Justia Contracts Opinion Summaries

Section 515 of the Housing Act of 1949, 42 U.S.C. 1485, authorizes the Department of Agriculture, Farmers Home Administration to loan money to nonprofit entities to provide rental housing for elderly and low- and moderate-income individuals and families. Sonoma, a limited partnership contracted with the government to construct low-income housing in exchange for a $1,261,080 Section 515 loan. In 2010, Sonoma submitted a written request to prepay the balance of its loan. The government denied the request. Sonoma sued for breach of contract, including a claim for a “tax neutralization payment” to offset the negative tax consequences of a lumpsum damages award. The Claims Court awarded Sonoma expectancy damages of $4,223,328 and a tax gross-up award of $3,171,990. The Federal Circuit vacated. The Claims Court clearly erred in using the income from a single tax year to predict the future rates at which each partner would pay taxes. While the government’s breach created the circumstances that require consideration of future income and tax rates, Sonoma is not absolved of its burden of showing an income-tax disparity and justifying any adjustment. View "Sonoma Apartment Associates v. United States" on Justia Law

Rotondo was the sole owner of Apex, which wholly owned four limited liability companies (Directional Entities). Apex and the Directional Entities provided services, such as human resources, to different clients. Rotondo sold the Directional Entities’ key asset, customer lists, to AES, which agreed to pay Rotondo a share of its gross profits in the form of “Consulting Fees.” Two entities sought to collect Rotondo’s Consulting Fees: Akouri loaned money to one of Rotondo’s other companies and had a security interest in Apex’s assets and a judgment against Rotondo and Apex for $1.4 million. Rotondo also owes the IRS $3.4 million. The IRS filed several notices of tax liens against Rotondo, Apex, and the Directional Entities. AES filed an interpleader action. The Sixth Circuit affirmed summary judgment in favor of the IRS. The timing of a federal tax lien is measured by when the IRS gave notice of its lien, 26 U.S.C. 6323(a), (f); the timing of state security interests, like Akouri’s, is measured by when they become “choate”—i.e., complete or perfected. Akouri’s interest would be choate as of 2019, but the IRS’s tax liens date to before 2019. The court rejected Akouri’s attempt to recategorize the customer list assets as originally belonging to Apex rather than the Directional Entities. View "AES-Apex Employer Services, Inc. v. Rotondo" on Justia Law

The Supreme Court held that summary judgment was improper in this case alleging fraudulent concealment and professional negligence.In her complaint, Plaintiff alleged that Defendants failed properly to prepare and file her delinquent tax returns for tax years 2006 through 2009 and intentionally deceived her about the status of the returns. The trial court allowed Defendants’ motion for partial summary judgment regarding Plaintiff’s fraudulent concealment claim, the corresponding claim for punitive damages, and Defendants’ statute of repose defense for professional negligence for tax years 2006 and 2007. The court of appeals reversed the trial court’s decision regarding the statute of repose and affirmed the trial court’s dismissal of Plaintiff’s fraudulent concealment claim and Plaintiff’s related claim for punitive damages. The Supreme Court reversed in part, holding that genuine issues of material fact existed regarding the fraudulent concealment claim and the accompanying punitive damages claim, as well as the triggering event for the running of the statute of repose. View "Head v. Gould Killian CPA Group, P.A." on Justia Law

This litigation began when purchasers of computer service contracts filed a putative class action against the sellers. The sellers successfully moved to compel arbitration pursuant to the terms of the computer services contracts. The sellers, in the meantime, had applied for tax abatements from the Commissioner of Revenue. The Commissioner denied the applications, and the sellers petitioned the Appellate Tax Board. Appellant, one of the consumers who purchased these service contracts, moved to intervene in the proceedings, which petition the Board allowed. The Board reversed the Commissioner’s decision and allowed the abatements. Taxes were imposed on the service contracts purchased by Appellant. After final judgment was entered in the sellers’ favor in the class action litigation, the sellers withdrew their tax abatement petitions with prejudice. The Board denied Appellant’s motion to strike the withdrawals and terminated the proceedings. The Supreme Judicial Court reversed, holding (1) the Board did not err as a matter of law in allowing the Sellers’ withdrawals; but (2) the Board’s termination of the proceedings in their entirety, after permitting Appellant to intervene and allowing the abatements, was an error of law. Rather, Appellant should have been allowed to proceed as an intervener on its claim to recover the taxes imposed on the service contracts it purchased. View "WorldWide TechServices, LLC v. Commissioner of Revenue" on Justia Law

This litigation began when purchasers of computer service contracts filed a putative class action against the sellers. The sellers successfully moved to compel arbitration pursuant to the terms of the computer services contracts. The sellers, in the meantime, had applied for tax abatements from the Commissioner of Revenue. The Commissioner denied the applications, and the sellers petitioned the Appellate Tax Board. Appellant, one of the consumers who purchased these service contracts, moved to intervene in the proceedings, which petition the Board allowed. The Board reversed the Commissioner’s decision and allowed the abatements. Taxes were imposed on the service contracts purchased by Appellant. After final judgment was entered in the sellers’ favor in the class action litigation, the sellers withdrew their tax abatement petitions with prejudice. The Board denied Appellant’s motion to strike the withdrawals and terminated the proceedings. The Supreme Judicial Court reversed, holding (1) the Board did not err as a matter of law in allowing the Sellers’ withdrawals; but (2) the Board’s termination of the proceedings in their entirety, after permitting Appellant to intervene and allowing the abatements, was an error of law. Rather, Appellant should have been allowed to proceed as an intervener on its claim to recover the taxes imposed on the service contracts it purchased. View "WorldWide TechServices, LLC v. Commissioner of Revenue" on Justia Law

The plaintiffs-respondents in this case sued hundreds of defendants, whom the plaintiffs asserted had served them mixed drinks over a period of several years prior to filing the lawsuit. The plaintiffs claimed that defendants had violated a tax statute, 37 O.S.2011, section 576(B)(2), that required a 13.5% tax on the gross receipts the holders of a license by the ABLE Commission for sale of a mixed beverage. They contended that the licensees who failed to combine the retail sale price with the tax in its advertised price had overcharged their customers by 13.5%. The defendants appealed the trial court's interpretation of the statute. The Oklahoma Supreme Court remanded these cases with orders to dismiss: "Although the briefs from the parties skillfully address other permutations of argument on both sides of this cause, we conclude that what we have chosen to address sufficiently resolves the main issue presented. The statute's ambiguities caused sufficient problems in collection of the tax that the Legislature amended the statute. We hold that the statute's purpose does not involve protecting consumers from having a tax separately listed from the price of a drink instead of including it in the price of a drink. Because the complaints of the plaintiffs against the defendants rest on the assumption that 37 O.S.2011, section 576(B)(2) protects consumers, and we have held that it is solely a tax statute." View "Truel v. Aguirre, LLC" on Justia Law

In a 2005 Cooperation and Option Agreement to facilitate Russell's construction and operation of the Energy Center, a natural gas-fired, combined cycle electric generating facility in Hayward, the city granted Russell an option to purchase 12.5 acres of city-owned land as the Energy Center's site and promised to help Russell obtain permits, approvals, and water treatment services. Russell conveyed a 3.5-acre parcel to the city. The Agreement's “Payments Clause” prohibited the city from imposing any taxes on the “development, construction, ownership and operation” of the Energy Center except taxes tethered to real estate ownership. In 2009, Hayward voters approved an ordinance that imposes “a tax upon every person using electricity in the City. … at the rate of five and one-half percent (5.5%) of the charges made for such electricity” with a similar provision regarding gas usage. Russell began building the Energy Center in 2010. In 2011, the city informed Russell it must pay the utility tax. The Energy Center is operational.The court of appeal affirmed a holding that the Payments Clause was unenforceable as violating California Constitution article XIII, section 31, which provides “[t]he power to tax may not be surrendered or suspended by grant or contract.” Russell may amend its complaint to allege a quasi-contractual restitution claim. View "Russell City Energy Co. v. City of Hayward" on Justia Law

Plaintiff filed a class action petition against J.C. Penney asserting that the internet retailer unlawfully charged Iowa sales tax on shipping and handling charges. J.C. Penney forwarded the tax to the Iowa Department of Revenue (IDOR) pursuant to the Iowa version of the Streamlined Sales and Use Tax Act (SSUTA). The district court granted summary judgment in favor of J.C. Penney. The Supreme Court affirmed, holding (1) the district court correctly granted J.C. Penney’s motion for summary judgment on Plaintiff’s statutory claims grounded in SSUTA, as the SSUTA does not create a private cause of action; (2) the district court did not err in granting summary judgment on Plaintiff’s claims related to the alleged unlawful payment of taxes on the ground that the remedies under Iowa Code 423.45(3) and 423.47 are exclusive remedies barring other claims for relief for wrongful payment of taxes under SSUTA; and (3) Plaintiff was not entitled to recover on her claims alleging shipping and handling misrepresentations. View "Bass v. J.C. Penney Co., Inc." on Justia Law

USA Tire Management Systems Inc. entered into a contract with Great Western Bank to “take title to, remove, and transport” tires and casings from a foreclosed property that a bank was attempting to sell. After an audit, the South Dakota Department of Revenue issued an assessment on the gross receipts USA Tire received from Great Western under their contract. USA Tire contested the assessment. The circuit court affirmed the assessment. USA Tire appealed, arguing that it was entitled to a trucking services tax exemption. The Supreme Court affirmed, holding that USA Tire did not meet its burden of proving that its services were exempt trucking services under S.D. Codified Laws 10-45-12.1. View "In re Sales Tax Liability of USA Tire Mgmt. Sys., Inc." on Justia Law

Textron, Inc. appealed a Superior Court judgment which held that the company was not entitled to reimbursement from its former fastening manufacturing business, now known as Acument Global Technologies, Inc. for paying certain pre-closing contingent liabilities in the United States. The Superior Court's opinion centered on the meaning of a "tax benefit offset" provision in the parties' Purchase Agreement under which Acument was required to reimburse Textron if Acument received a "tax benefit" related to the contingent liabilities. Textron argued that even if the tax benefit had to be actual rather than merely hypothetical, the Superior Court erred by not finding that Acument actually enjoyed the right to tax benefits. Textron contended that its payment of the pre-closing liabilities constituted a tax benefit because the payments automatically increase Acument's tax basis under U.S. tax law. The Supreme Court disagreed after its review of the appeal: the Agreement, taken as a whole, guaranteed that Acument would not receive a net tax benefit simply because Textron made a required indemnification payment. Accordingly, Textron's argument that Acument has received a tax benefit triggering Textron's right to reimbursement was without merit, as the total effect of Textron's payments is tax-neutral. Similarly, Textron's second and related claim that the Superior Court erred in "redefining" the required tax benefit to mean only a "deduction" rather than any "reduction" was meritless. The therefore affirmed the Superior Court's judgment. View "Textron v. Acument Global Technologies, Inc." on Justia Law