Thursday, May 28, 2020

Sue on it, embrace it

Originally published by David Coale.

The original party to an oilfield-services agreement assigned its rights to Motis Energy. Motis sued on the agreement, lost, and sought to avoid the agreement’s attorneys-fee provision. The Fifth Circuit ruled against it: “Motis is a nonparty to the Agreement. But Motis embraced the Agreement by seeking to enforce its terms. Motis’s argument–that it did not embrace the entirety of the Agreement because it was assigned the right to Motis-DI’s claims, not the entire contract–lacks merit. When a plaintiff sues to enforce a contract to which it was not a party, the Supreme Court of Texas has held, as have we, that the plaintiff subjects itself to the entirety of the contract terms.” Motis Energy LLC v. SWN Prod. Co. LLC, No. 19-20495 (April 28, 2020) (unpublished) (emphasis added).

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Wednesday, May 27, 2020

Bankruptcy – The New Normal?

Originally published by Lori-Ann Craig.

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At the beginning of May, the Administrative Office of the U.S. Courts announced that new bankruptcy filings decreased by 1.1 percent for the 12-month period ending March 31, 2020 as compared with last year. This decline in the number of new bankruptcy petitions is following a downward trend established in the period after the Great Recession when there were almost 1.6 million filings in the year ending September 2010. Unfortunately, that trend might be over, thanks to the coronavirus pandemic that has crippled the economy not only in the United States but also worldwide. The pandemic has affected all business sectors from local bars and restaurants to retail shops to local governments. Already, several major retailers have filed for bankruptcy including Stage Stores, Neiman Marcus, JC Penney, and Pier 1. Restaurant chains like Garden Fresh Restaurants and Steak ‘n Shake have opted to shut operations completely or close a number of their stores. Even car rental giant, Hertz, has recently filed for bankruptcy protection. Sadly, there are also a large number of small businesses have made the difficult decision and quietly closed their doors permanently.

Of course, not all bankruptcies result in the business shuttering its doors for good. Some companies use bankruptcy as a means to turn their business around by reorganizing or restructuring their finances to continue operating rather than liquidating all of their assets. The different types of bankruptcy cases can be found in Bankruptcy Code, codified in Title 11 of the United States Code. The Code provides for six main types: Chapter 7 (“Liquidation”), Chapter 9 (“Adjustment of Debts of a Municipality”), Chapter 11 (“Reorganization”), Chapter 12 (“Adjustment of Debts of a Family Farmer or Fisherman With Regular Annual Income”), Chapter 13 (“Adjustment of Debts of an Individual With Regular Income”), and Chapter 15 (“Ancillary and Other Cross-Border Cases”). Although individuals are able to file for bankruptcy on their own without the assistance of an attorney, they need to keep in mind that bankruptcy is a complicated and complex process. Nevertheless, there are plenty of good resources available that can help the self-represented litigant through the bankruptcy. Note that these resources are not substitutes for the advice of a lawyer, but they can offer some good information and guidance. Here area few:

The Basics of Bankruptcy

United States Courts – “Bankruptcy Basics”

TexasLawHelp – “Bankruptcy: An Overview”

FindLaw – “Bankruptcy Basics”

Nolo – “Bankruptcy Basics”

Bankruptcy Forms

United States District & Bankruptcy Court for Southern District of Texas

United States Bankruptcy Court for Northern District of Texas

United States Courts

Legal Aid

Lone Star Legal Aid

Legal Aid of NorthWest Texas

Texas RioGrande Legal Aid

As stay-at-home orders are lifted and businesses reopen, more people will venture out and patronize businesses that might have been closed for weeks or even months. The recovery from the pandemic may not be as quick as some want or need, but we have to continue to hope that bankruptcies and a sagging economy will not become the new normal.

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Tips on Taking Good Remote Depositions From a Veteran Court Reporter

Originally published by Julie Jordan.


Good court reporters have seen and worked through every scenario – mumblers, whisperers, screamers, paper rattlers, cross-talkers – you name it. So, after 32 years, I thought I’d seen it all. And then came COVID-19.

What to do? Wait for things to get back to normal or find a way to serve my clients who wanted to move forward? I decided to investigate and discovered Zoom couldn’t be easier to use. It provides the most “real” experience of the video conferencing and software programs I’ve seen.

Better than live depositions, I can consistently and clearly see the face of the witness, as well as the exhibits on-screen as they’re being read. We’re able to record video of all speakers or the traditional witness-only view. There’s no travel, no wasting time and I’m able to produce the same great product as in a live deposition.

So, I was ready. All I had to do was wait for and encourage my clients to give it a shot. And eventually some of you did. Here are the best practices we’ve discovered together.

Do a Trial Run

Most reporters offer you the opportunity to do a trial run. Take them up on this. It gives you a chance to learn the technology in a stress-free environment. You’ll see how exhibits are posted, who can see what and just how visible the witness is. You’ll learn to toggle from gallery to speaker view – and most importantly, you’ll see how obvious it is if someone is trying to listen to or read something other than what’s being presented. In other words, how difficult it is to cheat.

Label and organize your exhibits ahead of the deposition

Exhibits are easy to share – even if you’re trying to surprise the witness. To keep your momentum and pace, consider organizing your exhibits, labeling them 1-100 and sharing them prior to the deposition with counsel and your reporter. This allows you to reference exhibits by number and keep moving. If surprise is part of your strategy, you can add and share those specific documents during the deposition.

Invest in quality internet and hardwire to your router

Our whole lives are wireless these days. Depositions are the time to plug back in. To ensure the best sound and video quality, I recommend attorneys and witnesses hardwire to their routers and use the computer audio on Zoom (with phone audio as back-up). You’ll see mixed opinions on this, especially from the early weeks of remote depositions. However, trial and error has shown me that computer audio produces the best record and video without interference or a lag. What you don’t want are witnesses roaming around the backyard on sketchy cell service. Believe me, it’s happened.

Avoid unseen influence

Attorneys fret about counsel coaching witnesses or texting them during remote depositions. Before we begin, I ask all parties if anyone is in the room with them or listening in that I can’t see on the screen. This, at least, puts it on the record that the witness is alone and not being coached. Doubters worry witnesses can receive texts or chats. My office disables the private chat feature, so chats are visible to all. Zoom records chats, so they’re part of the recording. You can see the witness (and their body posture) clear as day. They’re also on the record and you can easily ask them directly again, if something seems out of sorts.

Spend the money on a videographer

If this is the type of case you would usually video, be sure to do so on a Zoom deposition. The videographer is recording everything – each individual participant, the speaker, the court reporter, the onscreen exhibits – and it’s all stored in the cloud and can be synced to the transcript. Zoom video doesn’t do that.

Don’t wait for the old “normal”

The country is divided on so many issues, including remote depositions. Many attorneys are hoping live depositions will return soon…and they may. But that doesn’t mean court reporters are eager (or willing) to appear live. The thought of being in a small conference room with everyone wearing masks (or worse, not wearing masks) will keep a lot of reporters away. Prior to COVID-19, Texas was experiencing a court reporter shortage, making it harder for firms to cover your depositions. This pandemic will make that worse. Waiting for the restrictions to lift will put more stress on the shortage and delay depositions even more.

These are just a few of the tips I’ve learned over the past two months. There are many more and I’m happy to share and help you get up to speed. Who knows what our future holds? Several months ago, I certainly didn’t think it was this. But there is a way forward.

Photo by: Bill Oxford on Unsplash

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Free family law essentials CLE available to attorneys living near six Texas cities

Originally published by Amy Starnes.

Attorneys living within a 100-mile radius of Beaumont, Waco, Laredo, El Paso, Weatherford, or Lubbock and who are willing to pick up two pro bono cases from the state’s legal aid providers are eligible for a free 4.5-hour online CLE on “Family Law Essentials.”

The CLE—Family Law Essentials: Giving Back to Your Community—is made possible by the State Bar’s Legal Access Division, the Pro Bono Committee of the Family Law Section, Legal Aid of NorthWest Texas, Lone Star Legal Aid, and Texas RioGrande Legal Aid. It is offered free to attorneys who are willing to take two pro bono cases from one of the legal aid providers listed within on year of the date of the course.

The deadline to sign up and complete the course is June 30. The course is approved by the Texas Board of Legal Specialization for certification and recertification requirements for attorneys and legal assistants in civil trial law, civil appellate law, and family law.

For more information or to register, email Meredith Warren, program coordinator in the Legal Access Division, at meredith.warren@texasbar.com.

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Recent Case Demonstrates Limitations of Tax Court Jurisdiction

Originally published by Matthew Roberts.

 

 

 

 

Pope v. Comm’r, T.C. Memo. 2020-62 | May 18, 2020 | Lauber, J. | Dkt. No. 3411-19

Short Summary The IRS disallowed Taxpayer’s withholding credits of $7,856.  In conjunction with the disallowance, the IRS issued a notice of deficiency for 2017 of “$.00.”  Although the notice erroneously referred to adjusting Taxpayer’s earned income tax credit, Taxpayer had not claimed the earned income tax credit on his return.  After Taxpayer filed a petition with the Tax Court, the IRS moved to dismiss the case for lack of jurisdiction under I.R.C. § 6213.  On these facts, the Tax Court granted the IRS’ motion.

Key Issue Whether the Tax Court has jurisdiction to redetermine an adjustment to withholding credits under I.R.C. § 31.

Primary Holdings:

  • Adjustments in a notice of deficiency to withholding credits under I.R.C. § 31 lie outside the Tax Court’s deficiency jurisdiction.
  • Because the correct tax for the year and the tax shown on the return are both determined “without regard to credit under section 31,” withholding credits (and overstatements thereof) are necessarily excluded from “deficiencies” as defined by I.R.C. § 6211(a)(1). And because the Tax Court’s jurisdiction relevant to this case was limited to “redetermination of the deficiency” determined by the IRS, it lacked jurisdiction to redetermine an adjustment to withholding credits.

Key Points of Law:

  • This Court is a court of limited jurisdiction and may exercise jurisdiction only to the extent expressly authorized by Congress. Naftel v. Comm’r, 85 T.C. 527, 529 (1985); Breman v. Comm’r, 66 T.C. 61, 66 (1976).  “Jurisdiction must be shown affirmatively, and petitioner, as the party invoking our jurisdiction * * *, bears the burden of proving that we have jurisdiction over * * * [the] case.”  David Dung Le, M.D., Inc. v. Comm’r, 114 T.C. 268, 270 (2000), aff’d, 22 F. App’x 837 (9th Cir. 2001).
  • I.R.C. § 6212(a) authorizes the IRS to send the taxpayer a notice of deficiency, and I.R.C. § 6213(a) grants this Court jurisdiction to make a “redetermination of the deficiency” determined by the IRS. A “deficiency” is defined as the amount by which the tax imposed for the year (i.e., the correct amount of tax) exceeds “the amount shown as the tax by the taxpayer upon his return” plus any “amounts previously assessed * * * as a deficiency.”  I.R.C. § 6211(a)(1).  I.R.C. § 6211(b)(1) in turn provides that the “tax imposed * * * and the tax shown on the return shall both be determined * * * without regard to credit under section 31.”  I.R.C. § 31, captioned “Tax withheld on wages,” provides:  “The amount withheld as tax [by an employer] under chapter 24 shall be allowed to the recipient of the income as a credit against the [income] tax.”  I.R.C. § 31(a)(1).
  • Because the correct tax for the year and the tax shown on the return are both determined “without regard to the credit under section 31,” withholding credits (and overstatements thereof) are necessarily excluded from “deficiencies” as defined by I.R.C. § 6211(a)(1). And because our jurisdiction as relevant here is limited to “redetermination of the deficiency” determined by the IRS, we lack jurisdiction to determine an adjustment to withholding credits.  See Bregin v. Comm’r, 74 T.C. 1097, 1102 (1980).
  • That withholding credit adjustments lie outside our deficiency jurisdiction is confirmed by I.R.C. § 6201(a)(3). It provides that if an “overstatement of the credit for income tax withheld” appears on a tax return, then the amount of the overstatement “may be assessed by the Secretary in the same manner as in the case of a mathematical or clerical error.”    Adjustments for mathematical and clerical errors typically are assessed summarily outside deficiency procedures.  I.R.C. § 6213(b)(1).

Insight:  The Pope case demonstrates the fundamental principle that the Tax Court is a court of limited jurisdiction.  Its jurisdiction is therefore limited to that expressly provided by Congress.

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Record Prove-up 101

Originally published by David Coale.

A helpful summary of the requirements for proving up a mandamus record appears in In re Gentry“Documents become sworn copies when they are attached to an affidavit or to an unsworn declaration conforming to section 132.001 of the Texas Government Code. The affidavit or unsworn declaration must affirmatively show it is based on relator’s personal knowledge. The affidavit or unsworn declaration is insufficient unless the statements in it are direct and unequivocal and perjury can be assigned to them. An affidavit or unsworn declaration would comply with the rule if it stated, under penalty of perjury, that the affiant has personal knowledge that the copies of the documents in the appendix are true and correct copies of the originals.” No. 05-19-01283-CV (

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Shell Corporations

Originally published by A. M..

Shell Corporation Shell corporations are businesses that are created to hold funds and manage financial transactions of other entities. These corporations do not have substantial assets, employees, or active operations, and they do not provide customers with products or services. Entities can use shell corporations as legal tools for the following: For business transactions  To […]

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