Argument Recap:  Jefferson Allen, et al. v. Commissioner of Revenue Services, SC 19567

The Supreme Court heard oral argument in the case of Jefferson Allen, et al. v. Commissioner of Revenue Services, SC 19567, on October 13, 2016.  The issues in the case concern the constitutionality of Connecticut’s taxation of the exercise of qualified stock options by former residents when the options had no readily ascertainable value when received as part of compensation for work performed in Connecticut.  As part of this question, the Court is asked to interpret certain tax regulations referencing the applicable time period for taxing income derived from or connected with sources within this state.  Finally, because the nonresidents actually filed and paid income taxes within Connecticut for income from the exercise of qualified stock options in 2002, but later tried to amend and get a refund of those taxes, the Court is asked to address the issue of whether the statute of limitations is jurisdictional and equitably tolled by the existence of an audit.

Continue Reading Can Connecticut tax income from certain stock options exercised after the recipient (employee) moves out of state?

Here’s a look at the second week of the Connecticut Supreme Court’s October 2016 term:

Monday, October 17th

The Court starts the week by hearing oral argument in Gold v. Rowland, SC 19585, a fifteen year old lawsuit by state employees claiming that they were entitled to stock when their insurer demutualized. Two criminal cases follow: In State v. Samuel M., SC 19578, the Court will consider what the standards should govern determining when a child charged with a felony should be tried as an adult on the regular criminal docket.  In State v. Bouknight, SC19326, the Court is confronted with the question of how Facebook profiles should be authenticated to support admission as evidence.

Continue Reading October Term: Week Two

Argument Recap:  Heisinger v. Cleary, SC 19633

In Heisinger v. Cleary, SC 19633, the Supreme Court heard argument in a case alleging mismanagement of a decedent’s estate and residuary trust. The plaintiff claimed that the overvaluing of the principal asset of the estate by some $3,000,000 was a breach of the co-executor’s fiduciary duty to plaintiff, the sole beneficiary of the estate, because reliance upon an allegedly erroneous appraisal resulted in severe federal estate tax liabilities.

The co-executors, the plaintiff’s aunt and an attorney with a long-time relationship with the decedent, raised several special defenses, including the fact that they were entitled to rely on an expert appraisal in valuing the assets of the estate – the so-called third party reliance rule.  The defendants ultimately moved for summary judgment, which was denied initially as premature.  After much discovery and numerous depositions, the defendants renewed their summary judgment motions just prior to trial. The plaintiff also sought partial summary judgment.

Continue Reading Can “Blind” Negligence Constitute a Breach of a Fiduciary Duty?

 Argument Recap: Graham v. Olson Woods Associates, Inc., SC 19626

The Supreme Court heard oral argument last week in Graham v. Olson Woods Associates, Inc., SC 19626.  The question before the court is whether an insurer that is dismissed from a case after a formal hearing on an unopposed motion to dismiss may be cited back into the case at a later date. This case has implications to employers, insurers and claimants alike.  A decision permitting the insurer to be cited back (effectively holding that a motion to dismiss is never final) means that employers and insurers will be forced to incur legal fees for attorney appearances at all hearings (informal and formal) through the end of the case (whatever and whenever that is) regardless of whether there is evidence to implicate the employer/insurer.  On the other hand, a decision in the insurer’s favor would appear to elevate form over substance, where there may be no actual prejudice to the insurer in reversing the initial ruling.

The case is further complicated by its context. This particular claim arises from the “mystifying place” called the asbestos docket: the Eighth District of the Workers’ Compensation Commission.  Asbestos claims often stay on the docket for years before they ever reach a conclusion and therefore, the cost to employers/insurers is not insignificant.

Continue Reading In the Workers’ Compensation Arena, Are Dispositive Motions Ever Dispositive?

Argument Recap: Nutmeg Housing Development Corporation v. Town of Colchester, SC 19551

The Supreme Court heard oral argument on September 21, 2016 in Nutmeg Housing Development Corporation v. Town of Colchester, SC 19551, a tax appeal challenging the assessment of the value of an affordable housing project in Colchester.  Of particular interest is the dispute over whether Low Income Housing Tax Credits (LIHTCs) should affect the fair market value of the subject property for tax assessment purposes.

The Low Income Housing Tax Credit program is a federal tax incentive program designed to stimulate investment in affordable housing. Under the program, an eligible taxpayer receives credit against federal income taxes by holding an ownership interest in a qualified low-income housing project. This case presents the question of whether these tax credits can be considered in the valuation of the affordable housing property for purposes of property taxes.

Continue Reading Low Income Housing Tax Credits: Should They Affect A Municipal Property Tax Bill?

Argument Recap: Disciplinary Counsel v. Laurence Parnoff, SC 19626

 Practice Book § 2-47A requires the disbarment of any lawyer who has knowingly misappropriated a client’s funds.  Last week, the Connecticut Supreme Court heard arguments in the appeal of Disciplinary Counsel v. Laurence Parnoff, in which the Office of the Chief Disciplinary Counsel argued that both the trial court and the Appellate Court got it wrong when they concluded that Attorney Parnoff’s conduct in closing an escrow account and taking those funds for his personal use was merely negligent and not a “knowing misappropriation” of client funds.  No Connecticut appellate court has previously considered the application of Practice Book 2-47A and therefore this case will be the Supreme Court’s first opportunity to rule on what conduct constitutes a knowing misappropriation.

Parnoff Fails To Maintain Disputed Funds In An Escrow Account

Attorney Parnoff represented Darcy Yuille in a claim against her former employer.  In her retainer agreement, Yuille agreed to pay Parnoff a contingency fee of 40% of her recovery if she prevailed on her bad faith claim.  After winning more than $1 million at arbitration, Yuille contested the 40% contingency – $438,413.17 – as being in excess of the fees permitted under Conn. Gen. Stat. §52-251(c).  Yuille also demanded that another attorney, Laura Mooney, who had made an appearance in the bad faith litigation on Yuille’s behalf, be paid out of Parnoff’s share of the award.  In 2004, Yuille agreed that Parnoff could take $125,000 of the judgment and Parnoff agreed to hold the balance of the disputed fee in escrow until the resolution of the dispute.

Continue Reading Court Considers Subjective Standard to Prove “Knowing Misappropriation” of Clients Funds

Argument Recap:  Connecticut Light and Power Company v. Proctor, SC 19531

The Supreme Court heard oral argument yesterday in Connecticut Light and Power Company v. Proctor, SC 1935, a dispute concerning a poultry business, unpaid electric service and a man from New Jersey known only as “Chan.” Setting aside the interesting facts, the legal issue presented is whether the elements of an implied in fact contract were established at trial.

The facts, in a nutshell, reflect that the Defendant, Gary Proctor, was a part time employee of a poultry business known as “Pedigree Chicks” which, although operating in Connecticut, was not registered with the Secretary of State’s office.  Mr. Proctor contacted Plaintiff to arrange for electric service to the commercial location but was informed by Plaintiff that no commercial account could be created in the absence of a validly registered corporate entity.  From that point, the facts asserted by the parties diverge greatly with the Plaintiff asserting that Defendant orally undertook personal responsibility for not only future electric consumption charges but also for payment of “retroactive” charges for service previously provided to the location.  Plaintiff’s claims were bolstered by Defendant’s act of providing his home address, contact phone numbers and social security number in a conversation with one of its representatives at the time of the creation of the account.

Continue Reading A Chicken Farm and an Electric Bill – Enforcing an Implied Contract

Argument Recap:  Bifolck v. Philip Morris, S.C. 19310

On Tuesday, September 13, 2016, the Connecticut Supreme Court heard oral arguments in Bifolck v. Philip Morris, Inc., S.C. 19310. The question before the Court was whether, for product liability actions premised on design defects, Connecticut should abandon its consumer expectation test and adopt a risk utility test that requires proof of a reasonable alternative design.

The case has significant implications for how product liability claims will be proven under Connecticut law going forward and, as such, will affect businesses that manufacture, distribute, and sell products within this state. The importance of this case is highlighted by the fact that twelve organizations filed amici briefs (Murtha Cullina authored an amicus brief on behalf of the Connecticut Business & Industry Association, which was joined by the New Haven Manufacturers Association and the Insurance Association of Connecticut).

Continue Reading Revisiting Connecticut’s Standard for Product Liability Design Defect Claims

Today, the Connecticut Attorney General filed an application for certification to file a public interest appeal in Connecticut Coalition for Justice in Education Funding, Inc. v. Rell, HHD-CV-14-5037565-S, the high-profile school funding lawsuit pending in Hartford Superior Court. The State is seeking permission to pursue an appeal under Connecticut General Statutes Section 52-265a which permits immediate appellate review of decisions rendered before the completion of a case under special circumstances.

Last week, Judge Thomas Moukawsher issued a 90-page post-trial decision declaring that Connecticut’s education funding policy is “irrational.” Rather than enter a final judgment, the court scheduled further proceedings to be held after the State has submitted to the court proposed reforms and after the plaintiffs have commented on those proposals. The judge gave the State until March 6, 2017 to submit its proposal addressing education related concerns such as the relationship between state and local government in education, a formula for statewide funding, standards for hiring, evaluating, and paying teachers, and funding and defining special education. In the last words of its decision, the court “retain[ed] jurisdiction” over the case until those issues had been addressed.

Continue Reading CCJEF v. Rell: Connecticut’s School Funding Case Headed to Supreme Court

The Connecticut Supreme Court has released its argument calendar for its first term of the 2016-2017 sitting. In a previous post, we profiled the first week of the September term. Here’s a look at the second week:

Monday, September 19th

The Court will first hear Connecticut Light and Power Company v. Proctor, SC 19531, which is a dispute over whether a consultant to a chicken farm could be held personally liable to the power company for electrical bills based on an implied-in-fact contract.  The second case is Disciplinary Counsel v. Parnoff, SC 19535, where the State Disciplinary Counsel appeals from Appellate Court and trial court decisions that determined that an attorney’s “negligent” commingling of escrowed funds with personal funds did not require disbarment even if those funds were “knowingly” taken.

Tuesday, September 20th

The Court hears cases about workers compensation insurance and bail bonds. In Graham v. Olson Woods Associates, Inc., SC 19626, the Court will consider whether an insurer that has been dismissed from a workers compensation claim based on asbestos exposure can be cited back into the case when a different insurer initially thought to be primarily obligated for the claim is dismissed from the case. In State v. Agron, SC 19499, a bail bondsman brings a writ of error arguing that he should be released from his bond obligation where the defendant, after failing to appear in court, was located in Puerto Rico but the State declined to seek extradition.

Wednesday, September 21st

The Court will hear two tax-related appeals. In Heisinger v. Cleary, SC 19633, the Court will hear a case brought by a decedent’s son claiming that the coexecutors of the decedent’s estate breached their fiduciary duties in valuing the estate’s stock holdings and causing the estate to incur additional taxes. In Nutmeg Housing Development Corporation v. Town of Colchester, SC 19551, the Court is presented with the issue of how municipalities should assess affordable housing projects that are subsidized with low-income housing tax credits. (Murtha Cullina authored an amicus brief in this appeal).

Continue Reading Week Two at the Connecticut Supreme Court