Masterpiece Cakeshop: Maintaining the Status Quo

In agreeing to review Masterpiece Cakeshop Ltd. v. Colorado Civil Rights Commission, the U.S. Supreme Court faced questions involving both constitutional protections for LGBTQ rights and the free exercise of religious beliefs. In the end, the Court followed the facts of this particular case, making a decision that was narrower than anticipated while still upholding both rights.

In 2012, a same-sex couple visited Masterpiece Cakeshop, a custom bakery in Colorado, to order a wedding cake. The shop’s owner, Jack Phillips, refused because of his religious opposition to same-sex marriages, saying that he would make any other kind of cake, such as a birthday cake. At the time, Colorado did not recognize same-sex marriages since the Court had not yet handed down Obergefell v. Hodges. The couple filed suit with the Colorado Civil Rights Commission alleging discrimination on the basis of sexual orientation in violation of the Colorado Anti–Discrimination Act (CADA). CADA makes it unlawful to discriminate in public accommodations or “place[s] of business engaged in any sales to the public and any place offering services … to the public.” (Colo. Rev. Stat. § 24–34–601(1) (2017)).The Commission determined there was probable cause that discrimination had occurred. Unwilling to ignore his religious beliefs, Phillips stopped selling wedding cakes altogether and his profits fell forty percent. Eventually, Phillips brought his lawsuit to the Supreme Court.

The Court faced two issues: Continue reading »

Missouri On Track to Reform Interpleader Law: House Bill 1531 Unanimously Approved by the Senate

As he was leaving office, Missouri Governor Eric Greitens signed at least 77 bills into law, including House Bill 1531, which may protect insurance carriers subjected to purported bad faith claims.

“Interpleader” is a civil procedure vehicle used to force claimants to litigate a dispute involving two or more claims to a limited amount of money held by a third party, such as an insurance carrier.  A common example is when multiple people are injured in a car accident and the injuries exceed the amount covered by the tortfeasor’s policy limits.  What should the insurance carrier do?

Under the prior law, codified at Section 507.060 RSMo, the tortfeasor’s insurer could interplead the policy limits, but the insurer would remain subject to a purported bad faith claim.  This would put insurers in an impossible situation, choosing between paying claims on a first-come, first-serve basis to avoid time-based bad faith claims, paying the limits on the most seriously injured claim, or gathering all of the claimants’ documentation supporting their injuries or damages in an attempt to globally resolve all claims within the policy limits, and reducing the insured’s exposure to excess claims.

Continue reading »

An Oral Agreement Is Not Worth the Paper It’s Printed On

On June 4, 2018, the U.S. Supreme Court held that an individual’s false oral statement about his assets would not support a finding of fraud under the relevant provision of the U.S. Bankruptcy Code. That provision required the false statement to be in writing if it were to serve as the basis of a fraud claim. (Lamar Archer & Cofrin LLP v. R. Scott Appling, Case Number 16-1215, 584 U.S. ___ (2018), issued on June 4, 2018.)

In this case, Mr. Appling hired a law firm to represent him in some litigation. When he had fallen behind on his legal bill to the extent of some $60,000, the firm threatened to withdraw from the case. He told the firm that he was expecting a tax refund of about $100,000 which would cover that bill and all future fees. Relying on Mr. Appling’s assertion, the law firm continued with the representation.

As you probably have concluded by now, there was no $100,000 refund. It was only $60,000, and Mr. Appling invested it in his business rather than paying his attorneys. Worse, when his attorneys subsequently asked about the refund, Mr. Appling lied and told him that he hadn’t received the refund yet. Continue reading »

“Motivating Factor” Standard Replaces “Contributory Factor”

Over the past decade, Missouri has been viewed as a plaintiff-friendly state in workplace discrimination lawsuits. Effective August 28, 2017, Senate Bill 43 was signed into law by Missouri Governor Eric Greitens, which amends the Missouri Human Rights Act (MHRA). The law changes the applicable standard for liability of an employer and more closely aligns Missouri law with federal policies and law. The standard for liability has moved from proof that the discriminatory conduct was a “contributing factor” to “the motivating factor.”

Under the more strict “motivating factor” standard, a plaintiff must prove, not only that the accused employer was unlawfully biased against the plaintiff’s protected classification, but also that this bias had a “determinative influence” on the employer’s decision to terminate the plaintiff. (Missouri Revised Statutes 213.010(19) 2017). The MHRA specifies that only employers are considered entities, not individuals, subject to liability for proven discrimination.

Also important, the MHRA changes language of the Act and now requires that a complaint must be formally filed by the victim within 180 days of any alleged discriminatory offense. Previously, in Missouri, a victim could file a complaint of discrimination within 300 days of the alleged discriminatory conduct. Continue reading »

Litigation Considerations

Part 11 of a 12-part series on Legal Considerations for Your Missouri Leasing Business: What You Should Consider Now, Later, and Throughout the Process

Whether you encounter a tenant who breaches your lease, a contractor who improperly repairs your property, or an individual injured on your property, at some point your company may be faced with the need to pursue or defend against a lawsuit. It is important to understand what your company should consider when it comes to our court system.

What type of paperwork do you have?

The first item to consider when an issue arises is whether the issue is documented.

• If your contractor failed to properly repair the property, do you have a copy of your contract? What about pictures of the repairs?
• Regarding tenant disputes, were your discussions and agreements in writing or, if initially in person or over the phone, did you follow-up with a letter memorializing your discussion? Do you have a copy of any demands for unpaid rent or to do/cease doing some activity?
• Regarding an accident at the property, did you have warnings in place or written rules concerning the source of the accident?

What type of documentation was in place at the time the issue arose and what you have available will be crucial in evaluating whether and how to proceed with a lawsuit, what defenses are available, and whether settlement may be appropriate if your company is served with a court summons.

You will likely need to retain an attorney to represent the company in court. Continue reading »

Recent Illinois and Missouri Supreme Court Decisions Reduce Litigation Risks of Companies Operating in Multiple States

On September 21, 2017, the Illinois Supreme Court handed down its decision in Aspen American Insurance Company v. Interstate Warehousing, Inc, greatly limiting the ability of plaintiffs to sue foreign corporations in Illinois simply because the corporation is registered to do business in and may have minimal contacts with Illinois. As described below, the decision joins Illinois with a nationwide trend disfavoring forum-shopping – a practice in which plaintiffs bring suit against defendants in plaintiff-friendly venues unrelated to the defendant’s contacts and the injury giving rise to the action.

The Aspen case concerned a claim filed in Illinois by a plaintiff who had been injured in a fire which occurred in Indiana. The defendant corporation was incorporated in and maintained its principal place of business in Indiana, although it did maintain a warehouse in Illinois and was also registered to do business in Illinois. The defendant corporation moved to dismiss the lawsuit for lack of proper jurisdiction as a result of these facts and the Circuit Court agreed. On appeal, the plaintiff argued that maintenance of a warehouse in Illinois and being registered as a foreign corporation in Illinois was sufficient to impart general jurisdiction over the corporation. Continue reading »

The Reptilian Response to Missouri’s New Collateral Source Rule

As discussed in “Statutory Changes in Missouri Lead to Blue Skies Ahead for Insurance Companies Facing Bad Faith Set-Ups and Collateral Source Rule Issues,” Missouri Governor Eric Greitens recently signed Missouri Senate Bill 31 into law bringing needed changes to Missouri’s collateral source rule.

Missouri Senate Bill 31 amended Missouri Revised Statute Section 490.715 to redefine the “value” of medical expenses as equating to the amount actually paid by or on behalf of a plaintiff, rather than the total amount of medical bills, prior to adjustments, contractual discounts, or write-offs.

Although the new amendment does not go into effect until August 28, 2017, one of the responses expected from the plaintiffs’ bar is one that has already been trending: refusing to proffer plaintiffs’ medical bills as evidence. This approach has been considered by some as an expansion of the “reptile approach,” an approach where the plaintiff’s attorney aims to influence the jury’s decision-making by using tactics to activate jurors’ survival instincts with the expectation that the jury will make decisions based on instinct rather than logic and reasoning. Continue reading »

Statutory Changes in Missouri Lead to Blue Skies Ahead for Insurance Companies Facing Bad Faith Set-Ups and Collateral Source Rule Issues

Recent legislation signed by Missouri Governor Eric Greitens is expected to promise procedural relief from bad faith set-ups in Missouri as well as provide clarity regarding the collateral source rule.

New Legislation Affecting Bad Faith Set-Ups

Section 537.065 of the Missouri Revised Statutes allows claimants and insureds to contract to limit recovery to insurance coverage. This statute is unique to Missouri, as no other states have established such a practice by statute. Typically, the insured, while knowing that he will not be held personally responsible, agrees to either settle the claim or to not legally oppose the tort victim’s prosecution of the claim at trial. Post-trial the insurer is limited to disputing only the legal conclusion of whether coverage existed and usually barred from re-litigating any other aspect of the suit. These agreements are often used to pressure the insurance company into providing a defense where there may not be coverage or to pay policy limits on questionable claims.  They are also used as schemes whereby insureds and claimants work in concert to obtain coverage and create inflated damage awards at uncontested bench trials.

Effective August 28, 2017, Missouri House Bills 339 and 714 repeal section 537.065 and enact a new section 537.058, as well as a revised section 537.065 (as signed by Gov. Greitens). The new law will help curb the abuses associated with section 537.065 agreements by allowing insurers to intervene in underlying lawsuits. By participating in the underlying lawsuit, the insurer will be able to present a more accurate picture on liability, damages, and coverage issues. The bills further provide that an insured cannot enter into such a settlement agreement with a claimant if the insurer is providing the insured a defense without reservation, under the reasoning that an insured should not be allowed to enter into an unauthorized settlement agreement if an insurer defends without qualification. When an insurer defends under the policy, the insurer is fulfilling its policy obligations and should expect the insured to comply with its corresponding policy obligations, including the duty to cooperate and refusal to pay provisions.  As such, section 537.065, as amended, adds the following procedural protections: Continue reading »

What to Do When You Are Served with a Lawsuit

For many individuals and businesses, being served with a lawsuit is an uncommon, or possibly even a once-in-a-lifetime, situation. Litigation can be stressful and being served with a lawsuit is often surprising as well.  However, in all situations when you or your business is served with a lawsuit, there are three simple, basic steps to best preserve your rights and protect yourself from the outset.

1. Make Some Quick Notes

Often, as a result of the frustration or surprise associated with being served with a lawsuit, most people don’t pay attention to the details of how they were served. These details can be very important. There are specific rules and procedures about proper service of lawsuits, depending on the type of lawsuit and the court.

Take a few minutes to jot down notes related to the service. Specifically, identify the date and time of service, the manner of service including whether a sheriff or process server handed you papers or if the lawsuit was received by first-class or certified mail, and the recipient of those papers. These may be important facts for your attorney to know in determining whether or not service was proper and if you should contest service as a result.

Also, don’t assume that service is improper without getting legal advice. In some instances, service by mail or serving papers on your 16 year old son or daughter when you are not home can be proper service. Continue reading »

Lien Stripping in Bankruptcy after Caulkett

Under the Bankruptcy Code, “lien stripping” allows a debtor to void a property lien “[t]o the extent that [the] lien secures a claim against the debtor that is not an allowed secured claim.” Lien stripping is based on the concept that a second claim must actually be secured by collateral of sufficient value to equal or exceed the amount of the secured claim. Section 506(a) of the Bankruptcy Code provides that claims which are only partially secured, or “underwater,” are to be split into two claims – one fully secured and one fully unsecured.

In 1992, the U.S. Supreme Court addressed an important question about lien stripping in Dewsnup v. Timm (1992). In Dewsnup, a Chapter 7 debtor sought to strip the unsecured portion of an underwater lien on her residence under Section 506(d). Specifically, the debtor wanted to reduce her debt of approximately $120,000 to $39,000, the value of the collateral securing her debt at that time. Relying on the statutory definition of “allowed secured claim” in Section 506(a), the debtor argued that her creditor’s claim was “secured only to the extent of the judicially determined value of the real property on which the lien [wa]s fixed.”

The Court rejected this argument, relying on policy considerations and pre-Code practice. The Court concluded that if a claim has been “allowed” under Section 502 and is secured by a lien with recourse to the underlying collateral, it does not come within the scope of Section 506(d). As such, the Court held that the debtor could not strip down the creditor’s lien to the value of the property because the creditor’s claim was secured by a lien and had been fully allowed under Section 502.

The Dewsnup Court defined the term “secured claim” in Section 506(d) as a claim supported by a security interest in property, irrespective of whether the value of the property would be sufficient to cover the claim.  Under this definition, lien stripping is limited to “voiding a lien whenever a claim secured by the lien itself has not been allowed.” Dewsnup has been widely criticized as being contrary to the plain language of Section 506(a). Continue reading »