The states employ unclaimed property laws (also referred to as escheat laws) to determine if property owned by one person but that is in the possession of another person is subject to the state’s control after the period of abandonment set by state law has passed. In recent years, states have aggressively enforced their unclaimed property laws by both auditing companies and assessing fines for failure to comply with the state’s laws. Large and small companies confront the states’ aggressive tactics pretty regularly and, more recently, companies have been fighting back because complying with the state’s audit requests is expensive and time consuming and, from their perspective, the large fines that a state can assess for failure to comply with the state’s unclaimed property law are unfair and unreasonable. Recently, companies have been turning to federal common law for protection against state actions of this nature.
The real estate industry has been on a high after the legalization of marijuana, but as we examined in “Part 1: The Real Estate Bloom,” getting involved in this budding industry comes with risks, the majority of which stem from marijuana being listed as an illegal Schedule I drug under the federal Controlled Substances Act (CSA). Under the CSA, it is illegal to possess, cultivate, and/or sell marijuana or to “knowingly open, lease, rent, use or maintain any place … for the purpose of manufacturing, distributing, or using any controlled substance.” Additionally, under the Comprehensive Drug Abuse Prevention and Control Act, the federal government is allowed to seize property that is connected to illegal drug activity. This federal illegality opens up the marijuana industry to a number of vulnerabilities. Indeed, federal prosecution of marijuana activities has been relaxed after the issuance of the Cole Memorandum, which instructed federal prosecutors to only focus its efforts on certain issues related to the legalization of marijuana in the states. Such issues include, among others, preventing the distribution of marijuana to minors, preventing marijuana revenue from ending up in the hands of criminal enterprises, and preventing the diversion of marijuana across state lines. However, although the Cole Memorandum resulted in the federal government taking a hands-off approach in its enforcement of cannabis prohibition, we may see a federal push back under the current administration, which has repeatedly expressed its opposition to the legalization of cannabis.
In general, the Tax Cuts and Jobs Act bill allows pass-through owners making less than $157,500 ($315,000 for married couples) to take a flat 20 percent deduction on certain business income, before computing the ordinary income tax they would owe on the remainder. Under complex rules, the deduction phases out when taxpayers make over that amount but under $207,500 ($415,000 for married couples). Continue reading
On December 8, the U.S. Court of Appeals for the First Circuit, in the case of Town of Westport, et al., v. Monsanto Company, et al., affirmed the District Court’s ruling granting the defendants’ Motion for Summary Judgment in a products liability case involving the sale of products containing polychlorinated biphenyls (PCBs). The Court of Appeals, affirming the District Court’s ruling, held that
Monsanto did not breach the implied warranty of merchantability because it was not reasonably foreseeable in 1969 that there was a risk PCBs would volatilize from caulk at levels requiring remediation — that is, levels dangerous to human health.
On November 22, the Texas Court of Appeals, sitting in Fort Worth, decided a case involving mandatory sanctions awarded under the Texas Citizens Participation Act (TCPA). In Rich v. Range Resources Corporation, et al., the Court of Appeals determined that although that denial of sanctions was erroneous, it was not harmful; error.
In the case of CH2M Hill Engineers, Inc. v. Springer, et al., the Court of Appeals of Texas, Ninth District, sitting in Beaumont, decided an interlocutory appeals brought by the Appellant CH2M Hill Engineers, Inc. The Court of Appeals concluded that the “trial court did not abuse its discretion when it denied CH2M’s motion to dismiss” based upon the evidence before it, and affirmed the trial court’s order. The Court of Appeals noted that
While the record contains evidence that CH2M is registered with the Texas Board of Professional Engineers, the record does not contain any evidence that a licensed or registered professional practices within CH2M. Scott Neeley, Senior Designated Manager, signed the agreement between CH2M Hill and the Appellees. Mr. Neeley has not been shown to be a ‘licensed or registered professional,’ nor did he sign the contract as such. Moreover, the report is not signed by a licensed or registered engineer, but only issued by ‘CH2M Hill.’ CH2M has not proven, or even identified a single licensed professional engineer who performed professional engineering services for the firm.
The Real Estate Bloom
The real estate industry is booming in states where marijuana is blooming—that is, in states that have legalized the medicinal and recreational use of marijuana. Here is a quick overview. In November 2016, voters in California, Maine and Massachusetts, all approved the legalization of recreational marijuana use. On January 1, 2018, California’s law will go into effect, and the state will start issuing temporary licenses to cannabis businesses. On December 6, 2017, Los Angeles approved a series of cannabis regulations, making it the largest city in the United States with legal recreational marijuana. Massachusetts will implement retail marijuana sales on July 1, 2018. While Maine has plans to open retail marijuana stores in the summer of 2018, it is unclear exactly when their laws will go into effect. Continue reading
Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), commonly referred to as Superfund, was enacted in December 1980, and Section 108(b) provides that the Environmental Protection Agency (EPA) shall promulgate, no later than December 11, 1985, financial responsibility requirements for classes of facilities—designated by EPA—consistent with “the degree and duration of risk associated with their production, transportation, treatment, storage or disposal of hazardous substances.” Despite this directive, EPA has not issued any financial responsibility rules under Section 108(b). This record of inaction prompted a lawsuit demanding compliance with the law.
On November 27, the U.S. Court of Appeals for the Seventh Circuit decided the case of Betco Corporation v. Peacock, et al., which concerns a contractual dispute between the buyer and the seller of companies that produce and market a biodegradation product that is utilized in waste management and control. After paying out the escrow contemplated by the parties’ contract, Betco Corporation (Betco) “discovered that certificates of analysis were being re‐used or falsified by the sales team.” Critical of Betco’s due diligence efforts, the Seventh Circuit held that Betco
“failed to develop its argument in the district court that its breach of contract claim was in fact a claim for intentional misrepresentation that should have survived the Agreement’s one‐year time limit. Thus, it waived this claim, and we decline to hear its merits.
However, Betco did not waive its claim against Malcolm Peacock for breach of the duty of good faith. But our only inquiry in analyzing this claim is whether Malcolm acted in a way that injured or destroyed Betco’s ability to receive the benefits of the contract. Because Betco proffered no evidence at trial of consumer complaints, it cannot show that it was deprived of its contractual expectations. To the contrary, Betco received a company producing a successful line of products to the satisfaction of its customers.”
On November 27. the U.S. Court of Appeals for the Ninth Circuit decided an important Clean Water Act (CWA) jurisdictional case, United States. The Ninth Circuit unanimously affirmed the defendant’s criminal convictions for knowingly discharging dredged or fill material from a point source into a “water of the United States” on private property without a permit. At issue was whether the Government proved that these waters were subject to the CWA in accordance with Justice Kennedy’s concurring opinion in Rapanos v. U.S., which set forth the “significant nexus” test for jurisdiction over certain wetlands.