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Michael Brian Fisco, Anne F Larsen, Oppenheimer, Wolff & Donnelly, Minneapolis, MN.
Philip K Jones, Jr, John Charles Anjier, Liskow & Lewis, New Orleans, LA. Robert C Galloway, Butler, Snow, O'Mara, Stevens & Cannada, Jackson, MS.
Appeal from the United States District Court for the Southern District of Mississippi.
Before REAVLEY, SMITH AND EMILIO M. GARZA, Circuit Judges.
First Trust National Association ("First Trust") is indenture trustee for a trust the assets of which are proceeds of notes sold by Belle Casinos, Inc. ("BCI"), and Biloxi Casino Belle, Inc. ("BCBI"). Those assets were placed by BCI/BCBI into two escrow accounts to be employed in building two casinos. The casinos ran over budget, and BCI/BCBI filed for bankruptcy. First National Bank of Commerce ("FNBC"), the agent for these escrow funds, failed to obtain necessary documentation, guaranteeing the cost of construction, from various sources, therefore contributing to the cost overruns and the bankruptcy. Before the bankruptcy, First Trust became aware of cost overruns and of its failure to receive from FNBC copies of all necessary documentation.
First Trust sued FNBC, claiming breach of various contractual and fiduciary obligations to the noteholders whom First Trust represents as indenture trustee. FNBC challenged First Trust's suit on grounds of standing and the statute of limitations. The district court found for FNBC on summary judgment on both grounds. First Trust appeals. Agreeing with the district court that limitations bars this action, we affirm.
Mississippi Riverboat Amusements, Ltd. ("MRA"), which owned and operated the Biloxi Belle Casino in Biloxi, Mississippi, decided in 1993 to expand its existing casino (the "Biloxi Project") and to open a new casino in Tunica County (the "Tunica Project"). To facilitate this expansion, MRA established two subsidiary corporations: BCI, a Delaware corporation, and BCBI, a Mississippi corporation. To finance the construction and expansion of the projects, certain notes were sold under an offering put together by Bear, Sterns & Co., Inc., in the name of BCI. The notes were sold to investors (the "noteholders" or "Holders") pursuant to an Indenture under which First Trust served as indenture trustee, thereby agreeing to perform certain acts on behalf of the Holders and in relation to the notes, which were sold in October 1993.
Upon sale of the notes, FNBC was selected as Disbursing Agent for the proceeds, and its obligations were defined by the Disbursement and Escrow Agreement ("Disbursement Agreement"). The proceeds from the notes were placed into two escrow accounts administered by FNBC, which agreed to distribute the funds from those accounts only on the occurrence of certain conditions listed in the Disbursement Agreement. Simultaneously, BCI loaned the net proceeds of the notes to BCBI, which executed a Disbursement and Escrow Account Security Agreement ("Disbursement Security Agreement") to BCI in the principal amount of $ 75 million. BCBI was to use the net proceeds of the offering to finance the construction and expansion of the projects and thereafter operate the casinos.
After a draw at closing to pay off the interim loans and closing costs, BCBI deposited almost $ 60 million into two escrow accounts at FNBC. Finally, an Assignment Agreement was executed between BCI as assignor and First Trust as assignee, whereby BCI assigned all of BCI's rights as Lender to First Trust, including its rights under the Disbursement Agreement. Moreover, BCI assigned its rights, title, and interest in the escrow accounts to First Trust.
According to article III of the Disbursement Agreement, FNBC and First Trust were to receive certain documents (the "initial documents") as a precondition to disbursing money from the escrow accounts. After the note sale, FNBC received Contractor's and Architect's Certificates (the "Disbursement Certificates" or "certificates") as contemplated by article VI of the Disbursement Agreement, and in particular section 6.08. FNBC, however, was to use the Disbursement Certificates to make disbursements only if both First Trust and FNBC had first secured the initial documents.
Neither First Trust nor FNBC received those documents. FNBC, though, disbursed the requested funds on the strength of the Disbursement Certificates alone.
FNBC first distributed money from the escrow accounts on October 14, 1993, and continued to disburse until May 13, 1994. On or about April 14, 1994, the Holders were first notified by BCI that there were construction-cost overruns. At a meeting between Bear, Stearns and the Holders on May 5, 1994, the Holders received a financial report indicating that the projects had greatly overrun their budgets.
The Holders hired attorneys to negotiate further with BCI and to investigate defaults under the Indenture and Disbursement Agreements. On May 19, 1994, the noteholders' attorney informed Scott Strodthoff, First Trust's vice president, of the overruns and that a review of the Disbursement Agreement indicated that a potential default had occurred, and faxed Strodthoff a copy of the Disbursement Agreement.
On or about May 19, 1994, Strodthoff examined First Trust's file and discovered that only Disbursement Certificates numbered 3, 4, and 5 were in the file. First Trust then hired its own counsel on May 26, 1994, to "review documents regarding construction disbursements." The construction budget in the Disbursement Agreement limited the Biloxi and Tunica Projects to about $ 30 million each. Accordingly, BCBI could not exceed the budgets by more than $ 1.2 million without First Trust's permission. There is no evidence that First Trust ever consented to any increase in the budgets.
First Trust declared default on July 12, 1994, and instructed FNBC to transfer the remaining escrowed funds to First Trust; BCI and BCBI filed for bankruptcy on August 31, 1994. First Trust claims that it first discovered FNBC's failure to obtain the initial documents in July 1996, when its attorneys examined FNBC's files.
First Trust sued in its capacity as indenture trustee on behalf of the Holders on June 10, 1997, claiming breach of the Disbursement Agreement, alleging that FNBC disbursed funds from the escrow accounts without having first received the initial documents. It claimed breach of contract and of fiduciary duty and sought damages in an amount equal to the funds wrongfully disbursed.
In response, FNBC filed a third-party complaint against various third-party defendants, claiming that they were at least partly responsible for FNBC's alleged mishandling of the proceeds. FNBC also filed a motion for summary judgment, arguing that First Trust's action was time-barred and that First Trust lacked standing under the Indenture to bring its claims. The district court found for FNBC on both counts, granting summary judgment and attorney's fees under the Indenture.
(1) All actions for which no other period of limitation is prescribed shall be commenced within three (3) years next after the cause of such action accrued, and not after.
(2) In actions for which no other period of limitation is prescribed and which involve latent injury or disease, the cause of action does not accrue until the plaintiff has discovered, or by reasonable diligence should have discovered, the injury.
MISS. CODE ANN. 15-1-49 (1999).
First Trust sued on June 10, 1997. Under subsection (1), therefore, its action is barred if it accrued before June 10, 1994. First Trust claims, however, that the "discovery rule" should apply to toll the statute until July 1996, when it first discovered that FNBC had never sent it the initial documents, or, if the discovery rule does not apply, that its claim was still timely, because its cause of action did not accrue until BCI and BCBI declared bankruptcy--after June 10, 1994.
The district court and FNBC reason, to the contrary, that First Trust's claim accrued on the day of the first disbursement of funds, that the discovery rule does not apply, and that even if it did, the tolling pursuant to that rule would have ended at the very latest on June 10, 1994, when First Trust's attorneys explained to First Trust that breach had probably occurred and that the relevant documents should be reviewed. We agree.
In Mississippi, a breach of contract claim accrues at the time of the breach regardless of when damages resulting from the breach occur. See Young v. Southern Farm Bureau Life Ins. Co., 592 So. 2d 103, 107 (Miss. 1991); Johnson v. Crisler, 156 Miss. 266, 125 So. 724, 724-25 (Miss. 1930). The breach First Trust complains of is FNBC's disbursement of money without having received and transmitted to First Trust the appropriate documents. Disbursements began on October 14, 1993, and continued until May 13, 1994. First Trust's cause of action therefore emerged at the earliest on the first of those dates and, most generously, on the last.
First Trust claims that its cause of action could not arise until BCI and BCBI filed for bankruptcy, because "First Trust's claims against FNBC were contingent on whether BCI paid the amounts due and owing under the Notes. Only when it became clear that BCI was unable to satisfy its obligations under the Notes was First Trust able to seek recovery of principal and interest from other sources." First Trust argues that the district court's earlier denial of summary judgment to the third-party defendants (regarding the claims brought by FNBC) on limitations grounds should, under the law-of-the-case doctrine, protect First Trust from FNBC's summary judgment motion as well.
First Trust errs in comparing its cause of action to FNBC's. As we will explain, First Trust's viable, independent action against FNBC sounds in contract, while FNBC's action sounds in tort--recovery as a result of fraud. The district court's refusal to find the third-party defendants dismissed on limitations grounds is based on when tort actions, not contract actions, accrue. As we have said, contract actions accrue when the breach, not the injury, accrues. While it might have been the case that First Trust's injuries became final when BCI/BCBI filed for bankruptcy, formal breach had occurred long before.
Moreover, First Trust errs in its assertion that it enjoyed no option of action before bankruptcy ensued because it could prove no damages. The Disbursement Agreement provides that, "upon the occurrence of any Event of Default, Lender may, in its sole discretion and without notice to or demand on Borrower, and in addition to all rights and remedies available to Lender under the Collateral Documents, demand the return of any funds in the Escrow Account," and take various actions against the borrower. First Trust then, immediately upon disbursement of the first funds, could have recognized that it had not been sent copies of the initial documents, demanded them from FNBC, found that FNBC lacked them as well, declared breach, and seized the escrow accounts.
These actions would have ensured, as concretely as did BCI's and BCBI's bankruptcy, that expenditures from the account would cease until the documentary deficiencies were resolved--either through proper provision of the documentation (thereby protecting the Holders) or through FNBC's discovery of fraud by various third parties and recovery against them (thereby recompensating the Holders). In short, First Trust's claim that its cause of action did not materialize until BCI and BCBI declared bankruptcy cannot stand; it accrued on disbursement of the funds.
First Trust's fiduciary-duty claims against FNBC arise from the same source and the same incidents as do its breach of contract claims--the relationship between the parties created by FNBC's contract and the failure to get and deliver the initial documents to First Trust. No basis independent of the contract exists for finding a fiduciary duty. The district court therefore decided that the fiduciary duty claim was parasitic of the breach on contract claim, and thus accrued as the contract claim accrued.
First Trust does nothing to defeat the district court's reasoning; it merely reasserts that FNBC owed it a contract-based fiduciary duty. Even were it able to convince us that the court erred in finding that First Trust's tort claim is entirely derivative of its contract claim, however, First Trust would gain no ground on the limitations front, because, for reasons we will explain, First Trust was or should have been aware, more than three years before it brought the instant action, that it had been actionably damage.
We agree with the district court that First Trust's fiduciary duty claim is derivative of its contract claim. Because First Trust insists that a fiduciary relationship existed between it and FNBC, however, and because the bare existence of a fiduciary relationship is, in Mississippi, a question of fact for the jury,3 we will analyze First Trust's contention that the discovery rule should apply in this case under the assumption that FNBC was, pursuant to its contractual relationship, a fiduciary of First Trust's.
First Trust argues that the discovery rule should apply in this context because FNBC's errors were latent and undiscoverable, especially because FNBC stood in the position of fiduciary to First Trust, responsible to report all of its errors to First Trust at every opportunity. FNBC responds by noting that the discovery rule has never been applied in Mississippi to a contract claim, and urges us to construe the discovery rule as inapplicable to the contract setting. These facts, however, do not require us to make that determination of Mississippi law.
[a]fter reviewing the documentation, we have reached the conclusion that we cannot comply with your request that we deliver funds directly to you under the Escrow Agreement or the Security Agreement.
Under the terms of the Escrow Agreement, an event of default must exist before we, as escrow agent, can deliver the funds to the trustee. Although we do not have concrete evidence of the existence of an event of default, we would be willing to rely upon your representation to that effect, provided that you indemnified us for any loss we sustained and costs and expenses incurred in connection with the transfer of such funds to you. . . .
In the alternative, under the Security Agreement, you could seize the account. The seizure of the account should be a relatively simple matter. . . . Finally, . . . we can invoke a concursus [interpleader] proceeding and deposit funds into the registry of the court.
This letter hardly indicates active concealment on FNBC's part. Rather, it demonstrates a bank wishing to serve the interests of all relevant parties to the best of its capacity--even providing legal advice about how best a threatening party might achieve its desired ends.
First Trust also argues that the fiduciary relationship between it and FNBC rendered it "entitled to rely" on its conclusion that FNBC had collected and provided to First Trust all of the necessary and appropriate forms, and on FNBC's representation that it lacked concrete proof of an Event of Default. First Trust apparently thought this entitlement survived even in the face of mounting evidence of serious cost overruns, of Holders who had demanded an accounting, of evidence from its own files that FNBC had actually defaulted by failing to file with First Trust most of the necessary documentation related to the disbursements, and of lawyers who told it that a default had probably occurred and that it should begin a review of its records to document and act on that default.
While fiduciary relationships do often obscure misfeasance on the fiduciary's part and thus trigger the discovery rule, the principal of a fiduciary is not thereby permitted permanently and willfully to ignore patent evidence of the fiduciary's breach so as to delay indefinitely the accrual of an action against the fiduciary.7 Statutes of limitations exist to protect the courts from indolent claimants as well as defendants from stale claims.
Merchants & Marine's facts are inapposite here. As the Disbursement Agreement signifies, "agent's obligation to disburse any portion of the funds in the Escrow Account to Borrower . . . is subject to Agent and Trustee having received the . . . Collateral Documents." (Emphasis added). First Trust, by its own admission, never received these documents. This failure to receive documents--even without notice of cost over runs--constituted the relevant "event of default."
The record indicates that First Trust was first informed of the cost overruns on April 29, 1994. After taking over the account [a First Trust executive] was notified of the cost overruns on May 16, 1994, when he received a call from a Holder. As previously stated, [another party] also called [him] on May 19, 1994 and discussed the Holders' concerns about potential defaults under the Disbursement Agreement and the Indenture. [He] reviewed the Disbursement Agreement on or about May 19, 1994, and discovered that Disbursement Certificates numbers 3, 4, and 5 were the only documentation in First Trust's file. . . . First Trust hired its own counsel on May 26, 1994, to review all documents pertaining to the construction of the projects. First Trust also sent letters to FNBC on May 26 and June 3, 1994, acknowledging that disbursements had been made by FNBC and requesting Disbursement Certificates that it had not received as required by section 6.08 of the Disbursement Agreement.
None of these facts comports with the picture of an entity's remaining blissfully unaware that a cause of action had "probably" or "potentially" arisen. Rather, they are events indicating that First Trust not only should have recognized but actually recognized that its rights had been jeopardized, and that it needed to take forceful and perhaps litigious action to defend them.
What follows these actions, though, is a long pause--until June 1996 according to First Trust--in which First Trust took no action against FNBC.10 The district court was fully justified in concluding that First Trust knew or should have known that breach probably had occurred before June 10, 1994. Applying the discovery rule, then, cannot save First Trust's cause of action.
The question of attorney's fees is parasitic here. Section 10.14 of the Disbursement Agreement reads, "if any action or proceeding is brought by any party against any other party under this Agreement, the prevailing party shall be entitled to recover such costs and attorneys' fees as the court in such action or proceeding may adjudge reasonable." Because we affirm the judgment rendering FNBC the prevailing party, we affirm too on the issue of attorney's fees. Neither side challenges the amount of fees awarded.
See Williams v. Kilgore, 618 So. 2d 51, 54 (Miss. 1992) (citing Owens-Illinois, Inc. v. Edwards, 573 So. 2d 704, 706-07) (Miss. 1990)).
it is axiomatic that a single act or course of conduct may constitute not only a breach of contract but an independent tort as well, if in addition to violating a contract obligation it also violates a duty owed to plaintiff independent of the contract to avoid harming him. Such independent harm may be found because of the relationship between the parties, or because of defendant's calling or because of the nature of the harm. However, not all breaches of contract are also independent torts: where defendant's negligence ends merely in nonperformance of the contract and where defendant is not under any recognized duty to act apart from contract, the courts generally still see no duty to act affirmatively except the duty based on--and limited by--defendant's consent.
Palmer, 871 F. Supp. at 914 (citations, quotation marks and ellipses omitted; emphases added).
See Carter Equip., 681 F.2d at 390. As discussed, we have recognized that any fiduciary duty owed First Trust by FNBC would have arisen as a result of the agreements discussed herein, and thus cannot create an independent tort action. We have not held thereby that FNBC did in fact owe First Trust a fiduciary duty for any purposes, because such a conclusion is reserved to the jury. We conduct the following analysis to demonstrate the irrelevance of such a finding, whatever the answer, to this case.
The plaintiffs need not have actual knowledge of the facts before the duty of due diligence arises; rather, knowledge of certain facts which are "calculated to excite inquiry" give rise to the duty to inquire. The statute of limitations begins to run once plaintiffs are on inquiry that a potential claim exists.
Id. (citations omitted; emphasis added).
Mississippi courts have upheld summary judgments on limitations grounds even where the summary judgment record shows that the discovery rule would otherwise have applied under the circumstances, because the plaintiff either knew or should have known that an action had accrued, and it was not therefore latent. See Robinson v. Singing Riv. Hosp. Sys., 732 So. 2d 204, 208 (Miss. 1999); Womble v. Singing Riv. Hosp., 618 So. 2d 1252, 1266 (Miss. 1993); cf. Chamberlin v. City of Hernando, 716 So. 2d 596, 601 (Miss. 1998).
See Robinson, 732 So. 2d at 208; Fed. R. Civ. P. 8, 56.
For its proposition, First Trust relies on Smith v. Sneed, 638 So. 2d 1252, 1258 (Miss. 1994), holding that the discovery rule would work against a lawyer in a malpractice suit in part because of "the inability of the layman to detect [legal] misapplication; the client may not recognize the negligence of the professional when he sees it." Id. (citations omitted). Here, of course, First Trust does not merit "lay" status; it is, after all, a trust company, and therefore must be charged with the duty of knowing how to read a trust indenture, being aware of the rights and duties therein, and being able to protect those rights and duties.
See also Smith, 638 So. 2d at 1257 (holding that the statute will not run against a fiduciary "until the client discovers, or should discover, the material facts in issue" because such tolling "vindicates the fiduciary duty of full disclosure") (citation omitted)).
the general policies underlying the statute of limitations will not be thwarted by adoption of the discovery rule in that limited class of . . . cases in which, because of the secretive or inherently undiscoverable nature of the [act] the plaintiff did not know, or with reasonable diligence could not have discovered, that he had been [injured]. In such rare instances, we do not believe that a plaintiff can be accused of sleeping on his rights.
Id. (citations omitted; emphasis added). Again, this is inapposite, because even minimal diligence by First Trust would have brought discovery of the agent's breaches.
First Trust claims in July 1996 to have learned for the first time that FNBC had not received any initial documents (even though it knew or should have known that it had also never received such documents, as required), and realized that FNBC was a relevant target of litigation. Even then, First Trust still waited another 11 months, until June 1997, to sue FNBC.

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En erstatning, der udbetaltes til selskabet for manglende opfyldelse af en aktiekøbsaftale, ansås for omfattet af kursgevinstloven.
Klagen angår bindende svar om beskatning af erstatning for manglende overholdelse af aktiekøbsaftale.
Kan Skatterådet bekræfte, at den af H1 Holding A/S i 2007 modtagne erstatningssum for manglende opfyldelse af en aktiekøbsaftale kan anses for omfattet af statsskattelovens § 5 a, og erstatningen derfor er en skattefri formueforøgelse?
Landsskatteretten stadfæster afgørelsen med begrundelsen, at erstatningssummen anses for skattepligtig efter kursgevinstlovens § 3.
H1 Holding A/S ejes af G1 A/S, G2, G3 AB og den finske pendant til G2, G4. G1 A/S besidder 26,08 % af aktierne (indirekte), mens de tre øvrige aktionærer hver især besidder 24,64 % af aktierne i selskabet.
H1 Holding A/S blev stiftet i februar 2004 med henblik på at erhverve og besidde aktierne i et russisk datterselskab, der skulle eje et hotel i Rusland.
Den ene af de fire aktionærer i H1 Holding A/S: G1 A/S er et selskab i en gruppe, der er en international hotelkæde, der via managementkontrakter forestår ledelsen af hoteller i Europa, Rusland, Mellemøsten og Afrika under en række forskellige brands. Hensigten med G1 A/S' deltagelse i projektet var, at G1 A/S via en managementkontrakt skulle forestå ledelsen af hotellet i Rusland. De øvrige aktionærer skulle være passive investorer.
Efter aftalen udgjorde "T-date" tidspunktet for, hvornår den finske sælger G5 skulle fremlægge dokumentation for, at betingelserne vedrørende sikring af adkomst til hotelejendommen var opnået, mens "CC-date" fastlagde tidspunktet for, hvornår betingelserne i aftalen kunne anses for opfyldt, således at den betingede aftale kunne gennemføres med overdragelse af aktierne og udveksling af købesummen.
"(...) the date when all of the preconditions set out in clause 8.5 i) to vii) of this agreement to pay the Purchase Price have been fulfilled, and the ownership of the shares is transferred to the Purchaser".
Købesummen for aktieposten i G7 er i aftalen fastlagt til 13.200.000 USD.
Aktiekøbsaftalen blev senere revideret vedrørende detailforhold den 21. februar 2005 og den 2. februar 2006, men de grundlæggende forhold omkring den betingende erhvervelse af aktierne er uændrede i forhold til september 2004-versionen.
I marts 2006 blev hotellet færdiggjort. Det viste sig imidlertid, at der var store problemer med tinglysningen af G7's uindskrænkede adkomst til ejendommen. Russiske civilretlige regler medførte, at der alene kunne tinglyses adkomst til dele af hotellet, hvilket H1 Holding A/S ikke kunne acceptere.
I august 2006 måtte det herefter konstateres, at den finske sælger G5 ikke havde opfyldt betingelsen om at sikre fuldstændig og ubetinget tinglyst adkomst til hotellet.
G5 forsøgte herefter at hæve aftalen. Udover at den betingede tinglysning ikke kunne gennemføres, havde dette ifølge repræsentanten utvivlsomt også sin baggrund i, at værdien af hotellet var steget ganske betydeligt i byggeperioden, og sælger derfor kunne se en fordel i at hæve aftalen. H1 Holding A/S ønskede på sin side ikke at hæve aftalen, men anså sig som følge af medkontrahentens manglende opfyldelse af denne for berettiget til erstatning for misligholdelse.
Den 21. december 2006 blev der efter anmodning den 1. december 2006 fra H1 Holding A/S indledt voldgiftssag i Sverige. Den 20. december 2007 blev sagen afgjort, idet H1 Holding A/S blev tilkendt en erstatning på 13.200.000 USD med henvisning til, at det opførte hotel var steget væsentligt i værdi, efter sagkyndig erklæring minimum til 27.000.000 USD, sammenholdt med at maksimum for erstatning efter aftalen maksimalt kunne udgøre 13.200.000 USD.
187. H1 Holding A/S has consistently taken the position in its submissions that it does not seek termination of the SPA (Amended and Restated Sale and Purchase Agreement dated 2 February 2006) by virtue of G5's and G6's alleged breaches, but rather seeks to recover its damages only, within the limits specified by Clause 20 of the SPA.
189. With respect to the lost incremental value of the hotel property, H1 Holding A/S contends that it has suffered a loss of US$ 16,800,000 in discounted present-day value of the hotel property over the SPA Purchase Price, on the assumption that it would have held the property until 2011. Further, H1 Holding A/S submits that it has suffered a loss of US$ 15,154,000 in discounted present-day value with respect to the operating profits it would have derived from the Hotel over this same period. Thus, according to H1 Holding A/S, its actual total damages amount to US$ 32,724,806.
190. However, in light of the ceiling on liability set by Clause 20.3(a) of the SPA, H1 Holding A/S limits its request for recovery of damages in this arbitration to US$ 13,200,000, i.e., an amount equivalent to the Purchase Price under the SPA, together with interest thereon as from 31 December 2006.
195. Since the Tribunal has determined that G5 and G6 are liable for breaches of the SPA, the Tribunal now turns to an analysis of the recoverable damages in light of the Parties' submissions and supporting evidence.
196. At the outset, the Tribunal must note that H1 Holding A/S choice not to seek termination of the SPA has created difficulties for the Tribunal as regards treatment of future lost profits. Indeed, to the extent that the SPA continues to be in effect, it could be argued that the future loss of profits has not yet occured, since there remains a possibilily, even if highly remote under the present circumstances, of future performance.
197. This being said, as will be seen from the discussions below, the Tribunal finds it unnecessary to reach this issue in light of its finding that the maximum permitted recovery under Clause 20.3(a) of the SPA is attained on the basis of the market value of the property, without taking into account any additional loss that may occur in the future.
198. By the same token, in light of the above findings and the fact that H1 Holding A/S has presented its other expense and damage item as alternatives to the recovery of lost profit, the Tribunal finds it unnecessary to reach these other items of damage.
199. Indeed, once the ceiling of liability under the SPA has been reached, regardless of the continuing legal effectiveness of the SPA, H1 Holding A/S has exhausted its remedies with respect to the breaches of contract addressed in this arbitration, and can obtain no further recovery flow or in the future with respect thereto.
200. But for G5's and G6's breaches, H1 Holding A/S would have been owner through its wholly owned subsidiary G7 as of September 2006 of a fully operational hotel property which was evaluated in its First Report at US$ 18 million, and for which H1 Holding A/S would have paid the Purchase Price of US$ 13.2 million. According to the Second Report, the market value of the Hotel, as a fully operational hotel, is at US$ 27 million.
203. The Tribunal notes that the First Report evaluates the market value of the Hotel as a fully operational hotel as at 6 September 2006, a date in close proximity of the date of breach, 1 September 2006. Although the Tribunal considers that in normal circumstances damages are to be evaluated at the date of the breach, the Tribunal is of the opinion that a deviation from this principle is justified in the present case, due to two elements which ought not to be ignored: (i) H1 Holding A/S' intent to sell the Hotel, at the latest in 2011; and (ii) the fact that the Second Report contains the most recent historical and, in the Tribunal's view, accurate evaluation of the market value of the Hotel.
205. However, the Tribunal does not consider any of this criticism relevant in the absence of sale of the property. It remains that, because of G5's and G6's breaches, H1 Holding A/S was deprived of its right to an asset having a market value of US$ 27 million for which it would have paid US$ 13.2 million under the terms of the SPA. Consequently, H1 Holding A/S' damages exceed the maximum permitted recovery under Clause 20.3(a) of the SPA.
With respect to the profit earned by G7 to date from the operations of the Hotel and to which H1 Holding A/S would have been entitled as owner of G7 but for G5's and G6's breaches of the SPA, the Tribunal considers an analysis in this regard as unnecessary and inappropriate, given that the incremental value of the Hotel as a fully operational hotel is beyond the maximum permitted recovery under Clause 20.3(a) of the SPA.
210. Accordingly, the lost incremental value of the property, i.e., US$ 13,800,000 exceeds the US$ 13,200,000 ceiling of liability established by Clause 20.3(a) of the SPA. Therefore, the Tribunal concludes that H1 Holding A/S is entitled to the maximum recovery of US$ 13,200,000 as a result of G5's and G6's breaches of the SPA.
H1 Holding A/S blev i henhold til svensk ret tilkendt rente fra 31. december 2006, det vil sige 30 dage efter sagens anlæg den 1. december 2006, jf. kendelsens punkter 211-216.
Skatterådet har i sit bindende svar fundet, at den tilkendte erstatning må sidestilles med den avance, der ville være opnået, såfremt aktierne var erhvervet i henhold til kontrakten og afstået efterfølgende. Erstatningen er herefter skattepligtig, jf. aktieavancebeskatningslovens § 31, stk. 2, jf. § 6, stk. 1 og § 8, stk. 1.
Skat har indledningsvist bemærket, at vurderingen af, om erstatningsbeløbet er skattepligtigt eller ej må tage udgangspunkt i, hvad erstatningsbeløbet dækker.
Skat er enig med repræsentanten i, at erstatningsbeløbet ikke er tilkendt som kompensation for den manglende indtjening. Der er herved henvist til repræsentantens bemærkninger om, at erstatningen ikke er tilkendt på grundlag af mistet indtjening, da det var G7 og ikke H1 Holding A/S, der skule stå for driften af hotellet. Tabet vedrører derfor alene den manglende opfyldelse af aftalen om levering af aktierne.
"98. With respect to the type of damages, H1 Holding A/S claims the positive interest, i.e., loss of the operating profits G7 presently earns and will earn in the future as well as the value of the Hotel. Although H1 Holding A/S claims a higher amount as damages, H1 Holding A/S seeks the amount of US$ 13,200,000 in this arbitration, given the limitation under the SPA. H1 Holding A/S continues that only in case the Tribunal would deny this damages claim, it will need to deal with the amount of negative interest, i.e., expenses to be awarded. In this respect, H1 Holding A/S submits that it has suffered expenses in connection with the implementation of the SPA and foreign exchange losses in the amount of US$ 701,628."
Erstatning efter princippet om positiv opfyldelsesinteresse indebærer, at den erstatningsberettigede stilles som om, at aftalen er gennemført. Konsekvensen er, at den indtjening/gevinst, som det kan dokumenteres, at den berettigede har mistet som følge af kontraktbruddet, udgør grundlaget for erstatningskravet mod den erstatningsansvarlige.
Voldgiftsretten tilkendte H1 Holding A/S erstatning som følge af det tab, som selskabet blev påført ved ikke at kunne erhverve aktierne i G7. Dette tab er opgjort til 13,8 mio. USD, beregnet som forskellen på den aftalte købesum på aktierne og vurderingen af hotellet på USD 27 millioner. Da erstatningsbeløbet i henhold til kontrakten ikke kunne overstige 13,2 mio. USD, blev erstatningssummen fastsat til dette beløb.
Til det af repræsentanten anførte om, at det er en forudsætning for at være omfattet af aktieavancebeskatningslovens regler om afståelse, at der har foreligget en ejendomsret til aktierne, er bemærket, at H1 Holding A/S i relation til den tilkendte erstatning med udgangspunkt i princippet om positiv opfyldelsesinteresse blev stillet som om, at aktierne blev overtaget som angivet i kontrakten.
Det er derfor Skats opfattelse, at den tilkendte erstatning må sidestilles med den avance, der ville være opnået, såfremt aktierne var erhvervet i henhold til kontrakten og afstået efterfølgende.
H1 Holding A/S er herefter anset for skattepligtig af den udbetalte erstatning i henhold til aktieavancebeskatningslovens § 31, stk. 2, jf. § 6, stk. 1, og § 8, stk. 1.
Selskabets repræsentant har principalt nedlagt påstand om, at det bindende svar ændres, således at den modtagne erstatning ikke anses for omfattet af aktieavancebeskatningsloven, men anses for omfattet af statsskattelovens § 5 a, og derfor er skattefri, og subsidiært påstand om at anvendelse af aktieavancebeskatningsloven vil resultere i skattefrihed på grund af reglerne om ejertid i aktieavancebeskatningslovens § 9.
Repræsentanten har til støtte for den principale påstand om, at erstatningssummen må anses for skattefri efter statsskattelovens § 5 a, idet den må henføres til formuesfæren, anført at H1 Holding A/S reelt har mistet den fremtidige indtægtskilde fra aktiebesiddelsen i det russiske hotelselskab. Aktierne var en langsigtet, flerårig investering, der derfor forventeligt kunne være afstået uden beskatning, og den underliggende løbende indkomst fra hotellets drift ville efter beskatning i Rusland kunne modtages som skattefrit udbytte af H1 Holding A/S. Med det foreliggende bindende svar vil H1 Holding A/S derfor blive beskattet af midler som selskabet ikke under normale omstændigheder ville have været beskattet af. Det er påpeget, at voldgiftskendelsen fastlagde erstatningssummen baseret på den underliggende værdistigning på ejendommen og ikke baseret på mistede indtægter ved hoteldrift. Der er derfor ikke ved selve fastlæggelsen af erstatningssummen antaget, at erstatningen var erstatning for indkomst ved hoteldrift.
Repræsentanten har henvist til Skatterådets bindende svar fra december 2007 gengivet i SKM2008.21.SR (TfS 2008.171) vedrørende erstatning for opgivelse af erhvervslejemål samt til praksis vedrørende kvalifikation af vederlag for opgivelse af mælkekvoter, sukkerroekvoter samt skrotningsbeviser på vindmøller. Endvidere er henvist til Helket, 13. udgave af "Opgørelse af den skattepligtige indkomst", p. 559f mv. og til LSRM1976.137 om kvalifikation af en erstatning for en ikke-ønsket opgivelse af en forkøbsret til en ejendom.
Til Skats henvisning i afgørelsen til aktieavancebeskatningslovens § 31, stk. 2, hvorefter bl.a. erstatningssummer sidestilles med afståelsessummer, har repræsentanten anført, at det må være en forudsætning, at den der modtager erstatningen ejer eller har ejet de pågældende aktier, jf. modsætningsvis ordet "afståelsessummer". Foreligger der ikke en afståelsessituation, kan en erstatningssum ikke anses for omfattet af bestemmelsen.
I situationen her har H1 Holding A/S aldrig været ejer af aktierne. Der blev således aldrig indgået en endelig aftale om overdragelse af aktierne. Der er ikke tale om efterfølgende misligholdelse af aftalen, men om manglende opfyldelse af aftalens oprindelige betingelser, herunder om endelig og ubetinget tinglyst adkomst til hotelbygningen i det selskab, som aktiekøbsaftalen vedrørte. Ifølge repræsentanten kunne dette forhold, som skyldtes juridiske årsager, ikke påvirkes af sælger. H1 Holding A/S har på intet tidspunkt været tillagt de civilretlige ejerbeføjelser til aktierne.
Repræsentanten har henvist til Højesterets dom gengivet i TfS 1998.397, hvori det fastslås, at aktier ikke kan anses for afstået efter aktieavancebeskatningsloven på det tidspunkt, hvor selskabet er konkursramt eller dets aktiekapital utvivlsomt er tabt, da loven fordrer en reel afståelse af aktierne.
Tilkendelse af erstatningssum ved voldgiftskendelsens afsigelse kan ikke sidestilles med opnåelse af ejerskab med umiddelbar, efterfølgende afståelse. I køberetten medfører en kompensation i form af positiv opfyldelsesinteresse, at den skadelidte økonomisk stilles, som om præstationsløftet var opfyldt. Dette civilretlige begreb kan dog ikke medføre, at der uden hjemmel i skattelovgivningen kan ske beskatning af den tilkendte erstatningssum.
Aftalen kan endvidere ikke karakteriseres som en ren køberet, der kan beskattes efter aktieavancebeskatningsloven, da H1 Holding A/S i henhold til aftalen med medkontrahenten var forpligtet til at erhverve aktierne i G7 til den aftalte pris, og medkontrahenten modsat forpligtet til at sælge aktierne til den aftalte pris, når aftalens betingelser var blevet opfyldt. Der er derimod tale om en betinget aktiekøbsaftale, der aldrig blev gennemført.
Yderligere kan erstatningskravet ikke anses for en fordring omfattet af kursgevinstloven. Kursgevinstloven omfatter pengefordringer. H1 Holding A/S' erstatningskrav, og dermed erstatningen, har naturligvis sin rod i den betingede aktieoverdragelsesaftale, idet H1 Holding A/S' erstatningskrav opstod som en følge af sælgers misligholdelse af aftalen. H1 Holding A/S erhvervede imidlertid først en pengefordring på sælger, efter at aftalen var blevet misligholdt, og som følge af voldgiftsrettens tilkendelse af erstatningssummen til H1 Holding A/S. På dette tidspunkt erhvervede H1 Holding A/S en pengefordring på erstatningsbeløbet på 13,2 mio. USD. Endvidere må fordringen anses for anskaffet til 13,2 mio. USD, omregnet til DKK efter kursen på den dato, hvor voldgiftsretten traf sin afgørelse.
Repræsentanten er herefter af den opfattelse, at erstatningssummen til H1 Holding A/S skal behandles som en kompensation for uberettiget manglende opfyldelse af en betinget aftale. Denne manglende opfyldelse af aftalen, der medfører, at H1 Holding A/S ikke erhverver aktierne til den aftalte købesum, og den heraf afledte erstatning, kan derfor ikke anses for kompensation for tab af indkomst, men derimod som kompensation for manglende etablering af det indkomstgrundlag, som en erhvervelse af aktierne ville have medført, og er derfor skattefri efter principperne i statsskattelovens § 5 a.
Til støtte for den subsidiære påstand er anført, at såfremt Landsskatteretten måtte komme frem til, at H1 Holding A/S har besiddet ejerskab til aktierne, må dette ejerskab allerede være opnået ved indgåelse af aktiekøbsaftalen i september 2004. En "afståelse" af aktierne - ved voldgiftskendelsen den 20. december 2007 - og en afståelsessum i form af den tilkendte erstatningssum vil således være skattefri på grund af reglerne om ejertid i aktieavancebeskatningslovens § 9, da der indtil voldgiftskendelsens afsigelse var berettiget tvivl om, hvorvidt H1 Holding A/S havde krav på erstatning, herunder erstatningssummens størrelse.
Det er oplyst, at H1 Holding A/S den 24. september 2004 indgik den første betingede aftale med G5 og G6 om køb af aktier i G7, Rusland, idet aktiesalget skulle ske efter visse nærmere betingelsers opfyldelse, herunder efter opførelsen af et hotel, som skulle ejes af G7, og dette selskabs dokumentation for tinglyst fuldstændig og ubetinget adkomst til hotellet. Efter hotellets færdiggørelse i marts 2006 viste der sig store problemer, herunder med tinglysningen mv., hvorefter H1 Holding A/S med kæreskrift af 1. december 2006 indledte sag ved Voldgiftsretten.
Ved Voldgiftsrettens kendelse den 20. december 2007 blev H1 Holding A/S tilkendt en erstatning på 13,2 mio. USD for manglende opfyldelse af aftalen. Om baggrunden for erstatningens størrelse er angivet, at beløbet, der var det maksimale erstatningsbeløb, som kunne gives efter kontrakten, blev fastsat til dette beløb allerede fordi det oversteg stigningen i markedsværdien af hotellet, og dermed aktiernes værdi i G7.
Idet misligholdelsen af aktieoverdragelsesaftalen herefter må anses for sket på baggrund af forhold, som parterne ikke har haft fuld rådighed over, anses aftalen for gået tilbage, og aftalen kan derfor ikke tillægges skattemæssig virkning. Erstatningssummen er dermed ikke omfattet af aktieavancebeskatningslovens regler. Erstatningen må i stedet anses for ydet som kompensation for det tab, som selskabet har lidt som følge af ophævelsen af aftalen som sådan.
Selskabets erstatningskrav på manglende opfyldelse af aftalen er efter obligationsretten en fordringsret, der er stiftet på tidspunktet for misligholdelse af aftalen, som ifølge voldgiftskendelsen er den 1. september 2006. En sådan fordring er omfattet af kursgevinstloven, jf. lovens § 1. Det bemærkes, at det i denne forbindelse er uden betydning, at beskatning først har kunnet gennemføres, når kravet er endeligt fastslået.
Anskaffelsessummen for fordringen kan, da denne må anses for erhvervet for 0 kr., og da der ikke i øvrigt er oplyst om omkostninger i tilknytning til erhvervelsen, opgøres til 0 kr. Gevinsten kan herefter opgøres til 13,2 mio. USD, jf. kursgevinstlovens § 26. Gevinsten er skattepligtig, jf. kursgevinstlovens § 3.
Svaret på det bindende svar stadfæstes således, men med ovennævnte begrundelse.


D.C. Law Library - § 47–1818.02. Tax credits to Qualified Social E-Commerce Companies.
↪ § 47–1818.02. Tax credits to Qualified Social E-Commerce Companies.
(1) The annual new hire wage credit amount accrued shall be determined as of the end of each calendar year from 2010 through 2015 by multiplying the total new hire wage credit earned by a Qualified Social E-Commerce Company in each calendar year by the annual resident hiring factor in the same calendar year. The total new hire wage credit amount shall be the aggregate of the new hire wage credit amount earned in each calendar year, subject to the new hire wage credit cap. The amount of any new hire wage credit earned in a calendar year shall be based on new hire information reported by a Qualified Social E-Commerce Company to the Office of Tax and Revenue in its corporate tax filing for each calendar year.
(2) Notwithstanding any other provision of this subchapter, no person shall claim an abatement pursuant to this section before October 1, 2015, and unless that person occupies qualified real property before April 1, 2017.
(3) If a Qualified Social E-Commerce Company leases or subleases any portion of the qualified real property, the new hire wage credit shall be applied only to a pro rata portion of the assessment on the qualified real property, which shall equal the ratio of the square footage of building area on the qualified real property that the Qualified Social E-Commerce Company occupies to the total square footage of building area that could be occupied.
(b) Subject to subsection (c) of this section and § 47-1818.04, the corporate income tax imposed on a Qualified High Technology Company by § 47-1817.06 with respect to taxable income earned by a Qualified Social E-Commerce Company shall be abated up to the amount of the resident employment credit for 5 years commencing on the date that the Qualified Social E-Commerce Company occupies qualified real property (except, that in no instance shall such 5-year period begin before October 1, 2015), or until the resident employment credit is exhausted or forfeited as provided pursuant to this subchapter, or through fiscal year 2025, whichever occurs earlier. The resident employment credit amount available to be applied against the tax imposed by § 47-1817.06 shall be determined each tax year by applying the resident new hire proportions during the timeframe set forth in § 47-1818.01(14).
(H) The Qualified Social E-Commerce Company has not filed a petition in bankruptcy in connection with the Qualified Social E-Commerce Company’s business.
(2)(A) If a Qualified Social E-Commerce Company fails or ceases to comply with or achieve the provisions of paragraph (1)(A) through (C) of this subsection, any abatement provided for in this section shall not apply during the period of non-compliance.
(B) If a Qualified Social E-Commerce Company fails or ceases to comply with or achieve the provisions of paragraph (1)(D) through (H) of this subsection, any abatement provided for in this section shall immediately terminate and cease to be granted.
This section is referenced in § 47-1818.05 and § 47-1818.06.


The Trust Fund Recovery Penalty (TFRP) is also sometimes referred to as the Responsible Person Penalty, Responsible Officer Penalty, or 100% Penalty.
To encourage prompt payment of certain taxes, such as withheld employment taxes, Congress passed a law, I.R.C. § 6672, that provides for the TFRP or Responsible Person Penalty. Many state governments, have passed similar laws—for instance: C.R.S. § 39-21-116.5 (Colorado); Ariz. Rev. Stat. Ann. § 43-435 (Arizona); Mass. Gen. Laws ch. 62B, § 5 (Massachusetts); N.C. Gen. Stat. § 105-242.2(b) (North Carolina); S.C. Code Ann. § 12-8-2010(A) & (D) (South Carolina); Tex. Tax Code Ann. § 111.016 (Texas); Utah Code Ann. § 59-1-302(2) (Utah); Va. Code Ann. § 58.1-1813 (Virginia).
The TFRP, or Responsible Person Penalty, is a mechanism that the IRS uses to hold individuals, personally liable for the unpaid taxes of a company, including a corporation, limited liability company, partnership, or payroll service provider. Although the TFRP can be used to hold individuals responsible for several different types of tax, it most commonly used to hold them personally liable for a company’s non-payment of the “trust fund” portion of employment taxes.
Employment taxes can be broken down into two parts: the “trust fund” portion of the taxes and the non-trust fund portion of the taxes.
The trust fund portion of employment taxes consists of the taxes that an employer withholds from an employee’s wages. When an employer pays its employees, the employer does not pay the employees all of the money that the employees earned. This is because employers are required to withhold taxes (income tax and the employee’s share of Social Security and Medicare taxes (FICA)) from their employees’ paychecks and pay the withheld taxes to the government. The income tax and employees’ share of FICA (social security and Medicare) that an employer withholds from its employees’ paychecks are part of the employees’ wages, although they are paid to the government instead of to the employees. These taxes are called “trust fund” taxes because an employer actually holds its employee’s money, in trust, until the employer pays the withheld amount to the government.
The non-trust fund portion of employment taxes consists of the taxes that an employer pays from the employer’s own funds: the employer’s share of Social Security and Medicare (FICA) tax, and federal unemployment tax (FUTA).
There are a number of reasons why a company may not pay withholding taxes to the IRS. For instance, those in charge of a company’s employment taxes may not be aware of the company’s employment tax obligations or how to meet them. Likewise, a company may simply forget to withhold income, Social Security, and Medicare taxes from employees’ wages when it runs payroll. Sometimes payroll and employment taxes may be forgotten in the struggle to keep a company running. Other times, companies find themselves in positions of having to make difficult financial decisions and tap into or borrow the taxes withheld from employees’ wages, using the money to pay other expenses and creditors, instead of paying the money to the IRS. More nefarious reasons include situations in which an employee makes a tax mistake and conceals it from his or her employer, or when a dishonest employee or payroll service provider steals or embezzles the withheld taxes.
Regardless of the reason, a company that fails to pay trust fund taxes to the government in a timely manner opens itself up to scrutiny, potential penalties, and even criminal prosecution. Further, it may subject “responsible” persons to personal liability for the company’s taxes.
While shareholders, officers, directors, members, managers, partners, and employees of corporations, limited liability companies, and partnerships are generally not personally liable for corporation, limited liability company, or partnership debts and obligations, they can be held personally liable for certain taxes under the TFRP.
Through its use of the TFRP, the IRS is authorized to “pierce the corporate veil” by assessing liability for the unpaid trust fund portion of a company’s employment taxes against the individuals that are responsible for the company’s failure to properly withhold and pay such trust fund taxes.
The TFRP imposes personal liability on “responsible persons” for “willful” failure to collect and pay over trust fund taxes withheld from employees. If a person was “responsible” for withholding, accounting for, or depositing or paying trust fund taxes, and “willfully” failed to do so, that person can be held personally liable for the TFRP, which is equal to the full amount (100%) of the unpaid trust fund tax, plus interest.
“Responsible persons” are those persons who have a duty to collect and pay over withholding taxes. Oftentimes, responsible persons are those persons who have authority to sign company checks, control payroll, sign tax returns, or direct the accounting of a company. A responsible person for this purpose can be an officer or director of a corporation, a shareholder, a member or manager of a LLC, a partner of a partnership, or an employee of any form of business, in addition to other individuals.
“Willfully” generally means that the responsible person knows that employment taxes are due, and paying other creditors instead of the IRS.
The IRS is especially aggressive in employment tax and Trust Fund Recovery Penalty collection. The government likens a company’s failure to pay trust fund employment taxes to stealing because the withheld trust fund taxes are not the company’s money, but are employees’ money, held in trust by the company.
Unfortunately, a Trust Fund Recovery Penalty assessment can be devastating to the individual against whom it is assessed. The TFRP is often a very large amount, and it cannot be discharged in bankruptcy.
If you are a shareholders, officer, director, member, manager, partner, or employee of a business that is facing employment tax problems, or if you are the potential target of an IRS assessment of the TFRP, call the employment tax attorneys at the Politte Law Offices immediately. Do not speak to the IRS, no matter how friendly or helpful the IRS agent may seem, as this may damage your case. IRS agents are specially trained in employment tax matters to extract as much information as they can in order to use that information against both the business and individuals who the IRS may hold responsible for the Trust Fund Recovery Penalty.
Our tax attorneys can help you and your company navigate through its employment tax issues and potential or actual TFRP issues, and minimize the negative consequences to both you and your company.
Experienced legal counsel can often make the difference. The attorneys at the Politte Law Offices are experienced in handling Trust Fund Recovery or Responsible Person Penalty cases, and have successfully defended many individuals against assessment of the TFRP. We represent clients at all stages involving the Trust Fund Recovery Penalty, which include the IRS’s initial TFRP investigations, when the IRS proposes TFRP assessments, appealing proposed TFRP assessments, when the IRS actually assesses the TFPR, appealing TFRP assessments, filing claims for refund challenging TFRP assessments, litigating TFRP assessments in court and on appeal, and the IRS’s collection of the TFRP.
Contact the employment tax attorneys at the Politte Law Offices today by calling 303-261-8044 or using our online form.


FindACase | Exmark Manufacturing Company Inc. v. Briggs & Stratton Corp.
Exmark Manufacturing Company Inc. v. Briggs & Stratton Corp.
BRIGGS & STRATTON CORPORATION, Defendant.
This matter is before the court on defendant Briggs & Stratton Corporation's (“Briggs”) objections, Filing No. 755, to the Memorandum and Order of the Magistrate Judge, Filing No. 754, on Briggs's Motion to Transfer, Filing No. 715. The Magistrate Judge denied the motion.
The salient facts are set forth in the Magistrate Judge's order and need not be repeated here. Briefly, after remand from the Eighth Circuit Court of Appeals, Briggs moved to transfer venue to the Eastern District of Wisconsin under TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S.Ct. 1514 (2017), which clarified proper patent infringement venue under 28 U.S.C. § 1400(b). The Magistrate Judge denied the motion, finding that although Briggs's venue challenge was not considered waived under In re Micron Tech., Inc., 875 F.3d 1091 (Fed. Cir. 2017) (finding venue challenges based on TC Heartland are not procedurally improper under Rule 12 if the matter was pending at the time TC Heartland was decided), the transfer should be denied based on Briggs's conduct and delay as well as the procedural posture of the case.
Briggs challenges the Magistrate Judge's (1) finding that “Briggs wanted to wait for the outcome of the Federal Circuit appeal prior to raising its venue objections” as opposed to “request[ing] an indicative ruling from the district court under Fed.R.Civ.P. 62.1[;]” (2) finding that cases with “much shorter delays have given rise to forfeiture[;]” (3) reliance on cases that “declined transfer at much earlier litigation stages” without looking at procedural posture; (4) finding that “certain procedural questions” arising from what issues would be heard if the case were transferred is a factor that “necessitates continued litigation of this matter in the current district, in the interest of judicial economy[;]” and (5) failure to consider the prejudice to Briggs of litigating in an improper forum.” Filing No. 754, Memorandum and Order at 5-8; see Filing No. 755, Objections at 3-4.
A magistrate judge's authority over nondispositive pretrial matters is governed by 28 U.S.C. § 636(b)(1)(A). Gomez v. United States, 490 U.S. 858, 873-74 (1989); see also Fed. R. Civ. P. 72(a). On review of a decision of the magistrate judge on a nondispositive matter, the district court may set aside any part of the magistrate judge's order that it finds is clearly erroneous or contrary to law. 28 U.S.C. § 636(b)(1)(A); Fed.R.Civ.P. 72(a); see Ferguson v. United States, 484 F.3d 1068, 1076 (8th Cir. 2007).
A decision is “‘clearly erroneous' when, although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.” Chakales v. Comm'r of Internal Revenue, 79 F.3d 726, 728 (8th Cir. 1996); see Ferguson v. United States, 484 F.3d 1068, 1076 (8th Cir. 2007). A decision is “contrary to the law” when it “fails to apply or misapplies relevant statutes, case law or rules of procedure.” Knutson v. Blue Cross & Blue Shield of Minn., 254 F.R.D. 553, 556 (D. Minn. 2008) (quoting Transamerica Life Ins. Co. v. Lincoln Nat'l Life Ins. Co., 592 F.Supp.2d 1087, 1093 (N.D. Iowa 2008)).
The court has reviewed the parties' submissions and finds the Magistrate Judge's order is neither clearly erroneous nor contrary to law. The court agrees that waiver does not bar Briggs's motion, since parties can raise challenges to venue under TC Heartland if the case was pending at the time of the TC Heartland decision. In re Micron Tech., Inc., 875 F.3d at 1096. Nevertheless, factors such as timeliness, procedural posture, and efficient use of judicial resources weigh against a transfer. See Micron, 875 F.3d at 1101-02 (concluding that the district court may exercise its inherent powers to find waiver outside of Rule 12 under the framework of Dietz v. Bouldin, Inc. 136 S.Ct. 1885, 1891-92 (2016)); see, e.g., In re BigCommerce, Inc., 890 F.3d 978, 982 (Fed. Cir. 2018) (finding waiver inappropriate under Dietz when motion for improper venue was filed nine days after TC Heartland issued, and the case had only been pending for approximately two months at the time of the motion).


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Andy is a third generation legal brief printer. Cockle Law Brief Printing was founded in 1923 by Andy’s grandparents, who were both attorneys. At that time, the Cockles worked primarily with briefs that were filed in the Nebraska Supreme Court. In the 1980s, Andy and Trish—Andy’s sister and partner—guided the company to specialize in U.S. Supreme Court briefs. Andy is a lifelong resident of Omaha, and he obtained a Business degree from the University of Nebraska at Omaha. He started working at Cockle Law Brief Printing in 1982. Andy schedules briefs, handles marketing, tracks the Supreme Court’s docket, and fields the myriad questions that attorneys ask him in regard to filing a U.S. Supreme Court brief. He enjoys handball, rollerblading, reading and with his wife, Mary Helen, traveling to visit his two grown children.
Chikvashvili v. U.S., filed on November 3rd Yukins v. Tanner, filed on November 13th To read either of these Supreme Court petitions, click the heading to open this post, then follow the links!
E.L. v. Voluntary Interdistrict Choice Corp., filed on October 25th To read this Supreme Court petition, click the heading to open this post, then follow the link!
Lay v. Singing River Health Sys., filed on September 13th To read this Supreme Court petition, click the heading to open this post, then follow the link!
Thompson v. Park, filed on August 22nd To read this Supreme Court petition, click the heading to open this post, then follow the link!
Crouse v. Caldwell, filed on August 11th To read this Supreme Court petition, click the heading to open this post, then follow the link!
Defense Distributed v. U.S. Dep’t of State, filed on August 2nd To read this Supreme Court petition, click the heading to open this post, then follow the link!
Abeles v. Metro. Washington Airports Auth., filed on July 24th To read this Supreme Court petition, click the heading to open this post, then follow the link!
Markle Interests, LLC v. U.S. Fish and Wildlife Serv., filed on July 12th To read this Supreme Court petition, click the heading to open this post, then follow the link!
Hamilton v. Pallozzi, filed on June 15th To read this Supreme Court petition, click the heading to open this post, then follow the link!

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April 03, 2019 - Complaint in Capital Care LLC and Stillington Limited, of the British Virgin Islands, v. Direct Source Management Inc., d.b.a. Chateau Belle; Eileen Chan, and Michael Winchester at the Superior Court of the State of California, for the County of Los Angeles.
March 22, 2019 - Memorandum Opinion in FrontFour Capital Group LLC and FrontFour Master Fund Ltd., of the Cayman Islands, on behalf of themselves and similarly situated stockholders of Medley Capital Corporation, v. Brook Taube, Seth Taube, Jeff Tonkel, Mark Lerdal, Karin Hirtler-Garvey, John Mack, Arthur Ainsberg, Medley Management Inc., Sierra Income Corporation, Medley Capital Corporation, MCC Advisors LLC, Medley Group LLC, and Medley LLC at the Court of Chancery of the State of Delaware.
March 04, 2019 - Petition in Argyle Funds SPC Inc. and Ardent Harmony Fund Inc., both of the Cayman Islands v. Donald Barrick and Nancy Barrick, as Trustees of The Donald W. Barrick Family Trust 2004 Trust; Integrated Book Technology Inc., Bay Energy Services Inc., MKH Transportation Inc., Walter A. Smith Enterprises Inc., Western Structured Inc., Medar RMP SPV I LLC, Fiore & Sons LLC, Franklin Homes Inc., and Controlled Environmental Systems Inc. at the Supreme Court of the State of New York, County of Nassau.
February 28, 2019 - Opinion in RS Investments Ltd., Corrado Investments Limited, Eden Rock Finance Master Limited, Eden Rock Asset Based Lending Master Limited, Eden Rock Unleveraged Finance Master Limited, and Solid Rock Special Situations 2 Limited v. RSM US, LLP, RSM Cayman Ltd., and Simon Lesser at the Appellate Court of Illinois, First Judicial District.
February 25, 2019 - Plaintiff's Motion for Summary Judgment in Steven Slom v. Kenneth Rijock at the Circuit Court of the 11th Judicial Circuit, in and for Miami-Dade County, Florida.
February 25, 2019 - Complaint in ABN AMRO Capital USA LLC, of Delaware; Societe Generale, BNP Paribas, and Natixis, New York Branch, all of France; Macquarie Bank Limited, of Australia; Bank Hapoalim BM, of Israel; MUFG Bank Ltd., of Japan; and Israel Discount Bank, of New York v. AMERRA Capital Management LLC, AMERRA Latin America Finance LLC, AMERRA Agri Advantage Fund LP, AMERRA Agri Opportunity Fund LP, AMERRA Multi Strategy Fund LP, and AMERRA Agri Fund II LP, all of Delaware; AMERRA Agri Offshore Master Fund II LP, of the Cayman Islands; and Nancy Obler, of New York, at New York Supreme Court, County of New York.

matches: v. v. v. v. v. v.


UNITED STATES OF AMERICA, Plaintiff - Appellee, v. MICHAEL BRADLEY WESTOVER, Defendant - Appellant.
Before McKAY, MATHESON, and MORITZ, Circuit Judges.
Michael Bradley Westover appeals from a district court order that dismissed his 28 U.S.C. § 2255 motion to vacate the sentence he received under the Armed Career Criminal Act (ACCA), 18 U.S.C. § 924(e). Exercising jurisdiction under 28 U.S.C. §§ 1291 and 2253(a), we vacate the district court's decision and remand with directions that Mr. Westover's motion be denied rather than dismissed.
In May 2006, Mr. Westover pled guilty to one count of being a felon in possession of a firearm, in violation of 18 U.S.C. § 922(g)(1). A conviction for that offense carries a baseline statutory maximum sentence of 10 years. See id. § 924(a)(2). But because Mr. Westover had three or more prior convictions “for a violent felony or a serious drug offense, or both,” he was subject to the ACCA's 15-year minimum sentence. See id. § 924(e)(1). When Mr. Westover was sentenced in 2006, the ACCA defined a “violent felony” as an offense that (1) “has as an element the use, attempted use, or threatened use of physical force against the person of another” (the elements clause); (2) “is burglary, arson, or extortion, [or] involves use of explosives” (the enumerated-offenses clause); or (3) “otherwise involves conduct that presents a serious potential risk of physical injury to another” (the residual clause). 18 U.S.C. § 924(e)(2)(B).
At the July 2006 sentencing hearing, Mr. Westover's counsel did not mention his prior written objection to the PSR. Instead, he argued that although Mr. Westover “qualifie[d] technically as an armed career offender” under the Sentencing Guidelines, the ACCA was not “appropriately applied in his case.” R., Vol. II at 38. He argued for a lesser sentence based on Mr. Westover's mental-health issues, childhood trauma, drug use, and non-violent behavior. The district court noted that counsel had not addressed “the subject of objections to the [PSR],” and it then summarily overruled them. Id. at 42. After hearing allocution, the court sentenced Mr. Westover to the 15-year minimum required by the ACCA. Mr. Westover did not appeal.
Almost ten years later, in May 2016, Mr. Westover filed the instant § 2255 motion to vacate his ACCA sentence. He contended that his burglary convictions were too broad to fit under the ACCA's enumerated-offenses clause, so the district court must have determined they were residual clause offenses. He then pointed out that the Supreme Court has declared the ACCA residual clause to be unconstitutionally vague. See Johnson v. United States, 135 S. Ct. 2551, 2557 (2015) (holding that “[i]ncreasing a defendant's sentence under the [residual] clause denies due process of law” because the “clause both denies fair notice to defendants and invites arbitrary enforcement by judges”); Welch v. United States, 136 S. Ct. 1257, 1268 (2016) (holding that Johnson applies retroactively in cases on collateral review).
The district court rejected Mr. Westover's arguments, determining that (1) “the sentencing court relied on the enumerated offenses clause” and (2) “at the time of [Mr. Westover's] sentencing in 2006, his prior [burglary] convictions properly counted under the ACCA's enumerated offenses clause.” R., Vol. I at 187, 189. The court thus concluded that, without a sentence tied to the invalidated residual clause, Mr. Westover could not seek relief under Johnson. It further held that this conclusion rendered his § 2255 motion untimely. See 28 U.S.C. § 2255(f) (prescribing a one-year limitations period). The district court granted Mr. Westover a certificate of appealability.
Mr. Westover argues that a Johnson error occurred because “the ACCA [gave] the sentencing court the option of applying the residual clause.” Aplt. Opening Br. at 13. Similarly, he claims error because “the residual clause potentially played a role in his sentencing” in that “[i]t is impossible to tell from the sentencing record whether the sentencing court found that his burglary predicates fell under the enumerated clause, the elements clause, or the residual clause.” Id. at 9.
“[W]e review the district court's legal rulings on a § 2255 motion de novo and its findings of fact for clear error.” United States v. Miller, 868 F.3d 1182, 1186 (10th Cir. 2017) (internal quotation marks omitted). “A court's determination that a defendant qualifies for an ACCA enhancement is a finding,” albeit one “that rests largely on legal conclusions.” United States v. Snyder, 871 F.3d 1122, 1128-29 (10th Cir. 2017) (brackets and internal quotation marks omitted).
We reject Mr. Westover's argument, as inconsistent with Johnson and Snyder, that the sentencing court's mere “option” of applying the ACCA's residual clause constitutes a Johnson error. First, Johnson involved an actual application of the residual clause—the imposition of an ACCA sentence based on a prior unlawful possession of a short-barreled shotgun. See Johnson, 135 S. Ct. at 2556. Second, Snyder calls for a record and legal review to determine whether the sentencing court relied on the residual clause for the ACCA sentence. We therefore turn to the Snyder analysis.
The record shows that the sentencing court relied on the enumerated offenses clause to find that Mr. Westover's burglary convictions were violent felonies and qualified as predicates for an ACCA sentencing enhancement. The PSR (1) noted the ACCA's applicability, R., Vol. III at 8; (2) detailed the circumstances of Mr. Westover's three burglary convictions, which involved “a dwelling,” a “High School,” and “a building,” id. at 10; and (3) rejected Mr. Westover's attempt to avoid the ACCA by objecting that some of his burglaries did not involve a dwelling or a threat of violence, id. at 18-19. The PSR considered the crimes as burglaries, not as whether they “otherwise involve[d] conduct that presents a serious potential risk of physical injury to another,” 18 U.S.C. § 924(e)(2)(B) (the residual clause). Indeed, the probation officer who prepared the PSR expressly characterized the crimes as “generic burglar[ies].” R., Vol. III at 19.
Further, at Mr. Westover's sentencing hearing, the court overruled Mr. Westover's objections to the PSR “for [the] reasons stated by the probation officer.” R., Vol. II at 42. Defense counsel disputed neither the probation officer's characterization of the crimes as generic burglaries nor the court's reliance on that characterization.
Finally, no reference to the residual clause appears anywhere in the PSR or in the sentencing transcript. Nor is there any discussion as to whether the burglaries might qualify as ACCA predicate offenses because they posed a “risk of physical injury” to others.
The record thus demonstrates that the sentencing court viewed Mr. Westover's burglary convictions as falling squarely in the ACCA's enumerated-offenses clause—which specifically lists “burglary” as the first of four such offenses.
The relevant background legal environment at the time of sentencing likewise shows that Mr. Westover was sentenced under the enumerated-offenses clause. Taylor provided well-established Supreme Court precedent on burglary under the ACCA when Mr. Westover's sentencing proceeding occurred. Taylor addressed the meaning of “burglary” in the ACCA's enumerated-offenses clause, holding that it covers “generic” burglary; i.e., any “unlawful or unprivileged entry into, or remaining in, a building or structure, with intent to commit a crime.” 495 U.S. at 599.
To determine whether an offense constitutes generic burglary, Taylor explained that a court should generally use a categorical approach, “look[ing] only to the fact of conviction and the statutory definition of the prior offense.” Id. at 602. Taylor provided for a modified categorical approach when the statute “define[s] burglary more broadly, e.g., by ․ including places, such as automobiles and vending machines, other than buildings.” Id. at 599. This approach is relevant here, given that Wyoming's burglary statute included entry of “occupied structure[s] or vehicle[s].” Wyo. Stat. Ann. § 6-3-301(a) (emphasis added).
In such cases, Taylor said a court may examine “the indictment or information and jury instructions” to ascertain whether the defendant was convicted of a generic burglary offense that would justify a sentence enhancement. Taylor, 495 U.S. at 602. When the defendant entered a guilty plea, that examination may include “the terms of the charging document, the terms of a plea agreement or transcript of colloquy between judge and defendant in which the factual basis for the plea was confirmed by the defendant, or to some comparable judicial record of this information.” Shepard v. United States, 544 U.S. 13, 26 (2005) (plurality opinion).
In light of Mr. Westover's sentencing record and the relevant legal background, we agree with the district court that Mr. Westover's sentence was enhanced based on the ACCA's enumerated-offenses clause, not the residual clause.
The district court erred, however, in concluding that Mr. Westover's § 2255 motion was untimely. His motion was timely because he asserted the right established by Johnson— “to be free from a sentence purportedly authorized by the unconstitutionally vague residual clause”—within one year of Johnson's release. Snyder, 871 F.3d at 1126; see also 28 U.S.C. § 2255(f)(3) (prescribing a one-year limitations period, running from, as relevant here, “the date on which the right asserted was initially recognized by the Supreme Court, if that right has been newly recognized by the Supreme Court and made retroactively applicable to cases on collateral review”). Specifically, the Supreme Court decided Johnson on June 26, 2015, and made it retroactive in Welch. Mr. Westover filed his § 2255 motion asserting Johnson's applicability roughly eleven months after Johnson. His motion was therefore timely.
The district court's judgment is vacated, and the case is remanded with directions that Mr. Westover's motion be denied rather than dismissed.
1. When Mr. Westover was sentenced, escape convictions were routinely held to fall within the ACCA's residual clause. See, e.g., United States v. Moudy, 132 F.3d 618, 620 (10th Cir. 1998). The Supreme Court later clarified that escape-related convictions do not automatically support an ACCA enhancement. See Chambers v. United States, 555 U.S. 122, 124 (2009). In deciding Mr. Westover's appeal, we do not consider whether his escape-related convictions could have counted toward his ACCA sentence.
2. The scope of his objection is unclear. It has not been included in the record. We assume that he objected to at least two of his burglary convictions because if his objection covered only one, his drug offense and remaining (unchallenged) two burglary convictions would have been sufficient to support an ACCA enhancement.
3. In Taylor, the Supreme Court held that the ACCA's sentencing enhancement applies to burglary convictions “if [the defendant] is convicted of any crime, regardless of its exact definition or label, having the basic elements of unlawful or unprivileged entry into, or remaining in, a building or structure, with intent to commit a crime.” 495 U.S. at 599.
4. Mr. Westover's reliance on In re Chance, 831 F.3d 1335 (11th Cir. 2016), to argue he has no burden to show he was in fact sentenced under the ACCA's residual clause is misplaced. We must follow the analytical framework established in Snyder.
5. “[T]he relevant background legal environment is, so to speak, a ‘snapshot’ of what the controlling law was at the time of sentencing and does not take into account post-sentencing decisions that may have clarified or corrected pre-sentencing decisions.” Snyder, 871 F.3d at 1129 (emphasis added). For instance, in Descamps v. United States, 133 S. Ct. 2276 (2013), the Supreme Court clarified that the modified categorical approach can be used only when a statute is “divisible,” such that it defines the crime “alternatively, with one statutory phrase corresponding to the generic crime and another not.” Id. at 2284, 2286. And in Mathis v. United States, 136 S. Ct. 2243 (2016), the Supreme Court stressed that “the modified approach serves—and serves solely—as a tool to identify the elements of the crime of conviction when a statute's disjunctive phrasing renders one (or more) of them opaque,” and that it is not “a technique for discovering whether a defendant's prior conviction, even though for a too-broad crime, rested on facts (or otherwise said, involved means) that also could have satisfied the elements of a generic offense.” Id. at 2253-54.


D.C. Law Library - § 46–251.07. Withholding for health insurance coverage.
↪ § 46–251.07. Withholding for health insurance coverage.
(4) Send each additional payment to the health insurer on the same date that the employee is compensated.
(b) Withholding for health insurance coverage shall not exceed the limitations set forth in § 303(b) of the Consumer Credit Protection Act, approved May 29, 1968 (82 Stat. 163; 15 U.S.C. § 1673(b)).
(c) Nothing in this subchapter shall alter the obligation of an obligor, obligee, employer, or other person or entity to comply with the provisions for the withholding of earnings or other income stated in subchapter I of Chapter 2 of this title.
This section is referenced in § 1-307.42, § 16-911, and § 46-251.03.
For temporary (90 day) addition of this section, see § 107 of Medical Support Establishment and Enforcement Emergency Amendment Act of 2002 (D.C. Act 14-485, October 3, 2002, 49 DCR 9631).
For temporary (90 day) addition of this section, see § 107 of Medical Support Establishment and Enforcement Congressional Review Emergency Amendment Act of 2002 (D.C. Act 14-600, January 7, 2003, 50 DCR 664).
For temporary (90 day) addition of this section, see § 107 of Medical Support Establishment and Enforcement Emergency Amendment Act of 2003 (D.C. Act 15-208, October 24, 2003, 50 DCR 9856).
For temporary (90 day) addition of this section, see § 107 of Medical Support Establishment and Enforcement Congressional Review Emergency Amendment Act of 2004 (D.C. Act 15-330, January 28, 2004, 51 DCR 1603).
For temporary (225 day) addition of section, see § 107 of Medical Support Establishment and Enforcement Temporary Amendment Act of 2002 (D.C. Law 14-238, March 25, 2003, law notification 50 DCR 2751).
For temporary (225 day) addition of section, see § 107 of Medical Support Establishment and Enforcement Temporary Amendment Act of 2003 (D.C. Law 15-84, March 10, 2004, law notification 51 DCR 3376).