Justia U.S. 8th Circuit Court of Appeals Opinion Summaries

The Hughes, Arkansas school district hired Ray Nassar as superintendent in 2008. Nassar hired Gena Smith as a business manager. Both are white. The school district renewed Nassar’s contract until June 30, 2013. After the racial composition of the school board shifted to an African-American majority, Nassar’s already-poor relationship with two African-American board members deteriorated. One member, Jackson, referred to Smith as Nassar’s “girlfriend,” at a public meeting (both are married to others) and to Nassar’s “lie[s].” A profanity-laced exchange followed; soon after, the district fired Nassar without a hearing. Months later, the school district fired Smith, without a hearing. Nassar and Smith sued, alleging violations of due process, unlawful racial discrimination, breach of contract, and defamation. A jury found for Nassar and Smith on all claims, awarded Nassar $340,000 on his due-process claim (more than he would have earned through the end of his contract), $1.00 on his discrimination claim, and $1.00 on his contract claim. The court granted Nassar and Smith attorney’s fees at a rate of $375 per hour. The Eighth Circuit vacated the due process award and remanded with instructions to offer remittitur. View "Nassar v. Jackson" on Justia Law

Draper, age 18, suffered traumatic brain injury in a 2006 car accident. Draper executed a durable power of attorney, authorizing her parents to collect money; compromise claims; and “fund, transfer assets to, and to instruct and advise the trustee of any trust wherein [Draper is] or may be the trustor, or beneficiary.” Draper began receiving Supplemental Security Income payments. In February 2008, father signed a personal-injury settlement. Draper received $429,259.41. Her parents signed documents creating a Special Needs Trust, intended to qualify under 42 U.S.C. 1396p(d)(4)(A), to provide for Draper’s needs without “displac[ing] or supplant[ing] public assistance or other sources of support that may otherwise be available” and transferred $429,259.41. In September 2008, Draper received notice that she had been overpaid $3,000 in SSI benefits because her trust exceeded the SSI-eligibility limit of $2,000, and that her SSI payments would cease. An ALJ found that for the trust to be exempt from consideration as a personal asset, Draper’s parents had to act as third-party creators when establishing it, but instead acted as agents under the power of attorney. Draper’s parents obtained a state court order modifying the trust, which retroactively listed the state court, rather than Draper’s parents, as the settlor. The Appeals Council denied review, finding that the order did not provide a basis for altering the ALJ’s decision. The district court and Eighth Circuit affirmed. View "Draper v. Colvin" on Justia Law

Highland Bank made a loan to FPC, an equipment lease finance company, based on an assignment of leases. The underlying leases, guaranteed by individuals, were ultimately discovered to be a Ponzi scheme. A guarantor claimed her signature was a forgery. Highland lost more than a million dollars. BancInsure denied Highland’s claim under a Financial Institution Bond that covered “Loss resulting directly from the Insured having . . . acquired, sold or delivered, given value, extended credit or assumed liability on the faith of any original . . . personal Guarantee . . . which bears a signature of any . . . guarantor . . . which is a Forgery.” BancInsure sought a declaratory judgment that Highland's claim was not covered. The district court granted summary judgment to BancInsure, finding that the loss did not “result directly from” a forged personal guaranty because the guaranty was worthless to the bank when it entered into the transactions. While appeal was pending, BancInsure was placed into receivership with the Oklahoma Insurance Commissioner as Receiver under a final order of liquidation. The Eighth Circuit affirmed. Highland failed to show the “direct relation between the injury asserted and the injurious conduct alleged” that the doctrine of proximate cause demands. View "BancInsure, Inc. v. Highland Bank" on Justia Law

As part of a redevelopment project partially financed by Sioux City, Iowa, Civic borrowed from Northwest Bank to build a movie theater complex. Main Street leased the space in 2004. Main Street did not fully pay its rent and Civic did not fully make its loan payments. After mediation, Civic and Main Street agreed on an amended lease that substantially lowered the rent. Eventually, Civic filed for Chapter 11 bankruptcy, arguing that the court should subordinate the interests of Northwest and the city because they had defrauded Civic into accepting the amended lease. The bankruptcy court issued orders deciding that the amended lease applied. Civic appealed the lease orders; the Bankruptcy Appellate Panel ruled that Civic’s appeal was improperly interlocutory and dismissed for lack of jurisdiction. Civic filed a second plan, which restated the fraud argument. The bankruptcy court denied confirmation and rejected the fraud argument, but did not dismiss the bankruptcy petition. Civic appealed the new order and, again, the three earlier orders. The BAP again dismissed. Civic appealed all four orders. The Eighth Circuit dismissed for lack of jurisdiction; a determination of the BAP is not final unless the underlying order of the bankruptcy court is final. View "Civic Partners Sioux City, LLC v. Main Street Theaters, Inc." on Justia Law

Jones owned SAM Packaging and owed several hundred thousand dollars in back taxes for 2006-2008. Jones refused to provide the IRS with bank statements, and later submitted statements, with blacked-out parts. He submitted financial disclosure forms, disclosing accounts at Mutual of Omaha Bank (MO), but not accounts at Community Credit Union. He directed his financial activity to the undisclosed accounts. When the IRS levied on Jones’s MO accounts, they were nearly empty. Jones commingled personal and business accounts, then began dealing in cash. He refused to turn over accounts receivable, stating that he would terminate the business before doing so. In 2010, he declared that SAM had been “suspended” and he was unemployed. He had started a new company to secretly serve his customers. The IRS summonsed customers and learned Jones had performed work without billing them, preventing levy on his accounts receivable. Jones pled guilty to tax evasion, 26 U.S.C. 7201. The district court imposed a two-level enhancement for use of sophisticated means, as recommended in the PSR. After a three-level reduction for acceptance of responsibility, the district court calculated a Guidelines range of 30 to 37 months and sentenced Jones to 24 months. The Eighth Circuit affirmed, rejecting an argument that Jones’s actions were typical of tax evasion offenses and did not make detection more difficult. View "United States v. Jones" on Justia Law

For about three years ending in 2009, five schemers bilked unsuspecting investors of an estimated $190 million in a Minnesota Ponzi scheme. They took more than $79 million of the investors’ funds with the help of Associated Bank. After the scheme was exposed, the district judge in a related case appointed a receiver to take custody of funds owned by the schemers’ estates and by organizations under their control (receiver entities). The receiver filed suit on behalf of the receiver entities, alleging Associated Bank aided and abetted the scheme. The district court granted Associated Bank’s motion to dismiss. The Eighth Circuit reversed and remanded, stating that, while it could not predict whether a jury will find Associated Bank either had actual knowledge of or substantially assisted in the asserted torts, the facts alleged in the complaint give the receiver’s claims “facial plausibility.” The receiver pled “factual content that allows the court [and a jury] to draw the reasonable inference that the defendant is liable for the misconduct alleged.” View "Zayed v. Associated Bank, N.A." on Justia Law

Butler sells agricultural and construction equipment, primarily for Caterpillar. In 2002, Butler formed North Central to take over its leasing operations. The companies are ultimately controlled by the same family and share space. Butler performs North Central’s accounting and ordering functions and initially pays the wages of its employees. Caterpillar assigned separate dealer codes, but Butler used its code to order equipment for itself and North Central. Under North Central's like-kind-exchange (LKE) program, North Central sold its used equipment to third parties, who paid a qualified intermediary, Accruit, which forwarded proceeds to Butler; Butler purchased new Caterpillar equipment for North Central and transferred it to North Central via Accruit, charging the same amount that Butler paid for the equipment. Butler's LKE transactions facilitated favorable Caterpillar financing terms. Butler essentially received a six-month, interest-free loan from each exchange. From 2004-2007 North Central claimed nonrecognition treatment of gains from 398 LKE transactions under IRC 1031, so that the gain was not included in gross income at the time of actual sale or gain. The IRS declared that the transactions were not entitled to nonrecognition treatment, reasoning that North Central structured the transactions to avoid the related-party exchange restrictions of section 1031(f). The district court analyzed Butler's unfettered access to the cash proceeds and the relative complexity of the transactions and entered judgment in favor of the government. The Eighth Circuit affirmed. View "North Cent. Rental & Leasing, LLC v. United States" on Justia Law

Brooks was riding her bicycle when Lawrence negligently struck her with his car. Lawrence later died of unrelated causes. Brooks sued Lawrence’s estate, which settled for the $50,000 limit of Lawrence’s auto insurance policy. Brooks agreed not to seek additional recovery from Lawrence’s estate, heirs, or insurer, but retained the right to seek recovery from the Brookses’ auto insurance policy (Midwestern), which provides underinsured motorist (UIM) bodily injury coverage. On the declarations page for the UIM endorsement, the policy states, “Insurance is provided where a premium entry is shown for the coverage.” This page lists “Underinsured Motorist Bodily Injury” with liability limits of $100,000 per-person and $300,000 per-accident. A premium amount appears for each of five vehicles, indicating the Brookses pay a premium for UIM coverage for each vehicle. Midwestern paid $100,000, declaring this per-person limit the maximum amount for a single application of the policy’s UIM coverage, then sought declaratory judgment that its UIM coverage limits for multiple vehicles do not stack to multiply the per-person limit. Granting Midwestern summary judgment, the district court determined the plain language of the policy makes it “quite clear” intra-policy stacking is prohibited and the per-person limit for one accident is $100,000. The Eighth Circuit affirmed. View "Midwestern Indem. Co. v. Brooks" on Justia Law

Licensees entered into a licensing agreement with Safeblood Tech for the exclusive rights to market patented technology overseas. After learning that they could not register the patents in other countries, Licensees sued Safeblood for breach of contract and sued Safeblood, its officers, and patent inventor for fraud, constructive fraud, and violations of the Arkansas Deceptive Trade Practices Act (ADTPA), Ark. Code 4-88-101 to -115. The district court dismissed the fraud claims at summary judgment. The remaining claims proceeded to trial and a jury found for Licensees, awarding them $786,000 in contract damages and no damages for violations of the ADTPA. The district court awarded Licensees $144,150.40 in prejudgment interest. The Eighth Circuit reversed as to the common-law fraud claim and the award of prejudgment interest, but otherwise affirmed. Licensees produced sufficient evidence that the inventor made a false statement of fact; the district court did not abuse its discretion when it gave the jury a diminution-in-product-value instruction; and Licensees waived their inconsistent-verdict argument. View "Yazdianpour v. Safeblood Techs., Inc." on Justia Law

Cole pleaded guilty to being a felon in possession of a firearm, 18 U.S.C. 922(g)(1). The district court determined that Cole’s minimum sentence should be increased under the Armed Career Criminal Act (ACCA) because he has three prior convictions for burglary – “a violent felony or a serious drug offense.” 18 U.S.C. 924(e)(1). In order for the sentencing enhancement to apply under the ACCA, the three prior convictions must be for offenses that were “committed on occasions different from one another.” Cole’s presentence investigation report (PSR) revealed that Cole has Missouri convictions for burglaries committed on July 20, 2005, March 1, 2007, and October 24, 2008. Neither Cole nor his lawyer objected to these PSR findings. The Eighth Circuit affirmed In Alleyne v. United States (2013), the Supreme Court ruled that any fact that increases the mandatory minimum sentence for a crime is an element of the crime that must be either admitted by a defendant or submitted to a jury. The Court specifically noted that it was leaving the “fact of prior conviction” exception intact. The determination of whether prior felonies occurred on separate occasions does not require “findings of fact beyond the mere fact of a prior conviction.” View "United States v. Cole" on Justia Law