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Archive for September, 2020

COVID-19 Related Tort Lawsuits On The Rise? Not So Fast, My Friend

Posted on: September 29th, 2020

By: Gregory Blueford

As summer turns to fall and football returns to fill our weekends, the unwelcome reality of COVID-19 still has a firm grasp on day-to-day life across the globe. Earlier this month, we outlined the HEALS Act’s Tort Immunity Provision under the proposed Safe to Work Act which seeks to curb liability for coronavirus exposure for businesses and individuals. In short, the proposed statute provides that individuals or businesses cannot be liable for alleged exposure to COVID-19 unless the plaintiff can prove by clear and convincing evidence that:

  • The defendant did not make reasonable efforts to comply with “applicable government standards and guidance” concerning exposure;
  • The defendant engaged in gross negligence or willful misconduct causing actual exposure to coronavirus; and
  • The actual exposure caused the personal injury to the plaintiff.

You can read the article here in full here.

Given our society’s penchant to engage in litigation, your first inclination may be: “Well, that makes sense. There must be people suing left and right!” However, an interesting ongoing study shows that may not be the case, at least as far as torts are concerned. Per a rolling tracker created by a corporate law firm, approximately 5,000 COVID-19 lawsuits have been filed this year, with a majority of lawsuits being filed under the broad “Insurance” and “Civil Rights” categories. Personal injury and wrongful death lawsuits from exposure to COVID-19 in a consumer setting are quite limited to date, totaling 20 and 5 respectively, which are less combined than the number of lawsuits filed due to recurring membership fees being charged without services rendered (28). Likewise, only 92 lawsuits have been filed that are categorized as “conditions of employment,” which includes lack of PPE, exposure to COVID-19 at work, wrongful death, and personal injury.

A disagreement, mostly along party lines, exists as to whether the HEALS Act is necessary. One side cites the above numbers as proof that the statute is another method to shortchange workers while the other side surmises that COVID-19 related lawsuits may track asbestos litigation, which has stayed fairly consistent for decades on end. As with most things in the year 2020, only time will tell.

If you have questions or would like more information, please contact Gregory Blueford at [email protected].

Additional Information:

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients.  Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments.  For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER:  The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19.  The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement.  We can only give legal advice to clients.  Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG.  An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest.  As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce education content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such.  We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.**

Tax Court Finds that a Rejected E-Filed Tax Return Satisfies the Beard Test

Posted on: September 29th, 2020

By: Lee Whatling

The IRS’ software automatically rejects e-filed tax returns that do not meet certain criteria. Paper tax returns are generally not subject to the same treatment. This disparity came to a head in Fowler v. Commissioner, 155 T.C. No. 7 (2020), in which the petitioner’s timely-e-filed tax return was automatically rejected by the IRS’ software for the failure to provide a valid Identity Protection Personal Identification Number (“IP PIN”).

On October 15, 2014, a CPA firm timely e-filed a 2013 Form 1040 on behalf of their client, Mr. Fowler, signing the document using a Practitioner PIN. The same day, the IRS rejected the tax return for failure to provide a valid IP PIN. Since Mr. Fowler was a victim of identity theft, he was issued an IP PIN to confirm his identity when filing with the IRS. Following a second attempt to file the return, which was inexplicably not received by the IRS through certified mail, Mr. Fowler’s 2013 tax return was accepted by the IRS’ software on April 30, 2015. Almost three years later, on April 5, 2018, the IRS sent Mr. Fowler a notice of deficiency for the 2013 tax year. Mr. Fowler subsequently petitioned the United States Tax Court, arguing that the IRS’ assessment of his 2013 taxes was barred by the three-year statute of limitations, as prescribed in 26 U.S.C. § 6501.

The Court, on cross motions for summary judgment, agreed, finding that Mr. Fowler’s first attempt to file his 2013 return on October 15, 2014, was a properly filed required return, thus triggering the three-year statute of limitations. The unanimous court, applying the three-prong test in Beard v. Commissioner, 82 T.C. 766 (1984), aff’d, 793 F.2d 139 (6th Cir. 1986), found that Mr. Fowler’s October 2014 return (1) purported to be a return and provided sufficient information to calculate tax liability, (2) constituted an honest and reasonable attempt to comply with the requirements of the tax law, and (3) was executed under penalties of perjury.

The latter finding proved the most contentious, with the IRS arguing that Mr. Fowler’s omission of an IP PIN failed the signature requirement. The Court, however, found the instructions included with the 2013 Form 1040 controlling, noting that there was no IRS guidance characterizing an IP PIN as a signature. The 2013 Form 1040 instructions provided only that “a personal identification number (PIN),” either a Self-Select PIN or a Practitioner PIN, would constitute a valid e-signature. Therefore, as Mr. Fowler’s 2013 return was signed with a valid Practitioner PIN, the signature requirement was satisfied. The Court emphasized that taxpayers are entitled to rely on the instructions referenced on IRS forms and that the IRS “cannot disavow” those instructions when convenient to their litigation position. The Court then found that there was no genuine dispute that Mr. Fowler’s return was properly filed, since it was submitted and received by the IRS as an e-filed return. See Appleton v. Commissioner, 140 T.C. 273 (2013). Accordingly, as the 2013 return constituted a “properly filed” “required return,” the Court granted summary judgment in favor of Mr. Fowler, finding that the return triggered the three-year limitations period.

Although Fowler clarifies the requirements for a required return under the Beard test, a word of caution: The Court did not hold that an IP PIN would never constitute a valid signature. Under 26 U.S.C. § 6061, the Secretary has congressionally-granted authority to prescribe forms or regulations that define the signature method for a tax return and to develop procedures for the acceptance of signatures in digital or other electronic form. Practitioners, therefore, must keep abreast of any changes in the relevant rules and regulations concerning the requirements for a valid e-signature, as well as review the instructions to the relevant form for the relevant year. Failure to do so could result in an unexpected tax assessment for the client.

If you have any questions or would like more information, please contact Lee Whatling at [email protected], or any other member of our Accountants Liability Practice Group, a list of which can be found at www.fmglaw.com.

A Death Knell to Georgia’s Draconian Default Law?: Bowen v. Savoy May Be A Defense Lawyer’s Best Tool for Opening 45+ Day Default

Posted on: September 28th, 2020

By: Janeen Smith

The risk posed by failing to timely file an answer in Georgia keeps defense counsel up at night. While no defendant nor defense counsel intends to cause a case to be in default, things happen. The Georgia Supreme Court’s recent clarification of the “proper case” justification for opening default in Bowen v. Savoy, provides defense counsel with a more forgiving framework to undo the effects of an untimely answer. 308 Ga. 204, 204 (2020). 

A. Getting into default.

In a nutshell, a defendant has 30 days to file a responsive pleading after service, a 15-day grace period after that, and then things become dicey.  O.C.G.A. § 9-11-12; § 9-11-55. The consequence of failing to answer within 45 days is that “every item and paragraph of the complaint or other original pleading were supported by proper evidence. O.C.G.A. § 9-11-55(a). Georgia case law clarifies that the plaintiff is not entitled to “an admission of allegations that are not well-pled or those that result from forced inferences.” Fink v. Dodd, 286 Ga. App. 363, 363 (2007). Nevertheless, the effect of default imposed by failing to timely answer can devastate a good defense strategy.  

B. Getting out of default generally.

Once in a 45+ day default, a defendant must provide the trial court with at least one of three bases to open default: (1) providential cause preventing the filing of an answer; (2) excusable neglect; or, (3) “proper case” justification. O.C.G.A. § 9-11-55(b).  “Providential cause” refers to a situation “over which a party or his attorney had no control, including the illness of a party.”  Bowen, 308 at 207. “Excusable neglect,” as the term of art suggests, occurs when “there is a reasonable excuse for failing to answer.” Id. at 207.  The Court does not find the following acts to constitute “excusable neglect”: an improper calendaring of a response date, disruption of mail, or misunderstanding of the rules. Id. at 207-208. “Proper case” justification is the broadest of the three grounds and permits “the reaching out in every conceivable case where injustice might result if the default were not opened.” Axelroad v. Preston, 232 Ga. 836, 837 (1974).

C. The effect of Bellsouth Telecomms, Inc. on the “proper grounds” basis for opening default.

Until recently, the “excusable neglect” and “proper grounds” justifications for opening default began to blend together due largely to a late 2000s Georgia Court of Appeals decision, BellSouth Telecomms, Inc. v. Future Commuc’ns, Inc., 293 Ga. App. 247 (2008), and its progeny. In BellSouth Telecomms, Inc., the Court of Appeals noted no definition of a “proper case” existed. Relying on a misreading in prior cases of a 1902 case, Brucker v. O’Connonr, 115 Ga. 95 (1902), the Court of Appeals reasoned that “[w]hatever that injustice might be, it may be avoided and the default opened under the ‘proper case’ analysis only where a reasonable explanation for the failure to timely answer exists.” (emphasis in original). 

At least five cases following BellSouth Telecomms required a showing of an “excuse” accompanying proper grounds justification arguments. See Northpoint Group Holdings, LLC v. Morris, 300 Ga. App. 491, 494 (2009); Samadi v. Fed. Home Loan Mortg. Corp., 344 Ga. App. 111, 117-118 (2017); Sierra-Coral Homes, LLC v. Pourreza, 308 Ga. App. 543, 545, fns. 5-6 (2011); Herring v. Harvey, 300 Ga. App. 560, 561-562, fn. 8-9 (2019). Several of these cases show the Court of Appeals placing more value on whether the explanation of the default was “reasonable” without proceeding to the question of whether opening default would avoid injustice. As such, a “proper case” argument had to morph into an “excusable neglect” argument to result in an opening of default. 

D. The effect of Bowen on the “proper grounds” basis for opening default.

The edge of Georgia’s draconian default rules may have been dulled by Bowen v. Savoy, 208 Ga. 204 (2020) and its progeny. In Bowen, the Supreme Court reasoned “decontextualized language has unfortunately resulted in the emergence of a tangle of competing, and frequently conflicting, standards for the opening of default under the proper case ground, both in BellSouth and in earlier decisions of the Court of Appeals.” Id. at. 208.  The Supreme Court, therefore, overruled BellSouth and 10 other cases appearing to require a reasonable excuse or explanation to open default under the “proper case” ground. 

Instead, the Supreme Court noted that “proper case decisions generally reflect that the defendant’s failure to file a timely answer must not have resulted from willful or gross negligence, that the statute ‘conveys very broad powers’ to open default, and that the [proper case] ‘provision should be liberally applied.’” Bowen at 209 (citations omitted). Therefore, the “proper case” standard appears applicable with consideration of all cases “where injustice might result if the default were not opened.” Nelson v. Bd. of Regents of Univ. Sys. of Ga., 307 Ga. App. 220, 223(1) (2010) (citation omitted). This outcome shifts the focus back to the big picture of the case rather than the actions of the party who got the case in default. 

E. Post-Bowen developments and additional considerations.

Bowen unambiguously provides that a reasonable excuse is not required to open a default under the “proper cases” basis. Defendants are routinely relying on Bowen in motions to open default and we are aware of multiple successful outcomes. Once a case is in default, acting promptly improves the likelihood of prevailing on proper case grounds. While this case removes a barrier for defendants, opening default after the 45-day mark is inevitably fact-intensive and this case does not mean a bad outcome is impossible. It goes without being said, avoid default at all costs, but, if it happens, Bowen v. Savoy provides strong support for opening default when a mistake happens.

If you have questions or would like more information, please contact Janeen Smith at [email protected].

California’s New Normal: Electronic Service and Remote Depositions

Posted on: September 25th, 2020

By: Marshall Coyle

Prior to California Governor Gavin Newsom approving Senate Bill 1146 on September 18, 2020, California law provided that, for cases filed on or after January 1, 2019, if a document may be served by mail, express mail, overnight delivery, or facsimile transmission, electronic service of the document was permitted if a party or other person has expressly consented to receive electronic service in that specific action, or if the court had ordered electronic service on a represented party or other represented person.

Senate Bill 1146 requires a party represented by counsel, who has appeared in an action or proceeding, to accept electronic service of a notice or document that may be served by mail, express mail, overnight delivery, or facsimile transmission. The bill requires a party represented by counsel, upon the request of any party who has appeared in an action or proceeding and who provides an electronic service address, to electronically serve the requesting party with any notice or document that may be served by mail, express mail, overnight delivery, or facsimile transmission.

Prior California law required a party deponent to appear at a properly noticed deposition and be in the presence of the deposition officer. It authorized a court to expressly provide that a nonparty deponent may appear at a deposition by telephone if the court found there was good cause and no prejudice to any party. It authorized a court to issue a protective order with respect to the conduct of a deposition in order to protect any party, deponent, or other natural person or organization from unwarranted annoyance, embarrassment, oppression, or undue burden and expense.

Senate Bill 1146 deletes the provision authorizing a court to provide that a nonparty deponent may appear by telephone. It instead authorizes the deponent or the deposing party to elect to have the deposition officer attend the deposition by telephone or other remote electronic means. It specifically provides that a deponent is not required to be physically present with the deposition officer when being sworn in at the time of the deposition, and that any party or attorney of record may, but is not required to, be physically present at the deposition at the location of the deponent, subject to any protective order issued by the court.

If you have questions or would like more information, please contact Marshall Coyle at [email protected].

To Shovel or Not to Shovel: New Jersey Appellate Court Revamps the “Ongoing Snowstorm” Rule for Commercial Landowners

Posted on: September 24th, 2020

By: Ashley Hobson

New Jersey Courts have long recognized an “ongoing snow-storm” rule. The rule relieves commercial landowners from liability when an injury occurs on their property while there is an active weather event such as snow or sleet. The premise of the law was based on the contention that trying to clean walkways in the midst of a snowstorm was “inexpedient and impractical.” However, in an April 9, 2020 decision, the Appellate Division abandoned the longtime precedent and instead enforced a “reasonableness” standard. The Court held that utilizing the ongoing snowstorm rule as “such a bright-line rule…ignores situations when it is reasonable for a commercial landowner to remove or reduce foreseeable and known snow or ice hazards.” The Appellate Division contends that litigants have long misunderstood the Court’s reasoning behind the standard. Thus, it was time to develop a new and clear standard. The new standard establishes a “duty to take reasonable steps to render a public walkway abutting [commercial property] covered by snow or ice-reasonably safe.” Although Defendants have won Motions for Summary Judgment using this standard, it will now be left for jurors to determine whether a landowner behaved reasonably by cleaning or not cleaning during active inclement weather.

In Pareja v. Princeton Int’l Props., __A.3d __ (App. Div. April 9, 2020), the Appellate Division held, “a commercial landowner has a duty to take reasonable steps to render a public walkway abutting its property…reasonably safe, even when precipitation is falling. The liability only occurs if after actual or constructive notice [the landowner] fails to act in a reasonably prudent manner to remove or reduce the foreseeable hazard.” The Court clarified that this holding does not require commercial landowners to completely rid their property of snow and ice in the midst of a blizzard. Rather, traditional tort principles and public policy concerns require commercial landowners to behave reasonably when they are inviting persons to visit their property.  Reasonable factors can include: the severity of the precipitation, past and present weather condition, and the efforts used to treat the property.

The defendants appealed the Appellate Division’s ruling and on September 9th, the New Jersey Supreme Court granted the petition for certification. It remains to be seen if the Court will uphold the Appellate Division’s ruling or if it will determine the new “reasonableness standard” is not reasonable at all. As the snowy season approaches, commercial landowners should be vigilant and ensure that proper steps are taken to treat walkways, even as the snow falls.  As these are very real issues to navigate, please contact one of our team members to discuss the next steps in more detail.

If you have questions or would like more information, please contact Ashley Hobson at [email protected].