Victory for Justice

Today (9/24/10), Chief Judge Coffman of the U.S. District Court for the Eastern District of Kentucky issued an order granting over 98% of a petition for attorney’s fees and costs on behalf of one of our consumer clients, Madeania Justice.  This is a solid victory for consumers because it encourages litigators to take on important cases that may not feature large damage awards or settlements but still allow for the opportunity for the attorneys to cover their time and expenses:

 “Justice’s small recovery does not render her case a nuisance or disqualify her as a prevailing party.  Justice need only show that her settlement provides some benefit to her, or some vindication of her rights, and that the settlement furthers the legislative intent of encouraging private enforcement of the respective statutes. ….  Monetary settlements often are small in consumer-protection cases, so the nuisance hurdle must be set low to avoid discouraging private enforcement.”  Order p. 4.

"Congress intended to bring an entire action that includes a Truth in Lending Act claim within the fee-shifting provision of the statute. .... Many attorneys would turn down consumer-protection cases if they were faced with the prospect of prosecuting such cases only to prevail on non-fee-shifting claims." Order pp. 6-7

 “Brother’s Auto argues that any time Justice’s attorneys spent conferring with one another should be excluded. ....  It would be extremely difficult, if not impossible, for a team of attorneys to effectively represent a client without conferring with one another.” Order p. 9.

Madeania Justice v. Nasser, Inc., dba Brothers Auto Sales, Il, Case No. 5:08-cv-00255-JBC-REW (E.D. Ky. Sep. 23, 2010).  The full opinion and order is available through the PACER service or here.

The World Equestrian Game are coming

It's an exciting time to live and work in Lexington, KY with the World Equestrian Games only three days away. Similar to the Olympics, the World Equestrian Games (or WEG) occur once every four years (opposite the Summer Games) and feature the world championship for eight different equestrian events: dressage, driving, endurance, eventing, jumping, para-dressage, reining, and vaulting. Hosting WEG would be an honor for any city, but Lexington has the unique privilege of being the first non-European city chosen.

Lexington is taking advantage of the international attention with Spotlight Lexington, a free entertainment event running through the Games in downtown Lexington. Though it is likely to add to the anticipated traffic problems associated with the extra tourists, media and athletes, Spotlight Lexington is a great opportunity to connect the community with WEG.

World Equestrian Games official website

Spotlight Lexington website

Nonprofits' IRS filing: Update

In a 6/4/10 post, we discussed the problems for small nonprofits, including §501(c)(3) charities, that were not required to formally register with the IRS and might be unable to submit the e-Postcard (Form 990-N) designed for them to use to fulfill the annual reporting requirement. The post concluded by passing along IRS statements that it was working on a way to resolve the problems — and avoid the catastrophic consequence that many non-profits would automatically lose their tax-exempt status.

That resolution was announced on July 26, 2010; on its website, the IRS provides a detailed overview of the program for allowing small nonprofits to preserve their tax-exempt status. In addition, the IRS provides lists, by state, of "organizations at risk" for automatic revocation of their tax-exempt status for failing to make the required filing for three consecutive years. Not every organization listed may be eligible for the program. More crucially, not every at-risk organization is on the list. Recall that this problem arose in part because many nonprofits quite legitimately had not registered with or been identified by the IRS as nonprofits. So:

Being listed does not itself make a nonprofit eligible for the IRS program.

Not being listed does not immunize a nonprofit from losing its tax exempt status for failing to comply with the annual filing requirement.

Two types of relief are available for small nonprofit organizations: (1) a filing extension for the smallest organizations, that are eligible to file the e-Postcard, and (2) a voluntary compliance program (VCP) for small organizations eligible to file Form 990-EZ, Short Form Return of Organization Exempt From Income Tax. The extension is to October 15, 2010, for filing the e-Postcard; for many organizations the deadline otherwise passed on May 15 of this year. The VCP involves much more paperwork and the payment of a fee (in lieu of late-filing penalties and interest), but is a mechanism for a nonprofit to "erase" any breaks in its tax-exempt status with the IRS.

I Write Like ...

I read in a Wall Street Journal column about a website that would statistically analyze a text and compare it to statistics for famous writers: iwl.me

I cast about for something to feed into the analyzer. The more significant things to hand were briefs. So I tried it out with two paragraphs from a recently-written, fact-intensive statement of the case. I was rewarded with:

I write like
Edgar Allan Poe

I Write Like by Mémoires, Mac journal software. Analyze your writing!

Now ... I suspect that my paragraphs were not evocative of The Masque of the Red Death. Only that of the writers whose statistics were in the comparison database, my brief was more like something written by Edgar Allen Poe than, for example, Hemingway or Faulkner. I am, however, thrilled that my cool, dispassionate briefing style may be mysteriously dark at its tell-tale heart.

Tax-exempt, but failing to report to IRS

(researched and drafted by Christopher L. Jackson, UK law student and summer clerk)

Under recent changes in federal law, tax-exempt organizations — with only a few, select exceptions — must annually file information (known as a Form 990) with the IRS. (Note: "tax-exempt" means that the organization itself does not have to pay taxes, not that contributions to the organization may be deducted from the donor's taxable income.) While this “reporting” requirement burdens many tax-exempt organizations, its effect may be most significant among small nonprofits which qualify as charitable organizations under §501(c)(3) of the Internal Revenue Code.

A charitable organization that normally has less than $5000 per year in gross receipts is generally not required to request formal recognition from the IRS of its §501(c)(3) status in order to be tax-exempt. (See 26 U.S.C. §508(c)(1)(B).) Most of these organizations, however, are required to make a Form 990 filing with the IRS; failure to file the requisite report for three (3) consecutive years results in automatic loss of an organization's tax-exempt status — which may result in liability for paying taxes. Organizations that did not request formal recognition of tax-exempt status did not receive individual notice of the Form 990 filing requirement because the IRS did not know that they were (or claimed to be) tax-exempt.

IRS Commissioner Doug Shulman, in an official statement, urges that organizations go ahead and file the report even if they missed the deadline. Any tax-exempt organization whose gross receipts are normally less than $25,000 per year may file an abbreviated report via the web known as an e-postcard (Form 990-N). Before attempting to submit an e-postcard, those organizations which have not requested recognition of their tax-exempt status (like those 501(c)(3) organizations that normally have less than $5000 in annual gross receipts) should call the IRS customer service hotline at 1-877-829-5500 to be set up to allow reporting through the e-postcard system. It appears that because many small organizations did not file on time (and may not have known that they were required to file), the IRS is working on a way to resolve the problem.

Getting our name out there: Business Lexington magazine

The style of this advertisement may look similar to the TILA rescission entry.  This Wordle-like image was created by hand and lists many of Yunker & Park's areas of practice.  It's placed in the current edition of Business Lexington magazine, a news journal distributed in and around Lexington, KY.

Getting our name out there: Bench & Bar magazine

If you haven't seen it yet, Yunker & Park plc formally announced our formation to the Kentucky legal community in the March 2010 edition of the Kentucky Bar Association Bench & Bar magazine.  The announcement can be found on the third page of the Who, What, When & Where section.

The Question of Enes Kanter's Eligibility

I was born and raised in Lexington, Kentucky, which basically means two things: (1) I have seen a lot of horses in my life and (2) I am a huge University of Kentucky basketball fan.  Now that the 2009-10 Cats season is over (that is all I will say about that as I am still coming to terms with the loss to West Virginia in the Elite Eight), it’s time to turn our attention to another favorite pastime in the Bluegrass — keeping up with recruiting.  The Spring Signing Period, where high school basketball players commit to the colleges and universities of their choice, is nearly upon us (April 14, 2010 – May 19, 2010), and this particular signing period is very important to Kentucky fans as it looks like the Cats are going to need quite a few commitments this Spring.

 

The incoming class for Kentucky already includes two commitments: Stacey Poole (6’5” SG from Jacksonville, FL) and Enes Kanter (6’10” PF from Istanbul, Turkey).  However, the recruitment and commitment of Mr. Kanter poses an interesting question that the NCAA is in the process of addressing.  As an amateur basketball player in Europe, Mr. Kanter played on teams that had professional basketball players on their respective rosters.  Under the NCAA’s current rules and regulations, this fact affects Mr. Kanter’s eligibility to play college basketball at Kentucky next season, with a likely outcome involving Mr. Kanter being suspended for several games by the NCAA for his involvement with those European teams.

 

However, the good news for Kentucky fans is a proposed change to the NCAA’s rules regarding the eligibility of international amateur basketball players.  According to Luke Winn’s recent story for si.com, “NCAA proposal 2009-22 would allow international athletes who’ve played on teams with professionals, but not received compensation, to become eligible immediately, rather than face lengthy suspensions under current rules. Proposal 2009-22 was adopted at the NCAA convention in January, and passed a March 17 override deadline without the requisite number of objections from universities. It’s slated for final approval in April, three weeks after the national title game.  The rule would go into effect on Aug. 1 as ‘exception 12.2.3.2.1,’ stating that, ‘In sports other than men’s ice hockey and skiing, prior to initial full-time collegiate enrollment, an individual may compete on a professional team, provided he or she does not receive more than actual and necessary expenses to participate on the team.’”

 

Kentucky basketball fans should certainly keep an eye on this proposed legislation as it affects the eligibility of an important part of next season’s team and their chances for continued success.  From everything I have read or seen, it looks like the proposal will pass and be in effect for next season.  And thank goodness for that.

 

For more information, see Luke Winn’s si.com story: http://tourney.si.com/2010/03/24/new-rule-could-clear-way-for-kanter/?eref=twitter_feed

Taking / Civil Rights case opinion

Today (3/18/10), Sr. Judge Hood of the U.S. District Court for the Eastern District of Kentucky issued a decision on cross-motions for partial summary judgment in our client's case challenging Garrard County (Ky.) officials' actions in tearing down a gate limiting access to a lane on her property. The issue for summary judgment was whether that lane was a county road versus a private roadway.

The Court found that "pursuant to KRS 178.116(1) [a Kentucky statute], as well as the County's own acts and admissions, [the lane] shall be deemed discontinued as a county road, if it ever was classified as such."

Scott v. Garrard County Fiscal Court et al., Case No. 5:08-273-JMH (E.D. Ky. Mar. 18, 2010), slip op. at 15. The full opinion is available through the PACER service or here.

Warning Sirens Heard in Lexington

If you were outside around noon in Lexington, Kentucky last Friday, you probably heard something that sounded like this.  It was the severe weather alert coming from one of 26 outdoor warning sirens that are located in parks in and around Lexington (see map). The nearest siren to Yunker & Park is at Woodland Park, close enough that we can hear the warnings indoors. However, while we appreciate the advanced notice of community emergencies at our desks, the primary purpose of the warning sirens is to alert people outside to seek shelter.

Each siren has a range of about half a mile and are used by the Lexington Fayette Urban County Government (LFUCG) to warn citizens of severe weather or chemical emergencies. According to Stephen Jackson, operations manager for the LFUCG Division of Emergency Management, the warning system "is typically activated from Police dispatch when there is a National Weather Service alert for severe weather."

The warning sirens produce three different tones to signal different events (caution: siren videos are loud!):
• the Westminster Chime (video): severe thunderstorm watch/warning and tornado watch
• Stead (video): tornado warning, and
• Wail (video): evacuations and shelter-in-place

Jackson informed me that "Police dispatch will perform monthly tests and that will rotate through the various shifts." These tests use the Westminster chime and a test schedule can be found at the LFUCG website.  However, if you hear one of these sounds, you should seek shelter inside and turn on the radio or television for further information. As Jackson reminds us, "Emergency preparedness is everyone's business and responsibility."

Picture this: TILA rescission

One of the more important consumer protections is the right to rescind (or undo) a loan transaction. In general, this right is available for a refinancing in which a mortgage or other security interest is taken in someone's home.

The federal Truth-in-Lending Act (TILA) defines/gives this right in 15 U.S.C. §1635(a). The image at left depicts (by size) the frequency of uncommon words in that statute subsection. There are only 203 words total in the subsection, and fewer than half are "uncommon" — so the 80 shown include the one instance of "consumer" (in light blue, left of center).

At right is a comparable depiction of words in the entire statute section, 15 U.S.C. §1635 — which includes exceptions, how you exercise the right, what happens when you do, etc. The five appearances of "consumer" get only a small font size (in white, near the upper right corner), dwarfed by "section" (32 times) and "obligor" (27).

These images are of a Wordle, and are attributable to the wonderful http://www.wordle.net/.

Images created by the Wordle.net web application are licensed under a Creative Commons Attribution 3.0 United States License.

Kentucky's Lemon Law Statute

We practice several areas of law at Yunker & Park plc, including consumer protection law on the side of consumers. Over the course of a year, we receive many phone calls from consumers who are involved in disputes with car dealerships, debt collection companies, lenders, etc., and we have found that there are some misconceptions about certain consumer protection laws enacted to help the consumer. One of the more misunderstood consumer protection laws is “the lemon law.”

The commonwealth of Kentucky has a lemon law that protects consumers who buy or lease new motor vehicles. The Kentucky lemon law statute is codified as KRS 367.841 to .844, and the Kentucky Attorney General’s website describes the statute as follows:

“In Kentucky, manufacturers are required to repurchase an automobile if it is determined to be a ‘lemon.’ You can file a suit [against the manufacturer] in a circuit court but you must first go through the manufacturer's arbitration system. [For a new motor vehicle to qualify as a lemon, the following criteria must be met]:

· The automobile must have been purchased new in Kentucky by a Kentucky resident and not have more than two (2) axles and cannot be a motorcycle, motor home, conversion van, or farm equipment.

· The consumer must report the failure to repair the non-conformity to the manufacturer within the first 12 months or 12,000 miles, whichever is first.

· The problem must substantially impair the use, value, or safety of the automobile.

· The automobile has been out of service for the same problem for a cumulative total of 30 days or more or the problem was not corrected within a reasonable number of attempts. Four (4) attempts to repair the same problems is presumed to be reasonable.”

http://ag.ky.gov/civil/consumerprotection/cars/lemon.htm

While the Kentucky lemon law does apply to the purchase of new motor vehicles, it does not apply to the purchase of used cars. There are protections for purchasers of used cars, but the lemon law is not one of them.

Waiting for Spring

We’re not only about dispensing sage legal advice and vindicating the rights of our clients here at Yunker & Park plc. The attorneys and employees of the firm also lead incredibly exciting, vital and dynamic lives outside of the practice of law. On occasion, we will use this blog to share some of this excitement with you.

For instance, did you know that I am an avid amateur horticulturalist? Which means that right about now –– in the depth of a seemingly sunless, snowy February –– I’m busy poring over seed catalogs and dreaming of compost. I’ve even gotten a jump-start on the spring growing season by starting a variety of cool-temp-loving veggies indoors in my basement: broccoli, chard, spinach, lettuce, cabbage, leeks, Italian parsley, and scallions. This has been made much easier this year thanks to our new 4-foot, 4-bulb HO fluorescent grow-light fixture. The seedlings really love the extra light!

Also, this year I’m trying to grow artichokes for the first time. Most artichoke cultivars do not produce edible flower buds until the second year. In order to grow artichokes from seed in climates such as Kentucky’s that are too cold for the artichokes to over-winter without special protection (zones 7 and colder), you have to trick the plants through the process of vernalization into thinking that their first summer is really their second. You do this by starting the plants indoors in a warm environment (above a heated germination mat in my case), and then moving them outside early enough in the year to experience a period of colder temperatures (40-50˚F). By the time the warmer days of June arrive, the plants think they have experienced winter, and are ready to begin the flowering process. I’m curious to see if this will actually work. Check this blog later this summer for an update!

And now, a picture of my son holding the mythical 3 pound, 7.5 ounce sweet potato we grew last year:

Look who's in the news...

As reported by the Lexington Herald-Leader:

Personnel file - Feb. 22:

Newman Foundation: The following have been elected officers for 2010: Katie Yunker, president; Jeanne Miller, vice president; Don Madden, treasurer; and Rosemary Vance, secretary.

Congratulations, Katie!

Construing Contracts: Time Periods and "May"

The Bankruptcy Court and the U.S. District Court for the Southern District of New York have turned down claims by an investment banking firm to a one-year "tail provision" fee on a reorganization plan for its former client company in a bankruptcy filed 13 months after the investment banking firm sent written notice of termination of its engagement (and 21 months after the firm completed its work). Peter J. Solomon Company, L.P., v. Oneida, Ltd., Case No. 09-CIV-2229, 2010 WL 234827 (S.D.N.Y. Jan. 22, 2010), aff'g, Case No. 06-10489 (ALG) (Bkrtcy. S.D.N.Y. Feb. 6, 2009). Wojciech F. Jung and S. Jason Teele, of Lowenstein Sandler PC, have provided a thorough analysis of the decision in a client alert (.pdf).

The claim seemed doomed by the facts and the contract language almost no matter where you looked, and the gist of the decisions seems obvious — that a provision to protect the investment banker from providing most or all of the services but being denied a completed-transaction fee when the client terminates the arrangement before the transaction is complete should not apply when the transaction has been completed and the fee paid. There are, however, two minor points to show how hard it is to make a contract "clear," that plain-language construction can lead to widely different conclusions.

One is in the agreement's provision that either party "may terminate this Agreement upon 30 days notice delivered in writing...." The Bankruptcy Court opinion (.pdf) treats the permissive "may" as referring to the way (by written notice) termination was to be accomplished (slip op. p.11). Yet it seems obvious to me that the provision permits a party to terminate the agreement (rather than wait for its expiration or completion), but the only way to do so is by written notice.

The other is in the timing of the one-year tail provision:

PJSC shall be entitled to its full fee ... in the event that any Transaction is consummated at any time prior to the expiration of one year after such termination.

So what is the period covered by "any time prior to the expiration of one year after such termination"? Is it that a transaction be consummated during

• the one year following "such termination"? or


• any time before the one-year anniversary of "such termination"?

The latter is a stricter, more literal construction of the language, but the former is probably what the parties had intended. It would make a difference, for example, if the agreement covered 3 possible transactions — A, B, C —, had a one-year "tail provision," and the factual sequence was roughly as in the Oneida case. Assume that 6 months after the investment banker's engagement began, transaction A closed. The investment firm continued to work for 6 more months, at which time the client firm gave written notice of termination. Two to three years later, transaction B closed. Under

• the first construction, the fee for transaction B — which occurred outside the year following termination — is not owed to the investment banker.


• the second construction, a fee for transaction B fee is owed to the investment banker because, although transaction B occurred beyond the one-year anniversary, "any Transaction" — namely, transaction A — did occur before that one-year anniversary.

Welcome!

Welcome to the blog of Yunker & Park plc, a Lexington, Kentucky law firm. Topics will of course include commentary on current legal issues, but will also cover other areas of interest such as gardening, college basketball and the use of cats by the CIA during the Cold War.

Enjoy!