April 1997

Vol.1 – No.8

Hot Sites

The American Bankruptcy Institute (www.abiworld.org) has recent bankruptcy bills, resource links and statutes’ “Cracking The Code” newsletter of insolvency issues’ and ABI committee newsletters. Divorcesource (www.divorcesource.com) has an interactive bulletin board for visitors to express their concerns with others sharing similar experiences; a chat room for family law professionals to meet and exchange information and ideas; and family law links. The site features the legal aspects of divorce (attorneys and mediators, state guidelines, state resources and the legal process); family and financial aspects (child custody and support, counseling, spousal support, taxes and visitation); and valuations (businesses, gems/jewelry, machinery/equipment, pensions, personal property and real estate).

What’s New in Consumer Law?

Homeowners awarded $5.3 Million for fraud by insurance company. An elderly couple sued their insurance company after it refused to pay $2.5 Million to repair or rebuild their 6,000 square foot beachside house which was damaged in an earthquake. The foundation was severely damaged and the homeowners wanted it replaced. However, the insurance company proposed injecting chemicals underneath the property to stabilize it and offered $880,000.00. The couple had to stay in a hotel for three years. A Los Angeles, California Superior Court jury found the insurance company guilty of fraud and awarded $5.35 Million for punitive damages and emotional distress and $250,000.00 for out-of-pocket expenses incurred while the couple stayed at the hotel.

What’s New in Debtor/Creditor Law?

Bankrupts don’t loose IRAs. The Third and Eleventh Circuits have allowed Chapter 7 bankrupts to keep IRAs of $143,000.00 and $21,000.00 respectively. There is usually an attempt to save IRAs by relying on a federal exemption which allows debtors to keep only as much as is “reasonably necessary” for their support. However, the court ruled that an IRA is not part of the estate at all and, therefore, the debtor does not even have to get to the exemption stage. A bankruptcy estate does not include trust funds (such as an IRA) if there is a restriction on the transfer of a beneficial interest of the debtor in a trust that is enforceable under applicable non-bankruptcy law. The Third and Eleventh Circuits said that this includes state law restrictions on transferring IRAs. The state law restrictions in these cases are a New Jersey statute which provides that creditors can’t levy on qualified trusts and a Georgia statute that prohibits IRAs from being garnished.

What’s New in Divorce/Family Law?

Father’s personal injury award increases child support. A father’s $300,000.00 personal injury award is “income” which can be used to increase his child support payments despite the fact that: (a) lawsuit proceeds are not one of the 20 types of “income” listed in the child support statute; (b) the proceeds are not considered “income” for federal tax purposes; and (c) a majority of the award was for pain and suffering and medical expenses as well as lost wages (Pennsylvania Superior Court). (A Virginia Court of Appeals has held to the contrary.) Ex-spouse can avoid paying a divorce debt by going bankrupt. Divorce-related debts, other than ones for “alimony, maintenance or support”, can be discharged with a Chapter 7 bankruptcy if one of the following two tests is met: The debtor doesn’t have the “ability to pay” it, i.e. he or she does not have enough income or property beyond what is reasonably necessary for living or business expenses or A discharge would benefit the debtor more than it would be detriment to the ex-spouse. Dischargeable debts are property settlement payments or promises to pay a debt of the ex-spouse, such as attorneys fees, a credit card balance or a mortgage. The statute is very vague and has been subject to numerous court interpretations.

What’s New in Estate Planning Law?

Grandma may not be going to jail. The portion of the Kennedy-Kassebaum health care bill, effective January 1, 1997, which makes it a crime to give away property if the donor plans to apply for Medicaid, may be repealed by Congress (H.R. 216). Both the donor and his or her attorney can receive up to one year in prison and a fine of $10,000 for transferring assets in order to qualify for Medicaid benefits (see Vol. 1-No. 4). The American Bar Association has asked Congress to repeal the law which has been criticized for being poorly drafted and vague as to what types of gifts are illegal.

What’s New in Health Law?

Woman awarded $4.9 Million for removal of non-cancerous reproductive organs. A surgeon removed the Plaintiff’s ovaries, uterus and fallopian tubes before obtaining the results of a biopsy that had been performed at the beginning of the operation to detect ovarian cancer. The biopsy, which came back during the surgery, confirmed that she did not have cancer, but only a benign ovarian cyst. The Brooklyn jury found that the chief of gynecological oncology was personally responsible for the mistake.

What’s New in Landlord/Tenant Law?

Tenants with “invisible disabilities” such as mental illness mental retardation, brain injury, multiple chemical sensitivity and neurological disorders are protected by the Fair Housing Act and the Federal Rehabilitation Act of 1973. These laws require that landlords “reasonably accommodate” the tenant’s disability. Courts have held that mentally disabled tenants cannot be evicted for threatening others. They must be given a chance to control their behavior with medication. A condominium association was forced to stop using pesticides and to pay a $40,000 settlement because the owner had multiple chemical sensitivities. Tenants have been allowed to keep pets in violation of no pet provisions if the pet is needed for therapeutic reasons. Tenants cannot be denied an apartment on the basis that they are unable to live independently.

What’s New in Personal Injury Law?

Auto insurance covers dog bite. Auto liability insurance covers a lawsuit by a passerby who was bit in the face by a dog in the back of a pickup truck. The court found a substantial nexus between the bite and the use of the truck. The bite was facilitated by the height and open design of the truck (New Jersey Appellate Division). Arizona, California, Connecticut and North Dakota courts have similar holdings. Colorado, Florida, Pennsylvania and Washington courts have held to the contrary.

What’s New in Real Estate Law?

Landowners are immune from liability to recreational users. Landowners who open their property to free recreational use by others are insulated from ordinary tort liability, unless injuries occur due to acts or omissions of a willful or malicious nature. A motorbiker was injured when he fell 35 feet into a landfill after driving along one of its slopes and flying into the air. The landfill was a former gravel pit (New York Court of Appeals).

What’s New in Small Business Law?

Q: What is the cause of most business failures? A: Most businesses are unsuccessful because they fail to:

• plan properly,
• monitor financial statements,
• understand pricing,
• monitor cash flow,
• manage growth,
• borrow properly and/or
• plan for transition periods.

A sound, well-thought-out business plan will anticipate and help your business avoid these problems. A good business plan accomplishes the following:

• It allows the new business owner to determine the feasibility of the proposed business and identifies its start-up requirements.
• It provides a basis for outside investors and banks to determine whether to invest in or lend money to the business.
• It provides the groundwork for more detailed operational plans and serves as a valuable management tool for monitoring and planning future growth.

The businesses with the highest SBA loan failure rates are drinking establishments, plumbing, heating and air conditioning contractors, drug stores, furniture stores, and commercial printers. The businesses with the lowest failure rates are industrial machinery, equipment rental and leasing, hotels and motels, business services, and dental offices. For further information on business plans, order The Upstart Small Business Legal Guide.

Injured Victims’ Rights

The Friedman & Ranzenhofer, P.C. Ten Point Pledge to Accident/Injury Clients is:

• To communicate with you in plain language that is easy to understand.
• To promptly return your telephone calls.
• To quickly and thoroughly investigate and analyze your case. Friedman & Ranzenhofer, P.C. does not accept every accident case.
• To have your case personally handled by an attorney.
• To keep you informed of the progress of your case at all times.
• To show you the personal care, concern and attention which has been the hallmark of our law firm since 1955.
• To not handle your case in an “assembly line” fashion.
• To accommodate the needs of you and your family during the handling of your case.
• To vigorously protect your legal rights.
• To never release your name to the media after your case has been completed, except with your written permission.

Attorney Michael H. Ranzenhofer limits his practice to automobile accident, slip and fall, dog bite and defective product cases. He is a member of the Association of Trial Lawyers of America, the New York Trial Lawyers Association, the New York State Trial Lawyers Association and the Erie County Bar Association Negligence Committee.