The Business Law Brief sm (May-July, 2002)

My sincere apologies for missing the May and June issues of The Business Law Brief, but events
both great and small kept me from it.  To catch you up to date, more than our usual ten items will be included in this 
issue, but many will be written in an abbreviated format. Our August issue will be out shortly.
  1. IRS Plans to Tax Stock Options. Reversing more than thirty years of practice, on January 1, 2003, the Internal Revenue Service (IRS) plans to tax incentive stock options and employee stock purchase plans (ESPPs). The tax would apply to the spread between the discounted price and the market price on the day the stock option is exercised. The employee would pay Social Security and Medicare, and the employer would pay a matching amount. But the company may have to dun paychecks in order to withhold the new tax.
  2. Does Mortgagee's Requirement that Owner Carry "All Risk" Policy Mandate Terrorism Coverage?
    In a case which could have far-reaching repercussions, attorneys for the owners of the Conde Nast Building in Manhattan won a temporary stay preventing the mortgage holder from collecting millions of dollars in rental from the building to pay for a terrorism insurance policy. The building is still covered by an "all-risk" policy as required by the mortgage, but that policy has been amended to exclude coverage for terrorism. As a result, the mortgage holder declared the owner in default, and sought to collect $3.2 million in rent from the building to pay for an insurance policy covering the risk of terrorism. News item at law.com.
  3. "Mere Recital" of Consideration Does Not Establish Consideration.
    Where parties to a contract employed a "mere recital" by executing a release without specifically identifying value exchanged or forbearance exercised, a hearing on consideration is necessary to determine validity. Stone Motor Co. vs. General Motors Corp. No. 01-3519, 8th Cir. Ct. App., June 10, 2002.
  4. USSC: Federal Tax Lien May Attach to Interest in Property Held in Tenancy by the Entireties.
    U.S. vs. Craft, No. 00-1831, April 17, 2002.
  5. USSC II: ERISA Does Not Pre-Empt Illinois HMO Act.
    Rush Prudential HMO, Inc. vs. Moran, No. 00-1021 (U.S.S.C. June 20, 2002).
  6. Employer's Negligent Hiring Constitutes "Occurrence" Under CGL Policy, Although Employee's Wrongful Conduct Was Intentional.
    King vs. Dallas Fire Insurance Co., No. 00-1152 (05/30/02)
  7. Production of Business Documents Sought by IRS Does Not Violate 5th Amendment Protection Against Self-Incrimination.
    US vs. Teeple, No. 01-2811 (8th Cir. April 18, 2002)
  8. Purchaser Under LLC Buy-Sell Acquires Seller's Membership Interest, and Seller's Obligations to Firm are Extinguished.
    Valinote vs. Ballis ( No. 01-3768, 7th Cir., 06/26/02).
  9. No Insurance Coverage for Corporate Officer Who Failed to Give Notice of Possible Claim.
    National Union Fire Insurance Co. of Pittsburgh, PA v. Willis (No. 01-20723, 5th Cir., 06/26/02).
  10. Bankruptcy Court's Order to Transfer Property "Free and Clear" Defeats Broker's Claim, Even Though Property Sold to Broker's Purchaser.
    C.H.E.G., Inc. v. Millennium Bank (No. A094020, CA App.Dist. 06/20/02).
  11. Patent Owner May Not Enforce a Contract for Payment of Patent Royalties Beyond the Expiration Date of the Patent.
    Scheiber vs. Dolby Lab, Inc.( No. 01-2466, 7th Cir. Ct.App., 06/17/02).
  12. If Contract Contains Only a General Choice-of-Law Clause, Federal Law Governs the Right to Compel Arbitration; State Law Governs All Else.
    Sovak vs. Chigai Pharmaceutical Co., No. 00-55298 (9th Cir. February 19, 2002).
  13. Arbitration Agreement Giving Employer Right to Choose Arbitrator is Unconscionable and Unenforceable.
    Murray vs. United Food &Comm. Workers Int'l Union, No. 01-1602 (4th Cir. May 10, 2002). Employee Has No Private Cause of Action for Employer's Failure to Pay FICA.
    McDonald vs. S. Farm Bureau Life Ins. Co., ( No. 01-15648, 11th Cir., 05/13/02).
  14. Federal Arbitration Act's One Year Statute of Limitations for Seeking Confirmation of Award Mandatory and Strictly Construed.
    See Law.com article.
  15. Tips to Better Use, Manage Email.
    See Law.com article.

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