Taxes and Divorce Transfers

Under Internal Revenue Code 1041, most transfers between spouses or former spouses in the context of a marital dissolution will be non-taxable.  However, there are some important exceptions. For example, this rule does not apply when the recipient spouse is a non-resident alien. Transfers between former spouses which occur more than six years from the date of the divorce will be taxable unless the taxpayer shows that they are incident to the divorce. And, a person cannot avoid paying taxes on a vested right to income by assigning the right to receive that income to his or her spouse.

Attorney's Fees as a Debt

Traditionally, in Mississippi, a party has to prove inability to pay or a few other issues in order to recover attorney's fees in a divorce.  However, there may be a backdoor on that issue.  Attorney's fees can be substantial in a case.  I have had some hotly contested cases with multiple depositions get close to six figures in litigation costs.  Debts can be equitably divided by the court and it seems to be that there is no reason that attorney's fees could not be equitably divided as a newly created debt during the marriage. 

Employment at Will and Firearms

Yesterday, the Mississippi Supreme Court decided Robert Swindol v. Aurora Flight Sciences Corporation.  The Court found that an employee may not be fired for having gun locked in car on employer’s parking lot.  This was a certified question from the Fifth Circuit.

The district court had dismissed Swindol’s wrongful discharge and defamation claims under FRCP 12(b)(6) holding that Mississippi’s employment-at-will doctrine barred the wrongful discharge claim and that falsity had not been adequately alleged for the defamation claim. The Fifth Circuit, noting that the “wrongful discharge claim presents an important and determinative question of state law that has not been addressed by Mississippi courts” certified the issue asking the Mississippi Supreme Court to tell them what Mississippi law is.  The Court found:   “The Legislature has ‘independently declared’ via Section 45-9-55 that terminating an employee for having a firearm inside his locked vehicle is ‘legally impermissible.'” Aurora may be liable for firing Swindol in contravention of state law.

What Part of a Client file Belong to the Client?

Many times questions come up as to what part of a file must be turned over to a client at the end of litigation or when a client wishes to hire a new attorney.  The general rule remains that the file belongs to the client, but it was not always clear what that was.  The American Bar Association (ABA) stepped over the issue in its opinions from 1977 (Informal Opinion 1376) until it issued ABA Formal Opinion 471 (7/1/2015); see at http://bit.ly/1fsDriP.

So, the ABA considers these items to belong to the client:
• all property of the client supplied by the client to the lawyer, including original documents supplied by the client;
• end product items (like – reports or discovery for which the client paid; pleadings and papers filed with tribunal);
• copies of contracts, wills, corporate documents, etc., prepared by the lawyer for the clients (and considered end product);
• orders or other records of a tribunal;
• correspondence received or issued on relevant issues, including e-mail and other electronic correspondence that has been retained under the firm’s document retention policy;
• discovery or evidentiary exhibits (like transcripts, statements, reports, etc.);
• legal opinions issued;
• third-party assessments, evaluations or records paid for by the client.

The ABA opinion considered these items not to belong to the client file:
• papers and property that the lawyer generated for the lawyer’s own purpose in working on the client’s matter (unless certain of those needed to protect the former client’s interests);
• administrative materials related to the representation (e.g., conflicts checks, client worthiness, time and expense records, personal notes, drafts, research, and internal memorandums);
• drafts or mark-ups (except as above);
• notes regarding an ethics consultation;
• documents that might reveal the confidences of another.

Other common exceptions in various jurisdictions from the client file that are to be returned seem to be:
• materials that would violate a duty of non-disclosure to another person;
• materials concerning the lawyer’s assessment of the client;
• materials of only internal firm communications or welfare of client or of others;
• materials to which an attorney’s lien may apply when not paid.

Of course, each jurisdiction will have unique interpretations and those rules that need to be consulted first, e.g., file may not be withheld until paid (W. Va. L.E.I. 89-02) and Attorney Retaining Liens for unpaid attorney fees and expenses extends the right to withhold work product prepared for litigation by or for the attorney (i.e., WV L.E.I. 92-02 noting that some jurisdictions allow only the withholding of opinion work product).  Also, lawyers need to think about what is electronic and is required as a part of the modern “file” whether on the firm servers and hard drives or even on your personal device that you no doubt used while working on the file.  See ABA Model Rule 1.0(n).

Independant Medical Exam

In many personal injury cases and divorce cases, an independent medical exam is requested.  The decision whether to grant an independent medical examination under Rule 35 is reviewed under the abuse of discretion standard. See Baker Donelson Bearman Caldwell & Berkowitz, P.C. v. Seay, 42 So. 3d 474, 495 (Miss. 2010).  For “[t]rial courts are afforded broad discretion in discovery matters, and this Court will not overturn a trial court’s decision unless there is an abuse of discretion.” Ashmore v. Miss. Auth. on Educ. TV, 148 So. 3d 977, 981 (Miss. 2014). 

 MRCP 35(a) will allow for a person to be examined “When the mental or physical condition (including the blood group) of a party or of a person in the custody or under the legal control of a party is in controversy, the court in which the action is pending may order the party to submit to a physical or mental examination by a suitably licensed or certified examiner . . . .” Yet the grant of an examination is not automatic:  “The order may be made only on motion for good cause shown and upon notice to the person to be examined and to all parties and shall specify the time, place, manner, conditions, and scope of the examination and the person or persons by whom it is to be made.” MRCP 35 (emphasis added).  

One recent case shows that good cause is not met when the party seeking the examination already has all the relevant information in its possession.  Seay, 42 So.3d at 495.  The defendant law firm sought an IME when the plaintiff, a former client, asked for damages for mental and physical injuries. Id. at 481-82.  Yet the plaintiff had been deposed by the defendant, and also had obtained all of  his medical records through discovery. Id. at 482.  As a result, the plaintiff argued that the law firm had not shown good cause, in part because there was no evidence the deposition and discovery was not enough. Id. at 495. On appeal, the Mississippi Supreme Court upheld the trial court’s decision not to allow a medical examination.  Id. The ruling was simple—“that the circuit court did not abuse its discretion in denying [the] Motion to Compel Physical and Mental Examination.” Id.  Given the facts of that case, it is clearly within the discretion of a trial court to deny a medical examination if the plaintiff has been deposed and their medical records made available for review.

My take on this is that as long as all the medical records and such are provided, something more than we want to poke around on the other party is required. 

Wrongful Conviction Act

Mississippi has statutes which provide for compensation when an individual is wrongfully convicted.  This was an issue on Thursday in Hall v. State of Mississippi located here.   Hall was indicted for burglary and later convicted.  On appeal, the Mississippi Supreme Cour reversed finding that Hall was convicted of a crime for which he was not indicted, and that Hall did not waive indictment. Hall v. State, 127 So. 3d 202 (Miss. 2013). Thereafter Hall filed suit seeking  compensation under the Wrongful Conviction Act, M.C.A. Sect. 11-44-1 to -15.  The circuit court dismissed the case finding that Hall had failed to establish his innocence as required by Section 11-44-7(1)(b), because the Order Passing to Inactive Files was neither a dismissal nor a nol pross pursuant to Section 11-44-3(c). Hall appealed and the Mississippi Supreme Court reverse noting that:

"Here, though, what the district attorney passed to the files was the indictment for cause number 11-178CR, which is what comprised Hall’s burglary-of-a-building charge. Based on double-jeopardy grounds, because Hall was acquitted of the burglary charge by a  jury, Hall is entitled to a dismissal of the indictment with prejudice, as that was the only charge contained in the indictment. Contrary to the State’s contention and the circuit court’s ruling, this particular case meets the statutory prerequisites of Section 11-44-3(1)(c)."

Sex Crimes - Hearsay

On Tuesday, the Mississippi Court of Appeals decided Grant v. State  located here.  Grant was found guilty of sexual battery of a 14-year-old.  On appeal he argued that it was hearsay to admit statements made to medical providers that the girl identified him as her abuser because the identity was not necessary for treatment. The Court found that ” Grant’s identity was pertinent to Carter’s treatment of N.M., based on Carter’s concern regarding the potential for further inappropriate contact with Grant”  since Grant was a visitor to the child’s home.

Verdict of Interest

Recently, ESPN commentator Erin Andrews received a 55 million dollar verdict in Nashville against her stalker and the hotel chain which contributed to a nude video of her being made.  The stalker was found 51 percent at fault and the hotel was 49 percent at fault.  My understanding is that the hotel had inadequate procedures in place to prevent this kind of thing from happened.  A link to an article about it is locate here. 

Removal Information to Federal Court

The statutory procedures for removal are to be strictly construed.  A defendant removing a civil action must file in the U.S. district court for the district and division in which the state proceeding is pending a “notice of removal” that contains “a short and plain statement of the grounds for removal” and that attaches the process, pleadings, and orders served upon the defendant in the action.  The notice of removal must generally be filed within thirty days. The Supreme Court has clarified what triggers the thirty days to run:

First, if the summons and complaint are served together, the 30-day period for removal runs at once. Second, if the defendant is served with the summons but is furnished with the complaint sometime after, the removal period runs from the receipt of the complaint. Third, if the defendant is served with the summons and the complaint is filed in court, but under local rules, service of the complaint is not required, the removal period runs from the date the complaint is made available through filing. Finally, if the complaint is filed in court prior to any service, the removal period runs from the service of the summons.

The thirty days does not being running upon receipt of a faxed courtesy copy of a complaint, unaccompanied by formal service.  In a case not originally removable, the defendant may remove to federal court within thirty days of receiving information in an “amended pleading, motion, order or other paper” which allows the defendant to “ascertain ... that the case is one which is or has become removable ....”. The Federal Courts Jurisdiction and Venue Clarification Act has resolved a circuit court split over the so-called “last-served defendant rule.” Under the new provision, each defendant has thirty days to remove, but if the defendants are served at different times, an earlier-served defendant which did not timely remove, may consent to a removal filed by a later-served defendant. 

Explanation of Benefits

One of the best ways to find additional medical bills for personal injury cases is to look at the health insurance explanation of benefits.  Many times, the hospital has third party groups read x-rays, do certain tests, etc.  These added charges add value to claims due to the number of medical providers and the amount of costs. 

Invited Error

In watching the oral arguments last week concerning the medical malpractice caps in Mississippi, a discussion was made of the invited error doctrine.  This has not been litigated in Mississippi that I am aware of other than potentially in that case.  Invited error refers to a trial court's error against which a party cannot complain to an appellate court because the party encouraged or prompted the error by its own conduct during the trial.  I believe this could turn into an interesting area of appellate law in the future. 

Book of Interest

I recently bought The Deposition Handbook from Trial Guides located here.  From my reading so far, this is the best and most practical books I have found on depositions.  I am a book junkie and unfortunately too many law books I get are too abstract and idealistic in my opinion.  However, this one has good advice and also has voluminous case cites for issues I have been recently litigating. 

Medical Malpractice Caps

The Mississippi Court of Appeals heard oral arguments yesterday in Emergency Medicine Associates of Jackson, PLLC v. Anita Glover.  The case involves the constitutionality of the medical malpractice caps.  The oral arguments and the briefs are on the Court of Appeals website.  The facts of the case are very egregious as to the level of malpractice.                                                                       

Modification

The Mississippi Court of Appeals decided Moreland v. Spears yesterday located here.  This case has a good outline of what is needed to modify custody, visitation, and other terms of a property settlement agreement.  In this case, the trial court had modified all three.  On appeal, the Court of Appeals found that the proof was so weak that they reversed and rendered the case.  What I got from this case reading between the lines was that the proof may have been there but nothing made into the actual record to support the findings made.