Court Reviews Whether Insurance Company had Indemnity in a Personal Injury Suit

EVEREST NATIONAL INSURANCE COMPANY v. RESTAURANT MANAGEMENT GROUP, LLC ET AL. (Tenn. Ct. App. April 25, 2011)


This is a declaratory judgment action filed by an insurance company against its insured and the insured's customer who allegedly was injured from a fall after stepping in a hole in the insured's parking lot.

The insurance company asked for a declaration that it was not obligated to defend and indemnify the insured against the customer's personal injury claim. The insured filed a counterclaim asking for a declaration that the insurer was required to defend the claim and indemnify the insured against liability to the customer.

On dueling motions for summary judgment, the trial court held that the insurance company was relieved of its obligation to defend and indemnify the insured because the insured waited five months before notifying the insurance company of the claim and that, as a consequence of the insured's delay, the insurer was prejudiced. During that five months, the insured repaired cracks in the parking lot where the fall allegedly occurred. The insured appeals. We affirm. 


Opinion available at:

http://www.tba2.org/tba_files/TCA/2011/everest_042511.pdf

U.S. Supreme Court: Oral complaints protected in workplace

Workers are protected from retaliation when they voice complaints about labor law violations, even if they don't write them down, the U.S. Supreme Court said today. At issue is statutory language protecting workers from retaliation if they have "filed any complaint." In his majority opinion, Justice Stephen G. Breyer said the purpose and context of the provision support the conclusion that the oral complaint was protected.

ABAJournal.com has the full story:
http://www.abajournal.com/news/article/supreme_court_rules_oral_workplace_complaints_are_protected_under_labor_law/

Court Reviews Whether Plaintiff Sufficiently Alleged the Futility of Demanding a Board of Directors to Initiate a Lawsuit

IN RE HEALTHWAYS, INC. DERIVATIVE LITIGATION (Tenn. Ct. App. March 15, 2011)

Plaintiff in shareholder derivative action appeals the dismissal of his suit alleging breaches of fiduciary duty and other misconduct, including insider trading, by current and former officers and directors of corporation. Plaintiff filed suit without first making demand on the board of directors of the corporation that the directors initiate the lawsuit. Defendants moved to dismiss the suit on the ground that plaintiff failed to allege with requisite particularity that such demand would have been futile. We affirm the dismissal of the action.

Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/healthways_COR_032411.pdf

Court Reviews Whether Individual Defendants are Additional Lessees Personally Liable Under a Commercial Lease

ASSOCIATED SHOPPING CENTER PROPERTIES, LTD. v. EDWARD H. HODGE ET AL. (Tenn. Ct. App. March 23, 2011)

The issue in this commercial real estate lease dispute is whether the individual defendants are additional lessees and, thus, personally liable under the lease. Plaintiff, the lessor of retail space, filed this action against the three defendants when the limited liability company, Decor Fabrics, LLC, a lessee, breached the lease by failing to pay rent for the term of the lease. The individual defendants denied liability, asserting that Decor Fabrics, LLC, was the only lessee.

The trial court found that the lease unambiguously identifies each of the individual defendants as additional lessees and assessed damages against them for breach of the lease, including the plaintiff's attorneys fees. Only one of the defendants appealed. He asserts that the trial court erred by finding the lease unambiguous as to the identify of the lessee(s) and by failing to consider the parties' conduct to conclude that Decor Fabrics, LLC, was the only lessee. We affirm.

Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/hodgee_032311.pdf

Two New Loan Initiatives Announced by Small Business Administration

Two New Loan Initiatives Announced by SBA: Small Loan Advantage and Community Advantage 7(a) Loan
 
SBA is committed to expanding access to capital for small businesses and entrepreneurs in underserved communities so that we can help drive economic growth and job creation. In line with that, SBA is rolling out two new initiatives on February 15, 2011, aimed at increasing the number of loans in these communities.

SBA and U.S. Department of Commerce studies have shown the importance of lower dollar loans to small business formation and growth in underserved communities. With that in mind, and building on the agency's "Advantage" platform, both Small Loan Advantage and Community Advantage will offer a streamlined application process for SBA 7(a) loans up to $250,000.

Published by the Tennessee Small Business Development Center, referencing:
http://www.sba.gov/advantage.

See also: 
http://www.sba.gov/category/navigation-structure/loans-grants/small-business-loans/sba-loan-programs/7a-loan-program.

Supreme Court: FOIA does not extend personal privacy to corporations

The Supreme Court recently ruled that corporations have no right of personal privacy to prevent the disclosure of documents under the federal Freedom of Information Act. At issue is information gathered by the Federal Communications Commission during an investigation of AT&T's participation in the federal E-Rate program, which helps schools and libraries get Internet access. "The protection in FOIA against disclosure of law enforcement information on the ground that it would constitute an unwarranted invasion of personal privacy does not extend to corporations," Roberts wrote. "We trust that AT&T will not take it personally."

Read the full story here:
http://www.wrcbtv.com/Global/story.asp?S=14163469

General Assembly News: Bill would abolish ban on corporate donations

A measure that overhauls Tennessee's campaign finance laws would abolish a longstanding ban on donations from companies, in a move that supporters say would put businesses on an equal footing with labor unions.

"I think there should be parity," said state Rep. Glen Casada, R-Franklin, the bill's sponsor in the state House of Representatives.

But the legislation could give corporations and special interests more influence over Tennessee politics, say opponents, and a survey of campaign finance records shows Tennessee's largest companies are already big donors to campaigns through their political action committees.

The Tennessean has the story:  
http://www.tennessean.com/article/20110306/NEWS02/103060385/1972/NEWS02/TN-Republicans-want-allow-direct-corporate-donations

Supreme Court Reviews Whether a Nonprofit Foundation’s Records are Available Under the Public Records Act

THOMAS M. GAUTREAUX v. INTERNAL MEDICINE EDUCATION FOUNDATION, INC. (Tenn. February 28, 2011)

Plaintiff requested records from a nonprofit foundation pursuant to the Tennessee Public Records Act. The nonprofit foundation refused the request, stating that the foundation was not a government agency and that the records were not public. Plaintiff filed a Petition for Access to Public Records in chancery court, which held that the records were available because the nonprofit foundation was the functional equivalent of a government agency. The Court of Appeals affirmed.

We hold that the nonprofit foundation's records are not available pursuant to the Tennessee Public Records Act because it is not the functional equivalent of a government agency. We also hold that its records are not available pursuant to Tennessee Code Annotated section 10-7-503(d) (1999) because the nonprofit foundation has no more than two full-time staff members. We therefore reverse the judgment of the lower courts and dismiss the case.

Opinion Available At:
http://www.tba2.org/tba_files/TSC/2011/gautreauxt_022811.pdf

Court Reviews Whether Employee’s Termination was For Cause and Whether Employee was Entitled to Severance Pay

DEAN G. HAFEMAN v. PROTEIN DISCOVERY, INC., A TENNESSEE CORPORATION (Tenn. Ct. App. February 28, 2011)

This is a breach of employment contract action filed by Dean G. Hafemen ("the Employee") against Protein Discovery, Inc., a Tennessee corporation ("the Employer" or "the Company") after the Employer terminated the Employee's employment before the expiration of the term of his "Amended and Restated Employment Agreement" ("the Agreement").

The complaint alleges that the Employee is entitled to certain severance benefits provided for in the Agreement for any termination that does not qualify as a "Termination For Cause" as defined in the Agreement. After a bench trial, the court found that the termination was for cause and entered judgment in favor of the Employer. The Employee appeals. We reverse.

Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/hafemand_022811.pdf

Businesses Shift Strategy in Hiring Lawyers

The recession has brought changes to the business of law as companies try to find ways to lower fees and enter into less costly billing arrangements. Industry experts say some of these strategies include using junior associates at a lower billing rate, engaging different lawyers for specific issues, and paying by the hour rather than by retainer. In a New York Times article reprinted in the Memphis Commercial Appeal, business consultants and law firm managers offer their insights for making legal services affordable for small businesses.

Read the story here: http://www.commercialappeal.com/news/2011/feb/13/strategies-shift-in-hiring-lawyers/

Court Reviews an Interlocutory Appeal Regarding Class Certification

DONALD J. ROBERTS IRA, ET AL. v. PHILLIP H. MCNEILL, SR., ET AL. (Tenn. Ct. App. February 23, 2011)

This is an interlocutory appeal from a class certification. The named plaintiffs, former owners of preferred stock in Equity Inns, Inc., filed a class action against the company's former directors. Their amended complaint asserted breaches of the fiduciary duties allegedly owed to the preferred shareholders during the negotiation and approval of a merger. The trial court granted the plaintiffs' motion for class certification with respect to "[a]ll holders of Equity Inns preferred stock as of June 21, 2007." We vacate and remand for further consideration.

Opinion available at:
http://www.tba2.org/tba_files/TCA/2011/robertsd_022311.pdf

New 8(a) Regulations Limit Joint Ventures, Allow Higher Income

SBA has overhauled rules governing the 8(a) program, imposing new restrictions on joint ventures and raising limits on a business owner’s annual income and wealth. The final rule, published in the Feb. 11 Federal Register, is the first rewrite of 8(a) regulations in more than 10 years. It becomes effective March 14.

In a joint venture between an 8(a) firm and a non-8(a) partner, the 8(a) firm will be required to do at least 40% of the work done by the joint venture. Since the JV is required to perform at least 50% of the work on a contract, that means the 8(a) partner must perform at least 20% of the total contract. The current rule requires only that the 8(a) firm do a “significant portion” of the work. The non-8(a) partner may not take a second bite of the apple by serving as a subcontractor to the joint venture. The 8(a) partner in the JV must receive profits commensurate with the amount of work it performs.

SBA has indicated that the new JV rules were a response to suspicions that Alaska Native Corporations were passing through virtually all work to a large partner. Legislation is pending in Congress to restrict the size of sole source contracts awarded to Alaska Native and tribally owned 8(a) firms. Alaska Native Corporations and tribally owned companies will be required to report how their 8(a) contracts benefited their communities.

The Alaska firms have argued that their payments to impoverished Native people justify their special procurement preferences, but congressional investigators found that some Alaska companies paid only a few hundred dollars in dividends to Native shareholders. The owner of a company entering the 8(a) program will not be considered economically disadvantaged if his annual income exceeds $250,000, averaged over a three-year period. To remain eligible for the program, the owner’s annual income may not exceed $350,000. An individual may rebut a finding that he is not economically disadvantaged by showing that the high income was the result of an unusual event, such as an inheritance. Since the 8(a) owner usually must be the highest paid employee, SBA said the higher income limits will allow 8(a) firms to pay competitive salaries to other top-level executives. An owner will not be considered economically disadvantaged if his assets exceed $4 million at the time of application for the 8(a) program.

Complete article available with subscription to Set-Aside Alert

Haslam Unveils First Legislative Agenda

Gov. Bill Haslam unveiled his first legislative agenda today. Among its provisions, the proposal would limit damages in civil suits against businesses as part of an effort to attract more companies to Tennessee.

Under the plan, non-economic damages would be capped at $750,000. Tony Thompson, a lobbyist for the Tennessee Association for Justice, responded saying the group is not convinced that civil damages are a problem in Tennessee or are keeping businesses from moving into the state.

http://www.knoxnews.com/news/2011/feb/17/haslam-unveil-legislative-package-thursday/?partner=newsletter_headlines

Court Reviews Whether a Partnership Existed Between Two Parties

RICHARD SWECKER, et al., v. STEVEN MICHAEL SWECKER, et al., and, DINAH SLUDER, et al., IN RE: ESTATE OF JOSEPH JAMES SWECKER, STEVEN SWECKER, et al., v. RICHARD ALLEN SWECKER (Tenn. Ct. App. January 26, 2011).

Plaintiffs brought this action to establish a partnership with the deceased against the estate's personal representative and others. Defendants answered, denying the allegation that a partnership existed, and filed a counter-complaint, asserting the estate should be reimbursed for plaintiffs' mismanagement of the farm, and for monies the plaintiffs removed from the estate's bank account.

Following an evidentiary hearing, the Trial Court held that deceased and plaintiff had entered into a partnership and that the partnership would be wound up by the Court and the partnership assets distributed. Also, the Trial Court held that plaintiffs would be required to pay rent on the house they occupied on the farm for several years.

On appeal, we affirm the finding that a partnership existed, but reverse the Trial Court's holding that plaintiffs owed the estate rent for occupancy of the house on the farm. We remand, with directions to the Court to wind up the partnership.

Opinion may be found at:
http://www.tba2.org/tba_files/TCA/2011/sweckerr_012611.pdf

TN Supreme Court Reviews Whether Taxpayer’s Capital Gains were Business Earnings that were Subject to the Excise Tax

BLUE BELL CREAMERIES, LP v. RICHARD ROBERTS, COMMISSIONER, DEPARTMENT OF REVENUE, STATE OF TENNESSEE (Tenn. January 24, 2011).

Taxpayer is a Delaware limited partnership that produces, sells, and distributes ice cream in Tennessee and elsewhere. At issue in this appeal is the Tennessee Department of Revenue's excise tax assessment on capital gains from a one- time stock transaction between Taxpayer and its holding company. Taxpayer sought a refund in chancery court, challenging the validity of the tax assessment on statutory and federal constitutional grounds. Both Taxpayer and the Department moved for summary judgment. The chancery court granted summary judgment to Taxpayer, and the Court of Appeals affirmed the judgment.

Based on the uncontested facts in the record, we hold that Taxpayer's capital gains were business earnings pursuant to the functional test provided in Tennessee Code Annotated section 67-4-2004(1) (Supp. 2000) and therefore subject to the excise tax. Additionally, we hold that the tax assessment was constitutional pursuant to the unitary business principle. We therefore reverse the judgment of the Court of Appeals and enter summary judgment for the Department. We remand to the trial court to determine the amount of excise tax related to Taxpayer's capital gains.

Opinion may be found at:
http://www.tba2.org/tba_files/TSC/2011/bluebell_012411.pdf