Volunteering For The Ask A Lawyer Hotline

May 2nd, 2009

Brian Huddleston manned the phone banks to answer questions from the public on Law Day.lawday

About the annual “Ask A Lawyer” free legal advice project:

Oklahomans can expect an insightful look into the legal system when the annual award-winning Ask A Lawyer call-in show airs. This is the 31st year OETA and the Oklahoma Bar Association have co-produced the show, designed to share information about legal issues in easy-to-understand language.

A series of segments will be shown during the hour to provide a glimpse into Oklahoma’s legal community. The show will feature two segments on the topics of:

  • Consumer law
  • Equal rights in the workplace

Both segments will conclude with a town hall forum moderated by OBA member Dick Pryor.

With the nation’s economy woes on the minds of many, consumers need to be more mindful than ever about who they trust with their money. But sometimes, even the most prudent of us can be exploited. Viewers will meet Roy Sheppard, a hard-working family man who fell victim to predatory lending. Roy’s story is representative of thousands of families across the nation dealing with the foreclosure crisis. The panel of consumer law experts will address this issue along with other consumer topics.

While the United States is often called the land of the free, the rights and freedoms we enjoy have not always been available to all citizens. Oklahoma’s own Ada Lois Sipuel Fisher helped open the doors for African Americans and other minority groups to equal educational opportunities. Viewers will get a glimpse of Ms. Fisher’s struggle to be admitted to the OU law school and find a job after graduation. The panel of civil rights experts will explain how her journey led us to where we are today along with what issues we still face.

During the program, viewers can call in for free legal advice, a community service Oklahoma lawyers are providing in conjunction with the national celebration of Law Day. Viewers statewide will be able to reach an attorney by calling (800) 456-8525 from 9 a.m. to 9 p.m. Viewers who prefer to speak to an attorney practicing in their town or county will be able to see and call local numbers during the broadcast.

“I saw that there is a need in our community for affordable legal advice.  The callers were so grateful for the service.” Brian Huddleston

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What happens if your 1031 company files bankruptcy?

May 2nd, 2009

The U.S. Bankruptcy Court for the Eastern Division of Virginia recently ruled that funds held by a Qualified Intermediary (“QI”) in connection with a tax-deferred exchange under IRC Section 1031 constitute property of the QI’s bankrupt estate.In Millard Refrigerated Services, Inc. v. LandAmerica 1031 Exchange Services, Inc., the bankruptcy court held that the relationship between the QI and Millard Refrigerated Services, Inc. (“Millard”) was that of debtor and creditor and not of trustee and beneficiary as Millard contended.

Millard entered into three identical exchange agreements (“Exchange Agreements”) with LandAmerica Exchange Services (“LES”) in October of 2008. At Millard’s request, LES agreed to open segregated client sub-accounts under a master control account that LES maintained at Citibank.

Each of the three sub-accounts were associated with Millard’s name and taxpayer identification number however the accounts were titled in the name of and controlled by LES. LES alone had the ability to move funds into or out of the accounts and was the only signatory on the accounts.

Additionally, each of the Exchange Agreements signed by LES and Millard provided, in part: “. . . LES shall have sole and exclusive possession, dominion, control and use of all Exchange Funds, including interest, if any, earned on the Exchange Funds. . .”

The court held that the facts in the case mandate a presumption that the exchange funds are the property of the LES bankruptcy estate and that for Millard to successfully rebut that presumption, Millard must show that it retained some right in and to the funds.

Millard pointed to the facts that (1) LES was required, under the terms of the Exchange Agreements, to place the funds in segregated sub-accounts that were associated with Millard’s name and tax identification number; (2) Millard had negotiated to retain the benefit of accrued interest on the funds; and (3) there was no imposition of risk of loss on LES that would commonly be associated with ownership. Millard argued these facts proved that it never gave up its equitable ownership in the funds and that LES was holding the funds in trust for Millard’s benefit.The court looked to state law to determine whether the funds could be excluded from the LES bankruptcy estate because of the existence of either an express trust or a resulting trust. The Exchange Agreements were governed by Virginia law. Under Virginia law an express trust is created where there is an affirmative intent to create a trust which can be established either by express language between the parties or circumstances that show, with reasonable certainty, the intent of the parties was to create a trust.

The court did not find any express language or use of the terms “trust”, “trustee”, or “beneficiary”; therefore, the burden fell to Millard to demonstrate that the intention of the parties was to create a trust.Contrary to Millard’s assertion that the parties intended to create a trust, the court held that the language in the Exchange Agreements actually showed the parties’ intention not to create a trust. According to the court, Millard conveyed all control, dominion, and exclusive possession of the funds to LES in addition to disclaiming all right, title, and interest in and to the funds. The court concluded that the parties’ intention to not create a trust could be gleaned from the fact that they chose to utilize only the Qualified Intermediary safe harbor to the exclusion of the other safe harbors available to them under Treasury Reg. 1.1031(k)-1(g).

The Treasury Regulations permit the use of multiple safe harbors to secure the transferee’s obligation to deliver replacement property which include the use of a separate qualified escrow or qualified trust. While the terms and conditions of the safe harbors must be satisfied separately, they are not mutually exclusive.

Millard and LES did not have a separate trust agreement and did not avail themselves of the safe harbor provisions for a qualified trust arrangement. The court found that there was no express trust created in Millard’s three exchanges.

Additionally, the court held that the parties’ intentions were clearly discernible by the terms of the Exchange Agreements and that the parties evidenced their intention not to create a trust and the funds were considered part of the LES bankruptcy estate.

Copy of the Memorandum of Opinion: 2009_04_15_memorandum_opinion-millard-v-landamerica

Next Week, Part II: What does this mean for taxpayers entering into like-kind exchanges?

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Crib maker to recall nearly 100,000 cribs

May 1st, 2009

Crib maker Jardine Enterprise will recall nearly 100,000 cribs because of broken slats that could pose a strangulation risk to babies, according to the Consumer Product Safety Commission. The agency has recently received 31 reports of broken slats on Jardine cribs, including at least one report involving injury. The recall is the third in the last year by the crib maker, bringing the total number of cribs recalled to about 470,000. Patricia Callahan, Chicago Tribune 05/01/2009
Read Article: Chicago Tribune

“Several years ago I litigated a crib death case and it still stands as one of my saddest cases.”  Brian Huddleston

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House Bill 2026, A Bill to Reduce Oklahoma’s Uninsured, Goes to Governor

May 1st, 2009

House Bill 2026 will, among other reforms, strengthen and promote the state’s Insure Oklahoma program. The program, which is has been a national model for several other states, is a successful public-private partnership that gives premium assistance to small business workers and employers.  The House passed the final version of the bill with a vote of 95-0 and it now moves to the governor for his signature.

“It is no secret that our state has a high percentage of people who are uninsured,” said House Speaker Pro Tem Kris Steele, author of the bill. “Lacking insurance coverage causes problems for many Oklahomans who struggle to pay for needed health care services, thus creating an enormous cost shift that drives up prices for others. This ripple effect spreads throughout our state economy causing a deterrent for business recruitment, job creation, and the overall health of the people living in Oklahoma. This legislation will remove many of the barriers to obtaining private insurance like cost and lack of options and information while empowering patients to take more personal responsibility of their health outcomes.”

The legislation is based on the work last interim in the bipartisan House Health Care Reform Task Force, whose members sought ways to reduce Oklahoma’s high number of uninsured. The task force released a report that was unanimously endorsed by the Republican and Democrat members alike. The plan is designed to improve Insure Oklahoma by offering more choices for coverage to eligible participants. It also authorizes the use of basic health plans with catastrophic coverage for people under 40 to help reduce costs and increase options for young people who fail to see the value in paying costly premiums for services not utilized.

In addition, HB 2026 establishes the Oklahoma Exchange, a website designed to assist, inform, and empower individuals seeking to enroll in an affordable insurance plan. House Speaker Chris Benge, who formed the interim task force, said the legislation received bipartisan support and urged the governor to sign it into law.

“This legislation is the culmination of months of study by both Republicans and Democrats and task force advisory members from various areas within the health care community,” said Benge, R-Tulsa. “We worked hard to take the politics out of this issue and instead put our focus solely on moving more Oklahomans onto the private health insurance rolls. We know that a single-payer, universal health care system is not the answer for Oklahoma and I hope the governor will recognize this bipartisan effort by signing this important legislation into law.”

The comprehensive plan in HB 2026 includes:

Reform/improve Insure Oklahoma – Insure Oklahoma is an effective public-private model for providing assistance to Oklahomans who meet certain eligibility requirements and are seeking health care coverage. The program can be improved by offering more choices. HB 2026 directs both the employer-sponsored insurance and individual insurance plans to offer additional low-cost options, such as high deductible plans compatible with health savings accounts. Also, Insure Oklahoma would be modified to be more customer-friendly, especially at the point of eligibility determination and enrollment.

Reform the Individual Market – HB 2026 will enable insurance providers to offer basic preventative plans with catastrophic coverage by relaxing mandates so more low-cost choices can be offered to uninsured Oklahomans.

Establish the Oklahoma Exchange – The plan builds upon the current infrastructure to provide a service to assist individuals seeking to enroll in an insurance plan that would best meet their needs.

Establish Enrollment Options at Point of Access – In order to provide greater access to private health insurance and strengthen the marketplace for insurers, hospitals, physicians and other health care providers, cost-shifting must be reduced to moderate premiums. Under this model, the Oklahoma Exchange would be used to proactively connect individuals without health insurance to coverage options.

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Senate Bill 569, the Incorporation Transparency and Law Enforcement Assistance Act

May 1st, 2009

Senate Bill 569, the Incorporation Transparency and Law Enforcement Assistance Act, sponsored by Senator Levin et al., requires the filing of corporation or LLC beneficial ownership information with the state filing office. This act among other things would also require vetting the identity of foreign stock or LLC membership through a business formation agent. Additionally it would place business formation agents under the Bank Secrecy Act (see S 506) and provide penalties for submitting false information.
http://thomas.loc.gov/home/c111query.html (type in the name of the bill in the “Enter Search” box)

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NHTSA setting new safety standard for car roofs

May 1st, 2009

Consumer safety advocates say a new National Highway Traffic Safety Administration regulation regarding automotive roof strength doesn’t do enough to keep occupants from being crushed when a vehicle rolls over. The Alliance of Automobile Manufacturers has said it “supports NHTSA’s goal of enhancing rollover safety, but enhanced roof strength is only one part of that plan,” along with safer driving to prevent rollovers in the first place. ABC News (4/30)

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© 2009 Huddleston Law Offices