Friday, March 19, 2021

Personal Liability of Corporate Officers for Black Lung Benefits Affirmed Even as Veil of Insurer Not Pierced

 

Personal Liability of Corporate Officers for Black Lung Benefits
 Affirmed Even as Veil of Insurer Not Pierced

      In a March, 2021, decision from the U.S. District Court for the Eastern District of Kentucky, the court addressed the personal liability of corporate officers for black lung benefits. With respect to the mine operator, it was held that the officers of the mining company are personally liable thereon. In contrast, its insurer, which had not paid on the policy, would not be pierced to hold the officers of the insurer personally liable upon the claim. Templeton v. Apollo Fuels, Inc., No. 6:19-CV-71-REW, 2021 WL 920982 (E.D. Ky. March 10, 2021).

      Templeton had been granted an award of black lung benefits, including a lump sum for past benefits owed and attorneys’ fees. Neither Debra Lynn Coal, Inc. (“DLC”) nor Apollo Fuels, Inc. (“AFI”) satisfied the claim (AFI was the insurer), and this case arose.

      Applying the Black Lung Benefits Act (the “BLBA”), notwithstanding having purchased insurance thereon, the court noted that the obligation to make payments under the BLBA is on the operator, and the acquisition of insurance thereon does not absolve it of that ultimate responsibility. From there, the BLBA, its § 933(d)(1), “assesses personal liability on certain corporate officers if the employer required to secure benefits fails to do so.” quoting Donovan v. McKee, 669F. Supp. 138, 139 (S.D. W. Va. 1987), aff’d, 845 F.2d 70 (4th Cir. 1988). This liability extends to the president, the secretary and the treasurer of the operator. Based upon that authority, the court granted the plaintiff’s motion to hold each of the president and the secretary/treasurer of DLC liable for the benefits due and owing.

       Conversely, the court would not hold the president of AFI, the insurer, personally liable on the amounts due and owing. While § 933(d)(1) may have impose liability upon the operator’s officers, there existed no statutory equivalent with respect to an insurer. The court as well observed “A court should be reluctant to pierce the corporate veil absent a clear directive.”

IRS and Kentucky Shift Individual Income Tax Return Deadlines from April 15 to May 17

 

IRS and Kentucky Shift Individual Income Tax Return Deadlines from April 15 to May 17

 

        On Wednesday of this week the Internal Revenue Service announced that the deadline for submission of individual tax returns would be delayed from April 15 to May 17. HERE IS A LINK  to the announcement.

     On Thursday the Kentucky Revenue Department followed suit and delayed the Kentucky income tax return from April 15 to May 17.  HERE IS A LINK to that announcement.

     As of now we await word from the Indiana Department of Revenue as to whether they will be following the IRS’ lead.

Thursday, March 18, 2021

Deadline for Submission of Individual Tax Returns Shifted from April 15 to May 17

 

Deadline for Submission of Individual Tax Returns Shifted from April 15 to May 17

       Yesterday the IRS announced that the April 15 deadline for the submission (absent an application for an extension) of individual tax returns for the year ended December 31, 2020, has been shifted from April 15 to May 17, 2021

      HERE IS A LINK to IR-2021-59, March 17, 2021, it making this announcement.

Wednesday, March 17, 2021

The Statute of Frauds Does Not Apply to the Formation of a Partnership to Develop Real Property

 The Statute of Frauds Does Not Apply to the Formation of a Partnership to Develop Real Property

         In this 2021 decision, the court considered and rejected a pair of arguments that a complaint asserting the existence of a partnership should be dismissed. Initially, the defendants’ argument that the Statute of Frauds barred the formation of the partnership was rejected.  Second, the plaintiff’s assertion of the elements of a partnership was found sufficient.  Haymaker Dev. Co., LLC v. C.M. Gatton, Civil Action No. 5: 20-478-DCR, 2021 WL 297128 (E.D. Ky. Jan. 28, 2021).

         The alleged partnership (or joint venture [as if there is a distinction]) related to the purchase and development of real property.  The Statute of Frauds (KRS § 371.010) “generally requires contracts conveying or transferring an interest in real property to be in writing.” Id., *4. The court would hold, however, that this rule is inapplicable as to the formation of a partnership.

Indeed, an oral agreement to enter a partnership or joint venture for the purpose of dealing in real estate may be enforced even though it is not in writing. Jones v. Nickell, 179 S.W.2d 195, 196-97 (Ky. 1944). See also Garth v. Davis & Johnson, 85 S.W. 692, 692 (Ky. 1905) (“An agreement to become partners in dealing in real estate is neither a contract to buy nor a contract to sell real estate as between the parties to it. As far as the formation of the co-partnership is concerned, the title to real estate is no wise affected by the making of the agreement. The terms of the agreement, the mutual undertakings by the partners as between themselves as to what each will contribute, and the interests of each in the profits of their undertaking, are matters not necessarily affected by the statute.”).

As to the defense that the plaintiff had not sufficiently plead the elements of a partnership, the court found that the standard for defeating a motion to dismiss was satisfied.

The defendants contend that Haymaker has not alleged sufficient facts to demonstrate that the parties agreed to engage in a partnership or joint venture. To determine whether it has, it is necessary to define these terms. A partnership is the association of two or more persons to carry on as co-owners of a business for profit, whether or not the persons intend to form a partnership. K.R.S. § 362.1-202(1). “A joint venture is a special type of partnership, which Kentucky courts have defined as ‘an informal association or two or more persons, partaking of the nature of a partnership, usually, but not always, limited to a single transaction in which the participants combine their money, efforts, skill, and knowledge for gain, with each sharing in the expenses and profits or losses.” CASS JV, LLC v. Host Intern., Inc., 2014 WL 3955366 (W.D. Ky. Aug. 13, 2014) (quoting Roethke v. Sanger, 68 S.W. 3d 352, 364 (Ky. 2001)). A joint venture is treated like an informal partnership and is governed by principles of partnership law in that venture partners owe fiduciary duties to one another and the joint venture. Id. (citing Abbott v. Chesley, 413 S.W.3d 589, 604-04 (Ky. 2013)).

 

There is no bright-line test for determining whether a partnership exists. Instead, each case is assessed individually based on the totality of the circumstances. Thale v. Collector Imports, LLC, 2008 WL 4386769, at *3 (W.D. Ky. Sept. 23, 2008). Kentucky courts have considered the following factors: sharing of profits and losses; community of property; and control over the conduct of the business. See Roy C. Whayne Supply Co. v. McGowan, 280 S.W. 491, 493 (Ky. 1926); see also K.R.S. § 362.180. Kentucky case law contemplates that whether a partnership exists is a question of fact to be determined by a jury. Thale, 2008 WL 4386769, at *4 (collecting cases).

 

At this stage of the litigation, Haymaker has alleged sufficient facts to establish that Haymaker, Gatton, and the Trust entered into a partnership or joint venture to develop Hamburg and Coventry. Specifically, Haymaker contends that it negotiated purchases of property on behalf of the Trust, which the Trust then purchased and held on behalf of the partnership or joint venture.4 According to Haymaker, the parties agreed that the Trust would then convey the property to Haymaker as it was developed. In addition, Haymaker alleges that it put forth substantial effort and resources in developing the property. Upon sale of the property, the parties would share the profits.

 

Id., *5.

The Worst Decision of Marcus Aurelius Comes Home to Roost

 

The Worst Decision of Marcus Aurelius Comes Home to Roost

      Today marks the anniversary of the death in 180 of the great Roman Emperor Marcus Aurelius.  It is as well the date upon which his worst decision was inflicted upon the world.

      There is no question that Marcus was a great emperor.  In fact he is the only emperor to have written a book, namely the Meditations, that to this day remains in print (while Caesar's Gaelic Wars remain a staple of classes in both Latin and military history, Caesar was never emperor).  Marcus was one (and the last) of a string of excellent emperors.  After the tragedy that was Nero and the tumult of the Flavians (Vespasian, Titus and Domitian), the emperors of the Nervan-Antonian dynasty had consistently been effective leaders.  This had been largely achieved by the sitting emperor adopting his heir.  This path avoided the deficiency of restricting passage of control to only natural heirs, necessarily limiting the pool of possible successors; the Flavians had been lucky in this regard, but they were only two generations – the father Vespasian to his son Titus and then upon his death the throne went to his brother Domitian.  Hadrian was only a cousin to his predecessor Trajan. While Hadrian would in turn adopt Antoninus Pius, it does not appear they were related to one another.  It is reported that a condition imposed by Hadrian on Antoninius’ adoption was that he in turn adopt Marcus Aurelius.

      Marcus broke with this approach, appointing his natural son Commodus as his heir (Commodus was appointed co-emperor some three years before Marcus' death). He was a disaster.  A man of apparently no character, he is described by Aelius Lampridius as “even from his earliest years he was base and dishonorable. and cruel and lewd, defiled of mouth, moreover, and debauched.”   A megalomanic, he took to fighting in the gladiatorial games.  Of course he always won; it did not hurt that he secretly directed that his opponents be given dulled weapons.  Meantime he ignored the operation of the Empire, leaving decisions to his chamberlain and other officials.  He did, however, both order a devaluing of the currency and imposed excessive taxes.  Gibbons, in his monumental The History of the Decline and Fall of the Roman Empire, dated the decline of the Roman Empire from Commodus.

      Eventually Commodus was assassinated.  There was, however, no natural heir to the position of Emperor, and his death would be followed by the “Year of Five Emperors.”

      Had Marcus Aurelius followed the path of the other Nervan-Antonian emperors and adopted as his heir a proven leader, the path of the Roman Empire would well have been substantially different.  But he did not. Such decisions are the stuff of history.

      In closing, contra the movie “Gladiator,” Marcus Aurelius was not killed by Commodus.  Rather, he died of natural causes (it has been suggested that an unidentified plague was involved), possibly in Pannonia (what is now Serbia).  Commodus was not killed in the gladiatorial games, but rather was assassinated  in 192 by being strangled.

Tuesday, March 16, 2021

Personal Liability of Corporate Officers for Black Lung Benefits Affirmed Even as Veil of Insurer Not Pierced

 

Personal Liability of Corporate Officers for Black Lung Benefits
 Affirmed Even as Veil of Insurer Not Pierced

       In a March, 2021, decision from the U.S. District Court for the Eastern District of Kentucky, the court addressed the personal liability of corporate officers for black lung benefits. With respect to the mine operator, it was held that the officers of the mining company are personally liable thereon. In contrast, its insurer, which had not paid on the policy, would not be pierced to hold the officers of the insurer personally liable upon the claim. Templeton v. Apollo Fuels, Inc., No. 6:19-CV-71-REW, 2021 WL 920982 (E.D. Ky. March 10, 2021).

       Templeton had been granted an award of black lung benefits, including a lump sum for past benefits owed and attorneys’ fees. Neither Debra Lynn Coal, Inc. (“DLC”) nor Apollo Fuels, Inc. (“AFI”) satisfied the claim (AFI was the insurer), and this case arose.

       Applying the Black Lung Benefits Act (the “BLBA”), notwithstanding having purchased insurance thereon, the court noted that the obligation to make payments under the BLBA is on the operator, and the acquisition of insurance thereon does not absolve it of that ultimate responsibility. From there, the BLBA, its § 933(d)(1), “assesses personal liability on certain corporate officers if the employer required to secure benefits fails to do so.” quoting Donovan v. McKee, 669 F. Supp. 138, 139 (S.D. W. Va. 1987), aff’d, 845 F.2d 70 (4th Cir. 1988). This liability extends to the president, the secretary and the treasurer of the operator. Based upon that authority, the court granted the plaintiff’s motion to hold each of the president and the secretary/treasurer of DLC liable for the benefits due and owing.

        Conversely, the court would not hold the president of AFI, the insurer, personally liable on the amounts due and owing. While § 933(d)(1) may have impose liability upon the operator’s officers, there existed no statutory equivalent with respect to an insurer. The court as well observed “A court should be reluctant to pierce the corporate veil absent a clear directive.”

Monday, March 15, 2021

Beware the Ides of March


Beware the Ides of March 

“Et tu, Brute?”

 

       Today, the Ides of March, marks the anniversary of the assassination of Julius Caesar in 44 B.C. Caesar was famously assassinated at a meeting of the Roman Senate after having (almost certainly apocryphally) been warned to “Beware the Ides of March.” According to Seutonius, The Lives of the Twelve Caesars, “When a note revealing the plot was handed him by some one on the way, he put it with others which he held in his left hand, intending to read them presently.”  Marc Antony (not “Anthony”), to whom the plot had been divulged, tried to intercept Caesar, but he was himself intercepted. As for the Beware the Ides of March warning, Seutonius wrote: “Again, when he [Caesar] was offering sacrifice, the soothsayer Spurinna warned him to beware of danger, which would come not later than the ides of March.  …. [H]e entered the House [the Theater of Pompey] in defiance of portents, laughing at Spurinna and calling him a false prophet, because the ides of March were come without bringing him harm. Spurinna replied that they had of a truth come, but they had not gone.”

        Although stabbed twenty-three times by the various conspirators, only one wound was fatal (hence the occasional description of the assassination as the ultimate group project). At the time of his death he was 56, and by some measures was among the richest men to have ever lived.

      Caesar rose to power out of the First Civil War that resulted from the dissolution of the First Triumvirate, it comprised of Caesar, Pompey (a/k/a Pompey Magnus) and Crassus. Crassus was killed in 53 b.c. when as Governor of Syria he invaded Parthia (the invasion was for Rome a disaster).  The relationship between Caesar and Pompey fell apart over personal differences, and Pompey was killed in 48 b.c. when he fled in Egypt

        Caesar’s murder by members of the Senate (some 60 senators were part of the plot, but not Cicero – the conspirators were unsure he had the stomach for such an act) was premised upon the notion that they were somehow preserving liberty for Rome; after the deed they paraded through the streets shouting “liberty.”  This against the fear that Caesar sought to be king, an especially galling notion in light of Rome having been, at least as part of its foundation myth, ruled by kings and then thrown them off.  Still, at this stage Caesar had been appointed Dictator for Life (Dictator Perpetuo) by the Senate.  It seems this subset of the Senate sought to undo what the whole Senate had approved.

      As set forth in Adrian Goldsworthy’s biography of Caesar titled (surprisingly) Caesar:

The conspirators spoke of liberty, and believed that this could only be restored by removing Caesar. Most, perhaps all, thought they were acting for the good of the entire Republic. With Caesar dead the normal institutions of the State ought to function properly again and Rome could be guided by the Senate and freely elected magistrates. To show that this was their sole aim they decided they would kill the dictator but no one else, including his fellow consul and close associate Antony. Brutus is said to have persuaded them to accept this, against the advice of some of the more pragmatic conspirators.

      The huddled masses of Rome were less worried about Republican principles than they were with the loss of Caesar’s largess and the interruption of public work programs that provided desperately needed employment. As recounted by Nicolaus of Damascus in his Life of Augustus, “Even their [The assassin’s] houses were besieged by the people, not under any leader, but the populace itself was enraged on account of the murder of Caesar, of whom they were fond, and especially when they had seen his bloody garment and newly slain body brought to burial when they had forced their way into the Forum and had there interred it.”

      “Liberty” was not to be had. Caesar’s death unleashed upon the tottering Roman Republic the Second Civil War of Caesar’s heir Octavian (18 years old at the time of Caesar’s death and later to be Caesar Augustus) and Marc Antony (Lepidus, the third member of the Second Triumvirate, was a place holder) against the assassins and their various supporters. Octavian and Antony were not friends. Rather, applying the adage “the enemy of my enemy is my friend,” they were joined in opposition to Caesar’s assassins and little else. Regardless, the decision of the night before the assignation to not as well target Marc Antony, in retrospect, was no doubt regretted.

      Assassins Brutus and Cassius (Gaius Cassius Longinus) would each commit suicide after losing a phase of the Battle of Philippi (notwithstanding the presentation in the HBO series “Rome,” they died on different days).  Cicero (who as noted above was not himself part of the conspiracy) would be executed as part of the proscriptions after the victory of the Second Triumvirate.

      Still later Octavian and Antony would turn on one another, Antony’s forces being routed at Actium.  Octavian would go on to be the first Roman emperor, Caesar Augustus.

      But back to Caesar’s dying words. “Et tu Brute” is not recorded by any classical historian – it is a quote from Shakespeare. Plutarch, who was born exactly 100 years after the assassination, reports that Caesar said nothing after the attack began in earnest. Suetonius wrote that others reported his last words to be “καὶ σύ, τέκνον” (Greek still being the lingua franca of the Romans), transliterated as “Kai su, teknon” or “You also child,” addressed to Brutus (that is Marcus Junius Brutus the Younger, not to be confused with Decimus Junius Brutus, another party to the assignation). There were rumors, later reported by Plutarch (Suetonius is silent on the topic) that Caesar was in fact Brutus’ father – it was known that Brutus’ mother Servilia was Caesar’s mistress.  Still that would appear to be something of a stretch; Caesar was 16 at the time of Brutus' conception; Servilla was at that time 28. 

      For anyone who watched the “Spartacus” series, while the sources do not exclude Caesar's participation in the war against Spartacus (i.e., the “Third Servile War”), they provide no details of that participation.  Ergo, the portrayal of Caesar's actions are pure fiction.