Wrongful Denial Settlement

Today the firm settled the first of three pending wrongful denial of insurance claims cases that we are currently handling.  This one involved the theft of an automobile and the insurance companies denial of coverage for the claim.

It seems more and more insurance companies are denying claims out of hand.  We are close to settling both of the remaining two cases.

~Tim

First Win

Last week Rachel picked up her first win in a juvenile criminal case by getting a dismissal in a contributing to the delinquency case. Congratulations Rachel.  I am sure it will be the first of many.

~Tim

Judge Acknowledges Inequality of Representation

It has long been obvious to us little guys how difficult it is to file lawsuits on behalf of individuals against either the government or big business. Defendants like those have enough money to hire experts and obtain legions of lawyers who can generally bury us in paperwork and expense of litigation.

This week Federal District Judge Nixon, here in the Middle District of Tennessee, acknowledged the problem when he ordered a plaintiff's counsel to get more help. The case involved a challenge to the redistricting of a school district. Of course the school district, despite their constant claims of being strapped for cash, hired the biggest and most expensive law firm they could find (from Washington D.C. no less). That law firm hired what was described as a "handful" of experts.

Of course, the plaintiffs couldn't afford to compete with that, so when they showed up at the hearing with only a local lawyer and no experts, the judge noted the disparity. He then ordered the plaintiffs to seek the assistance of the NAACP Legal Defense Fund. Plaintiffs' attorney stated in comments after the hearing that he had already sought such help and was turned down.

This is, of course, a problem with the system. It seems that, if you have the resources, you can simply buy a victory - unless the plaintiff is very lucky. That's not always true, many times defendants attorneys will recognize the equities of the situation and settlements can be reached. But it is true enough of the time to present a problem.

I am not sure that Judge Nixon's solution will work - what happens if the plaintiffs can't find any organization to help? But it at least acknowledges the problem.

A newspaper article about the case appears here.

~Tim

The Right to Appointed Counsel in Civil Contempt Matters

In a recent South Carolina Supreme Court case, Turner, the defendant, failed to pay child support in the amount of nearly $6000 and had not made payment in about a year and a half. The lower court held him in willful contempt of court and sentenced him to twelve months in jail, and this sentence was upheld by the South Carolina Supreme Court. (See Price v. Turner, South Carolina Supreme Court Opinion No. 26793).

The United States Supreme Court will hear the case to determine if an indigent defendant charged with civil contempt, as in Price v. Turner, is entitled to an appointed attorney to represent him or her in the case.

The American Bar Association recently filed a United States Supreme Court amicus brief in which they make the argument that appointed counsel should be provided by and paid for by the court when the indigent defendant faces incarceration for contempt, civil or criminal, of court.

The ABA’s arguments state that deprivation of the defendant’s liberty warrants the appointment of counsel. In essence, the argument is that just because the contempt is labeled “civil” in form, the resulting jail time makes the appointment of counsel necessary. The blurring of the lines between civil and criminal matters, as in child support contempt cases, makes this discussion necessary. The U.S. Constitution’s Sixth Amendment provision for the right to assistance of counsel in criminal prosecutions comes into play as well. Just because these cases are being labeled “civil” does not mean that they are not actually criminal prosecutions, bringing with them Sixth Amendment protections.

An economical discussion also is found in the ABA’s amicus brief which states that while appointed counsel will cost the state money, appointed counsel will also be able to “guard against the improper use—and the costs—of incarceration.

In sum, this case will be heard by the United States Supreme Court and many questions will hopefully be answered to determine whether civil contempt defendants, when facing incarceration, will be entitled to appointed counsel.

Rachel Rieger

The Impact of Ransom v. FIA Card Services on the Bankruptcy “Means Test”

The Bankruptcy Code uses a statutory formula known as the “means test” to determine whether a debtor qualifies for a Chapter 7 or Chapter 13 bankruptcy case. Simply put, the means test compares the debtor’s household income averaged over the past six months with the median income of the state in which they reside.  If the debtor’s income is higher than the median, there is a presumption that the debtor has the means to pay creditors and a chapter 7 is inappropriate.  The debtor is forced into a chapter 13.  The means test is also used, in some districts, to determine the amount of the debtor’s chapter 13 payment.

In determining the six month average income, the debtor is permitted to take certain deductions.  The law says that those deductions may be calculated using the IRS standard deductions that the IRS uses to calculate debtor income when making payment arrangements or forgiving taxes.  One of those deductions regards expense related to motor vehicles.  That amount can include the amount of a car payment.

In the recent Supreme Court case Ransom v. FIA Card Services, the question before the Court was whether the debtor could claim a car payment deduction for a car that he owned free of any debt. The Court held that the debtor could not take a deduction for a payment that he did not have: “A debtor who does not make loan or lease payments may not take the car-ownership deduction.” A person who owns a car free of debt is entitled to the “Operating Costs” deduction for all driving-related expenses. However, a person may not claim the “Ownership Costs” deduction because that allowance is for the separate costs of a car loan or lease.

This holding has several implications for debtors. First, debtors may now be forced to make larger chapter 13 payments to unsecured creditors.  Second, the debtor may be forced into a chapter 13 instead of a chapter 7. There is also currently a case before the Court to determine whether the means test is used to determine the chapter 13 payment or whether a debtor may use the difference between the amounts on Schedules I and J (income and expenses).  That case, together with Ransom, will have a big impact on a debtor's ability to file a chapter 7 or to afford the payments of a chapter 13.

Brad Russell

Associate Attorney

Tim Hatton & Associates
104 ½ Public Square
Lebanon, Tennessee 37087
Tel.: 615-453-9934
Fax: 615-472-7868 

Interesting Supreme Court Arguments

The U.S. Supreme Court heard arguments today in a couple of very interesting criminal cases. The first was Kentucky v. King, an appeal from a ruling of the Kentucky Supreme Court excluding evidence obtained when the Lexington, Kentucky police broke down the wrong door while chasing a fleeing felon. The facts of that case are straightforward, the police chased a suspect into an apartment building where they lost sight of him. There were only two doors into which he could have gone. They approached the wrong door, claimed to smell burning marijuana, knocked and claimed to hear sounds as if someone was "destroying evidence." They broke the door down and observed marijuana being smoked.

The Kentucky Supreme Court held the search to be illegal and suppressed the evidence. Kentucky appealed to the U.S. Supremes. From reading about the argument (wouldn't it be nice if they televised these?), it seems like Kentucky will win and yet another of our protections against illegal search and seizure will go away.

The second is Sykes v. United States, which presents the issue of whether fleeing from the police in a motor vehicle after being ordered to stop is a "violent felony" for sentence enhancement purposes under the Armed Career Criminal Act. Seems kind of a no-brainer that it isn't. Running away seems calculated to prevent violence.

You can read more about these cases here.

~Tim

Appellate Court Win

I am happy to announce that my firm won a significant case in the Tennessee Court of Appeals last month. The case is Sabaski v. Wilson County Board of Education, et al. The appeal was from a dismissal by the trial court of our claims for false imprisonment and assault. The basis for the dismissal was the defendants' assertions that the plaintiffs must first exhaust their administrative remedies under the Individuals with Disabilities Education Act (IDEA).

Our position was that IDEA only required exhaustion when the basis of the lawsuit was a federal statute that was enacted for the protection of disabled individuals (such as the Americans with Disabilities Act). Since the plaintiffs causes of action were grounded in state law, exhaustion was not required. The Court of Appeals agreed and reversed the trial court and remanded the case, which will proceed to trial.

Since this opinion is very detrimental to the defendant, far beyond the scope of this single case, I expect them to seek review by the Tennessee Supreme Court. It will be interesting to see if that court accepts the case.

Anyone interested can read the opinion by clicking here.

“Practice Points” for Dealing with Divorce

I am an attorney practicing primarily in family law matters, including divorce, child custody, child support, and other domestic issues. At the risk of sounding cliché, I enjoy this practice area because I love “working with people.” I have made some observations about particular behaviors people seem to fall victim to time and time again. This blog will give some practical advice to individuals who may be thinking about getting a divorce or who are currently going through one.

I offer the following “Practice Points” to get the discussion started:

1. Does your spouse call you constantly to attempt to harass or threaten you?

*Practice Point #1: You do not have to tolerate this harassment, abuse or threatening behavior.

As soon as your divorce is filed, a temporary injunction is put in place while the divorce is pending to prevent any harassment, threats, or abuse of any kind at any time, and the injunction also prevents disparaging remarks made while in the presence of your children or made in front of your employer.

If you have not yet filed for divorce, you still have the right to remain free from fear and harassment. If the threats are severe and cause you to fear for your safety or the safety of your children, you might consider filing for an order of protection, restraining order, or no contact order.

2. Does your spouse threaten to stop paying child support if you don’t comply with his or her latest demand or request?

*Practice Point #2: If the court has ordered child support, the spouse may not stop payments until there is another court order stating that payments may be modified or stopped.

If your spouse stops child support payments, he or she may be held in contempt of court for failure to comply with a court order. Your spouse is simply trying to manipulate you when he or she threatens to stop paying child support. He or she does not have the right to stop payments until there is a new court order in place to modify the support amount.

The consequences of being found in contempt vary, but a contempt charge may result in the violator being put in jail for up to six months for this violation of a court order to pay child support. In addition, the violator will be required to pay back the amount owed, and this “back child support” is commonly referred to as an arrearage.


I welcome the submission of any question concerning child support, divorce, or child custody matters. If any reader would like it to be addressed either in the blog or to the reader personally, please contact me and I would be happy to provide some information. My contact information is:

Rachel Rieger, Attorney
Tim Hatton & Associates
Phone: (615) 453-9934
E-Mail: Rachel@lawyerhatton.com

Introducing Brad Russell

Brad Russel just made his first post to this blog. Brad is a new associate here who is focusing on consumer, small business and entertainment law. As part of our office new year's resolutions all associates will be making frequent posts to the blog.

~Tim

The Difference Between Sales Tax and Use Tax and How This Can Effect Your Business

In today’s market it is common for even small local businesses to conduct their business all over the country. Modern technology allows orders to be received by phone, fax, mail, e-mail, and the internet from out of state customers. However, with great opportunity for profit comes great responsibility. When dealing with out of state sales, it is important to know the basic definitions of the two types of retail tax: sales tax and use tax.

Sales Tax is imposed on retailers for the privilege of selling tangible personal property at retail. The tax is measured by the gross receipts from retail sales. The obligation to pay sales tax is on the seller.

Use tax is imposed upon the storage, use or other consumption in this state of tangible personal property purchased from a retailer. The use tax rather than the sales tax applies to purchases shipped from an out-of-state point to an in-state consumer. The obligation to pay use tax is on the purchaser. However, many customers fail to report and that has resulted in recent changes to state laws.

The states that have changed their laws to place a duty upon out of state vendors to register, report sales, and collect sales tax have generally followed a single pattern. While the burden initially remains with the customer, if a company has a nexus within the state it is required to register and report sales and collect and remit the tax.

“Nexus” is a means of connection, a link between an in-state business and another state. What constitutes a nexus depends entirely upon the state’s law defining that term. It can be as little as making one sale in the state, or as much as maintaining an office there. The only way to find out if a business has a nexus with another state is to analyze the language of the state’s nexus definition. Because each state has a different nexus definition, this analysis must be done for each state individually.

It is important to note that the laws of most states require companies to respond to requests for information to determine whether they meet that state’s nexus requirements. Failure to respond to these requests could result in a company being sued by the taxing authority or having civil penalties imposed upon them.

As more and more states respond to their budget crises by attempting to increase sales tax revenues, it is important for every business owner to keep in mind that, even though they may not consider themselves to be doing business in a state, they might in fact meet the state's requirements for withholding sales tax. If there is any question, consult your business attorney.

Brad Russell