-Underwood on the right to use the resulting salt cavern, holding that Myers-Underwood held the storage rights, a part of its rights as owner of the surface estate.

Underground cited Mapco, Inc. v. Carter, 808 S.W.2d 262 (Tex.App.–Beaumont 1991), rev’d on other grounds 817 S.W.2d 686 (Tex 1991), in support of its claim to storage rights. Mapco has often been cited as lending uncertainty to the issue of whether the surface owner owns the pore space under its land. The Beaumont court in Mapco, without citing any authority, held that the mineral owner had storage rights for underground storage facilities. After reviewing other authority, the Corpus Christi court concluded that, contrary to Mapco, “the well-recognized, decisional law states that the mineral estate owner owns the minerals but not the subsurface. … Therefore, we decline to follow Mapco in this case.”

Storage rights have become a more important issue recently with the advent of CO2 sequestration projects in Texas. Although the court did not cite Lightning Oil v. Anadarko, Lightning would seem to support its conclusion as well.

Read More –>

City of Dallas Owes $33+ Million for Drilling Permit Denials

City of Dallas Owes $33+ Million for Drilling Permit Denials

Co-author Trevor Lawhorn

If you have ever wondered how many ways a cocktail of stupidity*, treachery and feckless government can inflict financial harm on the undeserving, including the citizens the feckless government leaders are supposed to serve, see City of Dallas v. Trinity E. Energy, LLC.

 Facts

In 2008 during the Barnett Shale drilling boom, the City of Dallas issued an RFP to lease several thousand acres owned by the City. Trinity won the bid and agreed with the City that two additional tracts (the “Radio Tower Tract” and the “Gun Club Tract”) would be included in the lease, but only as drill site locations. Trinity paid a $19 million bonus for the lease.

Trinity submitted applications for special use permits (SUPs) from the City for the two tracts and a a private tract. The applications were filed correctly and in accordance with applicable laws. Pulling a Lucy on Trinity’s Charlie Brown, after a lengthy delay the City Plan Commission denied the applications. No other drill sites were feasible for various reasons. Trinity lost its appeal of the SUP denials to the city Council.

The City then amended its gas drilling ordinance to impose restrictions that effectively precluded drilling anywhere on the lease. The lease expired and the interest reverted to the City, never to be drilled.

Procedure

Trinity sued the City on several causes of action. The jury found the City committed statutory fraud and negligent misrepresentation and awarded damages to Trinity.

Over the City’s objection, the trial court submitted a jury question of the fair market value of Trinity’s property before and after denial of the SUPs. The jury found the FMV before denial was $33,639,000 and zero after. The trial court determined that the City committed a regulatory taking by failing to approve the SUPs and awarded Trinity $33,639,000.  The City appealed.

Regulatory taking

The Texas Constitution prohibits the taking, damaging or destroying of private property for public use without adequate compensation.  Inverse condemnation is a cause of action against a governmental defendant to recover the value of property which has been taken in fact by the governmental defendant, even though no formal exercise of the power of eminent domain has been attempted by the taking agency.  To plead a claim for inverse condemnation, the claimant must allege an intentional government act that resulted in the uncompensated taking of his property.

The City’s arguments:

  • There was insufficient evidence to support the finding that the City’s action constituted a regulatory taking. Trinity still had beneficial use of its property because it had other drill sites from which it could access some of the leased acreage. Trinity produced evidence that the best way to maximize the value of its interest was to use the three tracts as drill sites. This was why the sites were included in the lease.
  • Trinity could have drilled on other tracts in Irving and Farmers Branch to access its acreage. The City produced no evidence that those drill sites provided reasonable or economically viable access to Trinity’s minerals. Trinity showed that those sites would require complex drilling and excessively long well bores.
  • Trinity could have sought SUPs for different sites. But there was no evidence that Trinity would have been able to obtain SUPs for other sites that would have permitted Trinity to reasonably and economically develop its interests.

 The court of appeals affirmed the judgment.

 Sufficiency of expert testimony

 The City argued that Trinity’s expert’s testimony on market value was unreliable and therefore the evidence was insufficient to support the jury’s findings. In short, the court found that the expert’s testimony regarding value using the “proposed units” method was sufficient.

 The court also found that the expert’s use of the “comparable sales” method was sufficient. Testimony regarding comparable sales from other counties was appropriate because those sales included acreage with similar thickness as the City acreage. Comparable sales need not be in the immediate vicinity of the subject land, so long as they meet the similarity test.

Finally, the court found that the expert’s “discounted cash-flow” analysis was sufficiently certain. The expert relied on estimated future production, future prices, and estimated costs of production to calculate the net income for the property. He used publicly available price forecasts for his calculations.  While there was conflicting evidence regarding whether Trinity’s interests would be productive, resolving those conflicts was for the jury.

Your musical interlude.

* This is an opinion of course. We can’t certify that the then-City Council members who voted against granting the SUPs have IQ’s of two digits. Maybe they were driven by misinformed and misplaced ideology. Either way, $36 Million would fill a lot of potholes in South Dallas. Can’t blame Mayor Rawlings; he warned them.

Read More –>

Texas Correction Deed Statute Revisited … Again

Texas Correction Deed Statute Revisited … Again

You might recall this post on Broadway National Bank, Trustee v. Yates Energy Corporation. We now have Yates Energy Corporation et al v. Broadway National Bank, Trustee, the court of appeals’ ruling after remand. Recall the result from the Supreme Court: Execution of the 2013 Amended Correction Mineral Deed by the parties to the original 2005 Mineral Deed and the 2006 Correction Mineral Deed, without joinder of the current owners of the minerals, complied with Texas Property Code §5.029. The question remaining was whether the current owners were bona fide purchases for value without notice. Skipping all sorts of rulings on side issues, the result is that current owner Yates was not a BFP.  Other appellants survived to fight another day.

Yates

Yates et al acquired their interests in the minerals before execution of the 2013 deed. But in 2006 Broadway sent Yates recorded copies of the 2006 deed which recited that the 2005 deed had conveyed interests to John in fee simple by oversight, that the conveyance should have been limited to a life estate, and that specific individuals owned remainder interests.

Yates’ concession that it received the 2006 deed before it acquired its interest satisfied Broadway Bank’s threshold summary judgment burden that Yates had received actual notice of the claims. The burden shifted to Yates to present evidence raising a genuine issue of material fact about whether it had actual notice. Yates argued:

  • Actual notice is a question of fact not of law. The court concluded that was no room for reasonable minds to differ about whether Yates received actual notice.
  • Actual notice would not defeat its BFP defense because the 2006 deed was ineffective and unenforceable and notified Yates only of an alleged mistake that had never been proved or properly corrected. The court declined to hold that an invalid correction instrument is wholly ineffective to impart notice on the subsequent purchaser. The validity of the remainderman’s claimed interest was irrelevant to whether Yates had notice of that claim. Yates did not raise a genuine issue of material fact about whether the deed’s factual recitations were “sufficient to excite the suspicions of a person of ordinary prudence”.
  • Only a correction instrument that complies with §5.029 could defeat a BFP defense. Not so; a purchaser who acquires property with constructive or actual notice of a potential third party claim cannot successfully assert a BFP defense. It didn’t matter that the recording of the 2006 deed was insufficient as constructive notice because it was outside of Yates’ chain of title. Yates received actual notice.
  • John as holder of a life estate could sell the property in fee simple as long as he held the proceeds for the remaindermen. But John did not have unlimited power to dispose of the fee estate and there was no evidence that John held the proceeds for the remainderman.

Broadway conclusively showed that Yates received actual notice of the remainderman’s claim and Yates presented no evidence that raised a genuine issue of material fact. The court affirmed the probate court judgment that Yates was not entitled to protection as a BFP.

Appellants Jalapeno, Curry Glassell, ACG3, Glassell Nonoperating, and EOG.

While Yates could pass no greater interest than it owned, that general rule applies only if the grantee fails to show himself to be a BFP. There was no evidence that Jalapeno and Curry Glassell received actual notice of the facts in the 2006 deed. A subsequent purchaser is only deemed to have constructive notice of recorded documents within its direct chain of title. Jalapeño and Corey Glassell’s chain would not have included any instruments executed by Broadway after it conveyed the property to John. Broadway did not show as a matter of law that Jalapeno or Curry Glassell had constructive notice of the remainderman’s claims.

Broadway and ACG3 and Glassell Nonoperating all moved for summary judgment. The evidence did not conclusively establish either the BFP defenses or that those appellants had actual or constructive knowledge of the remainderman’s claims. Summary judgment for Broadway against ACG3 and Glassell Nonoperating was reversed.

Broadway and EOG filed competing MSJ’s. The evidence did not conclusively establish that EOG had actual knowledge of the 2006 deed when it acquired its interest in the minerals. A fact issue remained on that subject. An affidavit from an EOG landman asserting that EOG acquired John’s interest without notice was not conclusive proof of the fact. Summary judgment against EOG was reversed.

Result: Yates is out.  Its back to the probate court for the others. More likely, it’s on to the Supreme Court for another round.

Your musical interlude. Some things never change.

Read More –>

Picture

Santa Clara Minor's Counsel, GAL, Scam Moves to Alameda , Orange and LA  Counties

          Elise Mitchell Real Estate Bribery Scheme 

Caliornia’s State Auditor issued a report on lawyers appointed for children during their parent’s divorce after complaints from Marin and Sacramento Counties showed lawyers padding thier bills and gouging parents and taxpayers for work that did little for the best interests of children. 

Minor’s counsel appointments are the gateway appointment to scams lawyers run in connection with family law matters. A divorce or cusotdy case where lawyers claim ” high conflict ” between parents will see a judge quickly appoint a favored lawyer as Minor’s Counsel in a case. The appointment provides lawyers with immunituy to issue reports and advocate for children. In  reality the appointments serve as permission to bill and bill families until there is no money left in a community property estate subject to division. 

Parents are forced to go into debt in order to pay lawyers to tell them how to feed, cloth, educate and support thier children. Minor’s counsel are not required to make financial or other disclosures so they often sit in cases where they own businesses with other lawyers, or the judge. 

It was said that the auditor uncovered the scheme in Marin and Sacramento that had been running as designed by Tani Cantil Sakauye  who sat in family court before the Third District Court of Appeal . She was  appointed as the California Supreme Court Judge in 2011, where she not only did nothing to curb the appointments, she moved thorugh local bar associations and clubs in San Jose , Monterey, LA and Orange County to expand them.

​ In Santa Clara she worked directly with former stte bar Chief Trial Counsel Jim Towery and his wife Karyn Sinunu to expand the corrupt practice of profiting from harming kids and robbing families. 

Minor’s Counsel Bring in Funding for Foster Care and CPS 

In Santa Clara, Monerey, LA and Orange County , the small group of lawyers acting as minor’s counsel stand as look out for lawyers involved in real estate schemes, charity fraud and the lucrative practice of private judging. 

Lawyers are vetted by how well they will be team players. Then with a few hours of training, they are appointment ready, If they incite conflict suffienctly, they can remain in a case for a decade until the children age out of the court’s jurisdciton. 

Elise Mitchell is a Black female attorney in Santa Clara, When the court got pressure for the lack of diversity on the Minor’s Counsel pandel, Mitchell was brougth in my Jim Towery and groomed for appointments after she drew in a case where she represented a NFL football player. 

Mitchell then got conencted to the domestic violence scam connected to charties including Women SV, and Judge Cindy Hendrickson who replaced Judge Persky on the bench. Hendrickson and Mitchell’s ties to local Catholic Schools saw them grooming cases to send kids to foster care to earn the county more money and net them kickbacks in real estate and dark money. 

As Mitchell suceeeded she was appointed in cases where lawyers playing for the private judge team would defend her minconduct and criminality., Mitchell was awarded a secret real estate deal in Alameda County where she was charged with expanding the enterprise and rewarded with kickbacks for getting Heather Allan, Jessica Huey , BJ Fadem  Eva Martel or Nicole Ford appointed in a case where she represents a client seeking to use the courts to abuse a former spouse or parent of a child shared in common. 

Accounting records accidentially leaked by Mitchell’s office, run by her children. show such payments from a grandma, Rosalie Black Baker , and others and how those payments  used to bribe judges in Santa Clara and Alameda. The payments also bribe cops, CPS workers and therapists  who will recommend children are placed in foster care for the right pay off price. 

Mitchell has also assured payments to lawyers appointed in LA and Orange County as an escalation of minor’s counsel and cusotdy experts appointments see  judges sending  kids to foster care or charity reunificaiton camps that kick back referral fees to minor’s counsel, district attoney election campaigns and judges through real estate schemes.  

Payments  documented between Mitchell and Orange County mnior’s counsel Cherly Edgar and Tracy Willis show a pattern that reveals  judges who are in on the bribery scam and benefit from real esate kickbacks.

Payments to Orange County Minor’s Counsel Steve Dragna  and Kelly Irwin along with payments to Anaheim police officer Mark Irwin connect the dots of minor’s counsel and Disney lawyers who paid off Judge Cowan in the probate case linked to Walt Disney’s grandson where Judge Cowan victim shamed Bradford Lund for having Down Syndrome after conserving Lund and denying him the ability to manage the money left to him by his grandfather, Walt Disney.  Like Britney Spears Lund has been locked deep inside LA probate court in a horrifically corrupt  conservatorship. The unhappiest place on earth and just down the street from Disneyland where Disney’s wealth was built. 

Minor’s Counsel Appointments Force Parents to  Lucrative Private Judge Cases at JAMS 

Attorney Ed Navarro has been dubbed the children’s assasssin in Los Angeles County. Ed is regualrly appointed in cases with Dennis Wasser , Lisa Meyer , Christopher Melcher and Ron Brot. . Navarro brings in custody experts and therapists associated with Family Bridges and Overcoming Barriers.. He is also linked to psycologists from UCLA and UC Irvine to  discredit the mental health and sobreity of parents and their children. 

Navarro is known for making the pressure so great, and billing hundreds of thousands of dollars to apply pressure to get parents to agree to use a private judge, with no questions asked. 

Los Angeles County District Attonrey George Gascon  has been seen getting payments in crytocurrency and real estate kickbacks to look the other way when middle class and high asset family law litigants use private judging to cover up fraud and child abuse. 

Noise from parents losing cusotdy of their children has grown louder and has been linked to the noise in the Lund and Spears Conservartorships. As a result reporters from the Los Anegeles Times, NBC, Pro Publica and Wall Street Journal have begun asking questions and making records requests about California’s family courts.

​These media requests are said to be reponsible for Chief Justice Tani Cantil Sakauye’s sudden annoucement to resign  as the minor’s counsel and private judge scams in California’s family courts begin to be revealed. 

Read More –>

Picture

Love for LA Dodgers Exposes Sheriff Deputies in Second Bribery Scheme Connected to Appeals Court

Santa Clara Sheriff Sgt. Manual Rey Connects to Ghost Knowledge Account in  Family Court Files 

 When Sargent Rey’s digital footprint connected to the LA Dogers  and former Family Court Public Information Officer Joe Macaluso,  he exposed a Ghost Knowledge Account funded through cryprocurrency transactions  by divorce lawyers, judges, and court appointed witnesses. These accounts reveal Santa Clara Sheriff Department Gangs operating through a” 7:30 Club” in Santa Clara County, and police officer associations throughout the state  running a money laundering and bribery scheme that involves the   rigging divorce and cusotdy cases up through the Court of Appeal. 

It was the linking of Rey and Swenson’s digital footprints that exposed the state wide operation weaving throughout California’s courts and law enforcement agencies in Los Angeles, Orange County, Santa Clara, Los Gatos, Gilroy and Morgan Hill. 

Digital footprints exposing these Santa Clara Sheriff gangs connected to family court cases and the Sixth District Court of Appeal are being scrapped and uploaded to an investigative database. That database is being sold through Bay Area News Group reporters and shareholders in the private companies known as JAMS, ADR Services and Siganture Resolutions. Businesses that conduct 90% of California’s mandatory arbitration and private judging cases. 

Read More –>

WHEN JUDGES THREATEN YOU WITH CONTEMPT OF COURT



“CONTEMPT . . . IS PRESUMED NOT TO EXIST.” In NO. WR-91, 424-01, IN THE CRIMINAL COURT OF APPEALS AT AUSTIN, …

source