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By William T. MacMinn, Esquire Reprinted with permission from the July 28, 2014 issue of The Legal Intelligencer. (c) 2014 ALM Media Properties. Further duplication without permission is prohibited.
As the world becomes increasingly globalized, lawyers are more than ever involved in litigating matters for or against people and organizations that are involved in disputes within the United States, but are located in foreign jurisdictions. In these circumstances, domestic practitioners likely will need to obtain evidence from sources located in foreign nations with which they have little prior professional experience. For those attorneys who seldom encounter an international issue, conducting discovery abroad can be both confusing and overwhelming, but a brief review of some of the sources governing the process can help alleviate any anxiety associated with pursuing an international claim.
Several methods exist to conduct discovery outside of the United States. In Pennsylvania the options include the following: 1) a deposition on notice before a person authorized to administer oaths in the place where a deposition is to be held either by local law or United States law (Pa.R.C.P. 4015(b)(1)); 2) a deposition before a person commissioned by the Pennsylvania Court to administer oaths (Pa.R.C.P. 4-15(b)(2)); or 3) a deposition after application to the Pennsylvania Court presiding over the litigation, pursuant to a letter rogatory under Pa.R.C.P. 4015(b)(3) and 42 Pa. C.S. § 5325, or a letter of request, in accordance with the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters. If a witness will appear voluntarily the simplest way to conduct discovery, and specifically to depose a witness who is located abroad, is the notice or commission procedure outlined above. Where a party or witness refuses to participate, however, an attorney will need to resort to either a letter rogatory, where the Pennsylvania Court in which a matter is pending makes a formal request to the foreign country’s judicial authority, or a “letter of request” under the Hague Convention. This article focuses on this latter method of international discovery, which liberalizes and streamlines the international discovery process.
Deciding on an auto insurance plan, particularly after the rush of purchasing a new car, can be a deflating experience. There are many confusing choices to sort through the most significant of which is the option to select either full-tort or limited-tort coverage. While it’s certainly tempting to purchase the least costly option, savings at the front end can end up costing substantially more if you’re ever in an accident and hoping to recover more than your out-of-pocket medical costs.
The Pennsylvania Motor Vehicle Financial Responsibility Law (“MVFRL”) is the statute that defines both full-tort and limited-tort coverage. Under the MVFRL, limited-tort coverage limits the rights of an insured to recover damages in a lawsuit. Unless a limited tort claimant suffers a “serious injury”, his or her recovery is quite limited and certainly not fully compensable for all of the consequences of an accident. “Serious injury” is as ambiguous as it sounds, and defined by the act as “death, serious impairment of bodily function, or permanent serious disfigurement.” 75 Pa.C.S. § 1702. While death and permanent serious disfigurement are relatively self-explanatory, whether the insured has suffered a “serious impairment of bodily function” is more often than not a question for the jury which is asked to evaluate the injuries suffered in terms of “the extent of the impairment, the length of time the impairment lasted, the treatment required to correct the impairment, and any other relevant factors.” Washington v. Baxter, 719 A.2d 733, 740 (Pa. 1988), Cadena v. Latch, 78 A.3d 636, 640 (Pa. Super. 2013). Unless the jury decides that the injuries sustained, using these criteria, are “a serious injury”, a limited tort claimant can only recover his or her unreimbursed out of pocket costs (referred to as “economic loss” in the statute). He or she will receive no compensation for pain and suffering, loss of life’s pleasures, or the “non-economic loss” which so often has the most significant impact on an accident victim.
On April 29, 2014 an evenly divided Supreme Court let stand a Superior Court opinion which effectively creates a blanket prohibition on discovery of communications between an attorney and his or her expert. On November 23, 2011 the Superior Court handed down its opinion in Barrick vs. Holy Spirit Hospital, (32 A.3d 800). In that case, Carl Barrick brought suit against the hospital and its catering company, Sodexho, for injuries suffered when chair on which he was sitting collapsed beneath him in hospital cafeteria. Sodexho sought discovery directly from one of Mr. Barrick’s treating physicians, Dr. Greene, who was also designated as an expert witness to testify at trial. The medial records were produced, but Dr. Greene refused to produce “Certain records of this office that pertain to Mr. Barrick but were not created for treatment purposes….” These records included communication between Dr. Greene and Mr. Barrick’s attorney. Sodexho moved to enforce the subpoena which was granted by the trial court. An interlocutory appeal followed.
The Superior Court reversed. Its analysis focused on Pa.R.C.P. 4003.3 which protects from discovery counsel’s work product and 4003.5 which limits expert discovery. Discussing Rule 4003.5, the Superior Court reiterated the Supreme Courts’ interpretation of the rule in a prior case which held that, in Pennsylvania, expert discovery absent cause shown, is limited to the interrogatories described in Pa.R.C.P. 4003.5(a)(1) .
The Superior Court went on to hold that written communication between counsel and an expert witness retained by counsel is not discoverable as it is protected under the work-product doctrine of Pa.R.C.P. 4003.3. The only exception to this blanket prohibition arises where the party propounding the discovery can show that the communication itself is relevant.
Business divorce, just like traditional matrimonial divorce, can occur for many reasons. Many times, business divorce is occasioned by underperformance and the need to separate an underperforming owner. However, the opposite circumstance, a business that has done well, can also spur desire for change in structure. Just like matrimonial divorce, business divorce can be a long, painful and expensive proposition. Consideration of trigger events for dissolution and setting an exit strategy before commencing the business venture can manage the expectations of the parties and facilitate transition when it becomes necessary. And it almost always does.
One of the primary considerations is trust. Consider the level of trust you place in a business partner on so many levels. Trust ranges from the basics of whether you can trust your partner not to have a hand in the cookie jar, to more esoteric questions of whether you can trust your partner to share your long term vision. All too often clients come to us with stories of unexplained payments for personal expenses which are only discovered by accident. What are the rights and obligations of the company and the business partners in such event? These rights should be spelled out in the agreement between the parties, otherwise the company, and the innocent shareholders, are left to argue common law claims and may be without a way to specifically extract the untrustworthy owner.
Trust goes deeper than the simple situation of defalcation (misuse of funds). Can you trust your business partner to have the same desire to grow your business and increase sales and performance metrics over an extended time? Business entities generally have perpetual existence. Can you trust that your partner will continue to make the requisite investments of time, energy and money that are necessary to bring the success you work so hard to achieve? If the agreements between the parties do not provide for a mechanism to remove that partner, or at least monetarily induce that partner to voluntarily separate, what strategy is available to accomplish the necessary change?
If extraction of a non performing owner is one side of the coin, the terms of voluntary separation are the other. Even in the absence of material differences between owners and managers, time and circumstance often require parties to go their separate ways. The terms of voluntary separation can be every bit as complex as forcible removal. Often, the most problematic inquiry is the right to be compensated in consideration of separation. Such terms of separation can vary based on valuation methodologies such as “market” or “book” values, timing of payments, reductions or additions to value based on subsequent conduct. In the absence of advance planning, the parties are almost certain to find dispute.
Post-employment obligations and fiduciary duties are also fertile ground for dispute. Corporate officers and directors have fiduciary obligations to the business. Partners, shareholders and members may have fiduciary obligations to each other. A departing shareholder may or may not be permitted to directly compete either during or after termination of the business relationship. Certainly, issues arise with respect to client/customer relationships and confidential information. More substantial issues may arise when the business develops a new technology or intellectual property which one party seeks to exploit in a different way. Agreements between the parties can address such possibilities and preserve rights by contract which might otherwise be ambiguous.
What if it all goes wrong? Again, business entities are generally established to have a perpetual existence, so termination must be accomplished by agreement or statutory procedure. What kind of consent is necessary to effectuate dissolution? Must all of the shareholders or members agree? Agreements can specify events and effect of dissolution including specific assignments in distribution of assets according to differing methodologies or factual circumstances. In circumstances where one party is opposed to liquidation or dissolution, the situation can become even more complex. Occasionally, only the appointment of a receiver can effectuate liquidation or dissolution; a generally unappealing circumstance as such an appointment necessitates the loss of control.
The questions posed and circumstances described above underline the importance of careful consideration prior to establishment of business entities. Such considerations during the business “engagement” and before business matrimony are necessary to prevent significant hardship when expectations are not managed. Advance planning though counsel can address many of the issues potentially faced by business owners and help the parties realize their expectations when circumstances change.
Lis pendens is a powerful tool which can be utilized in civil litigation pertaining to a claim against title to real estate. The filing of a lis pendens and recording that lis pendens against a parcel of property puts the world on notice that the owner may not have clear title, and thus, may be unable to convey same. A lis pendens effectively precludes transfer of the real property as any buyer must take subject to the cloud on title. Of course, a lis pendens must be supported by a writ of summons or a civil action complaint relating to real property.
Curiously, a lis pendens is not an available tool in an Orphans’ Court proceeding. Accordingly, a lis pendens cannot be utilized to place the world on notice of a claim against an administrator or executor where a transfer of property is made in connection with estate administration. Nor can it be used to place the world on notice of the claim relating to that transfer or a defect in their authority to effectuate same. Thus, the lis pendens is not an effective tool to preclude further transfer or encumbrance by mortgage or other debt instrument.
Although lis pendens is not available, the same purpose can be accomplished under the Orphans’ Court rules, provided a Petition for Citation has been filed with respect to the administrator’s activity. Pursuant to 20 Pa. Cons. Stat. §3359, any pleading in Orphans’ Court may be recorded in the Recorder of Deeds Office with reference to the property in question. While little case law is available to address the impact of such filing, the practical effect of providing notice of any existing claim to title may be satisfied.
Antheil Maslow and MacMinn is experienced in matters of estate administration and litigation pertaining to estate matters.
The U.S. Supreme Court finally rendered its decision in U.S. v. Quality Stores, Inc., 572 U.S. ____ (2014), on March 25, 2014, in a closely watched tax case. The Supreme Court reversed the Sixth Circuit Court of Appeals, and found that severance pay is to be considered wages, and therefore subject to Federal Insurance Contribution Act (“FICA”) taxes.
This holding dashed the expectations created by the Sixth Circuit’s holding that severance pay was not subject to FICA taxes. Many businesses had already filed refund claims based on the Sixth Circuit decision, and many more were in the process. Those refund claims are now most likely going to be denied.
The taxpayer, Quality Stores, Inc., paid severance to hundreds of employees while undergoing Chapter 11 bankruptcy reorganization. In its originally filed payroll tax returns, the taxpayer paid roughly $1 million of FICA tax on those severance payments. It later sought a refund of those payments while in bankruptcy, which then placed jurisdiction with the U.S Bankruptcy Court, rather than the U.S. Tax Court. That jurisdictional position seemed to work in the taxpayer’s favor, as the Bankruptcy Court found in favor of the taxpayer, as did the Michigan District Court on review of the decision.