by Darrell Phillips, Attorney
On May 9, 2012, Tennessee Governor Bill Haslam signed into law the “Unemployment Insurance Accountability Act of 2012” which, among other things, broadens the definition of work-related misconduct and creates greater hurdles for claimants seeking to receive unemployment benefits. Specifically, it increases the definition of misconduct to include absenteeism, it heightens work search requirements for those utilizing unemployment benefits, it limits benefit eligibility for claimants who are incarcerated, and it ensures claimants cannot receive both severance packages and draw unemployment support at the same time.
Effective immediately, “misconduct” includes, but is not limited to:
1. Conscious disregard of the rights or interests of the employer;
2. Deliberate violations or disregard of reasonable standards of behavior that the employer expects of an employee;
3. Carelessness or negligence of such a degree or recurrence to show an intentional or substantial disregard of the employer’s interest or to manifest equal culpability, wrongful intent or shows an intentional and substantial disregard of the employer’s interests or of the employee’s duties and obligations to the employee’s employer.
4. Deliberate disregard of a written attendance policy and the discharge is in compliance with such policy;
5. A knowing violation of a regulation of this state by an employee of an employer licensed by this state, which violation would cause the employer to be sanctioned or have the employer’s license revoked or suspended by this state; or
6. A violation of an employer’s rule, unless the claimant can demonstrate that:
a. The claimant did not know, and could not reasonably know, of the rule’s requirements; or
b. The rule is unlawful or not reasonably related to the job environment and performance.
The new law disqualifies any claimant from receiving unemployment benefits:
1. For any week with respect to which the claimant is receiving, or has received, remuneration in the form of wages in lieu of notice. “Wages in lieu of notice” means wages paid where the employer, not having given an advance notice of separation to the employee makes a payment to the employee equivalent to the wages the employee could have earned had the employee been permitted to work during the period of notice;
2. If the claimant received a severance package from an employer that includes an equivalent amount of salary the employee would have received if the employee was working during that week;
3. If the claimant was discharged from the claimant’s most recent work through a layoff by the employer and the employer has offered the claimant the same job the claimant had prior to the layoff or a similar job with an equivalent level of compensation that the claimant had prior to the layoff; or
4. If the claimant has an offer of work withdrawn by an employer due to the claimant’s refusal to submit to a drug test or the claimant’s positive result from a drug test.
Claimants who are incarcerated for four or more days in any week for which they are claiming benefits are no longer eligible.
Beginning September 1, 2012, unemployment claimants must make “reasonable efforts to secure work”, which will require them to provide detailed information regarding contact with at least three employers per week or to access services at a career center created by the Tennessee Department of Labor and Workforce Development. Claimants who provide false “work search” information for at least eight benefit weeks will be disqualified.
Read the entire bill summary here.
Posted in Uncategorized |
by Darrell Phillips, Attorney
The Tennessee Supreme Court today filed its opinion in Troy Mitchell v. Fayetteville Public Utilities, No. M2011-00410-SC-R3-WC (Tenn. filed May 8, 2012), adopting a four-part test for the employer defense of willful misconduct and willful failure or refusal to use a safety appliance in workers’ compensation claims. A typical example of this defense arises when an employee fails to follow a company procedure and suffers an on-the-job injury as a result. By arguing that the employee willfully failed to follow a safety procedure, or suffered the injury because of that employee’s own misconduct, an employer may avoid its obligation to pay worker’s compensation benefits.
The four-part test adopted today requires that an employer prove: 1) the employee’s actual, as opposed to constructive, notice of the employer’s rule or procedure; 2) the employee’s understanding of the danger involved in violating the rule or procedure; 3) the employer’s bona fide enforcement of the rule; and 4) the employee’s lack of a valid excuse for violating the rule.
In Mitchell, a lineman for Fayetteville Public Utilities, had taken off his protective gloves to attach a lightning arrestor, when a copper ground wire he was holding touched a transformer on the pole. He received a shock of approximately 7,200 volts and suffered serious injury to his hands. At trial, the employee admitted that he knew about the company policy requiring use of the gloves, understood the rationale, and appreciated the danger in taking them off. His explanation however, that he was saving time or found it easier to staple the lightning arrestor without the gloves, was not valid or plausible, according to the Tennessee Supreme Court. The Court stated that, “convenience to the Employee does not qualify as a valid excuse.” The Court therefore reversed the trial court and denied the employee benefits.
Click here to read the opinion.
Posted in Uncategorized |
A Memphis-area arbitration panel awarded residential homebuilder David Clark Construction contract damages and attorney fees Wednesday in a dispute closely-watched by the regional construction industry. Clark is the immediate past president of the Memphis Area Home Builders Association.
In its binding opinion, the panel determined that the homeowners had breached the construction contract by changing the standards of construction and evicting Clark’s team from the project mid-stream.
Because binding arbitration provisions are so common in construction contracts, the decision will likely resonate across the home construction industry in its protection of the rights of homebuilders in disputes with owners.
The homeowners, in this case, contracted with Clark to build them a $600,000 home in the exclusive “Enclave” subdivision in Germantown, Tennessee. After Clark had completed 80% of the work, the homeowners ceased payment, arguing that Clark had breached the construction contract because his work varied in small ways from the home designer’s original plan. They then hired a new builder to finish the job at a substantially increased cost using building methods not customary for residential construction in the area, and sought to hold Clark liable for the balance.
Pietrangelo Cook attorneys Tim Johnson, Bryan Smith and Darrell Phillips vigorously defended the contract, arguing that Clark retained some discretion under its terms to vary from the plans, and that the homeowners had themselves breached, by changing the standards of construction in the middle of the game.
Bolstered by the expert testimony of widely-revered architect Carson Looney and builder Brad Rainey, Clark showed the arbitrators that his work was consistent with standard building practices in Memphis and Shelby County and that the homeowners’ unilateral termination of the contract was not allowed.
The arbitrators unanimously agreed, awarding Clark $230,000 in damages.
Click here to read the binding opinion of the Arbitration panel.
Posted in Firm News, Recent Victories |
On October 18, 2011, Pietrangelo Cook successfully defended its client, National Capital Management, LLC (“NCM”), against a $700,000 breach of contract claim and obtained a favorable judgment in its counterclaim against the Plaintiff. The United States District Court for the Western District of Tennessee agreed with Pietrangelo Cook attorneys Jon Lakey and John Cook, that the plaintiff’s breach of contract claim was without merit.
The litigation primarily involved the proper interpretation of a commercial contract involving the sale of unpaid consumer accounts. In the contract, the plaintiff, who was the seller, represented that all of the accounts would be “legal, valid and binding obligations” of the account debtors as of the date of sale. However, the bulk of the accounts delivered by the seller were time barred and beyond the applicable statute of limitations. Relying on the representation in the contract, NCM rejected the time barred accounts, and thereafter was sued by the seller.
In granting summary judgment to NCM, the court adopted Pietrangelo Cook’s proffered interpretation of the contractual language and held that time barred accounts were not “legal obligations”. According to the court, “[u]nder Tennessee law, a time-barred debt ceases to be a legal obligation, instead surviving as a mere moral obligation, upon the running of the statute of limitations—unless and until the debtor fails to assert the statute of limitations affirmative defense or another applicable defense.” Because the seller had failed to provide accounts which satisfied the contractual representation, Pietrangelo Cook’s client was entitled to summary judgment on the breach of contract claims.
The opinion, Genesis Financial Solutions, Inc. v. National Capital Management., No. 09-cv-02104 (W.D.Tenn.), can be viewed in its entirety here.
Posted in Firm News, Recent Victories |
On September 29, 2011, Pietrangelo Cook successfully defended its hotel client in a summary judgment motion brought by the client’s former attorney. The former lawyer claimed in its lawsuit that Pietrangelo Cook’s client owed him distributions under an oral agreement between the parties. The Shelby County Chancery Court agreed instead with Pietrangelo Cook attorneys Tim Johnson and John Cook, that the oral agreement was barred under Tennessee law.
Pietrangelo Cook’s client, a limited liability company that owned and operated a hotel, had entered into an agreement giving its then lawyer an ownership interest in the LLC. After receiving substantial distributions from the LLC, the former lawyer filed suit claiming that he was entitled to even more distributions beyond what was required under the LLC’s operating agreement.
The Chancellor rejected the former lawyer’s claim, which was based upon an alleged oral agreement with a former Chief Manager of the LLC. According to the court, because the alleged oral agreement was not included in the Operating Agreement or in any other written agreement, the former lawyer’s claim was barred under Tenn. Code Ann. § 48-206-101(a)(2) and (a)(5) which provide that an operating agreement must be in writing and shall include “a description and statement of the agreed value of any … services contributed for each membership interest” and “[a]ny right of a member to receive, or of the LLC to make, distributions to a member.”
Posted in Firm News, Recent Victories, Uncategorized |
On April 19, 2011, Pietrangelo Cook prevailed in a dispute against Shelby County, Tennessee over the interest rate accruing during the pendency of property tax appeals. The Tennessee State Board of Equalization agreed with Pietrangelo Cook attorney John Cook, that the statute pertaining to appeal-period interest was ambiguous, and that Pietrangelo Cook client Pro-Serve, Inc., should not have to pay a higher rate as a result.
Pro-Serve filed timely appeals for each of the tax years at issue, and (while those appeals were pending) Pro-Serve paid the undisputed portion of taxes. While Pro-Serve’s underlying appeals were largely successful, Pro-Serve was still required to pay some additional taxes. At the time of final payment, Pro-Serve maintained that it was entitled to the lower appeal rate of interest from and after the date of its payment of the undisputed portion. The County Trustee disagreed and insisted that Pro-Serve had to pay the 18% per annum non-appeal penalty rate for the entire period that the appeals were pending, because Pro-Serve did not pay the undisputed portion prior to the delinquency date.
The State Board disagreed with the County Trustee, explaining as follows:
T.C.A. § 67-5-1512(b) relieves taxpayers of delinquency penalty and interest otherwise accruing on property taxes as to property under appeal to the county and state boards of equalization, if the taxpayer pays the full amount of the tax prior to the delinquency date or pays the undisputed portion of the tax. The statute does not specify a due date for the latter option, and that is the issue here. A majority of the Board finds the taxpayer should not be penalized by the statutory ambiguity, nor should we imply a date if the consequence is a penalty.
Shelby County has filed a Petition for Judicial Review of the State Board’s Decision, which is currently pending in Chancery Court.
The State Board’s Final Decision can be viewed in its entirety here.
Posted in Firm News, Recent Victories, Uncategorized |
Pietrangelo Cook represented the City of Brentwood, Tennessee in the $10 million acquisition of 320 acres of property for the City’s largest municipal park. The property, known as Ravenswood Farm, includes an historic mansion, built in 1825, and will be known as the Marcella Vivrette Smith Park. The property is part of the late Reese L. Smith, Jr. and Marcella V. Smith family farm, and is the largest land acquisition in the City’s history. The property will contain forest land, natural wildlife habitats, hiking trails, and will eventually include sports fields and a brush recycling complex. Bryan Smith of Memphis, and Todd Moore, the firm’s affiliate in Nashville and a long-time resident of Brentwood, closed the transaction. We are excited to be a part of the City’s growth and its ten-year plan to expand recreational property and green spaces.
Posted in Firm News |
Pietrangelo Cook represented an interior design business that was seeking a redetermination of a decision by the Tennessee Department of Labor and Workforce Development that certain individual designers must be treated as employees rather than independent contractors. The State’s initial determination would have required the business to pay unemployment tax for these individuals and to treat them as employees. After briefing from counsel, the State reversed its decision in favor of the interior design business. Partner Anthony Pietrangelo explained – “We were able to demonstrate that the individuals in question did not meet the definition of an “employee” and were instead properly classified as independent contractors. This is a very good result for our client. The question of whether individuals are properly classified as employees or independent contractors is one faced by nearly every business and getting it right can impact not only state and federal tax owed by a business but also a company’s exposure to tort liability.”
Posted in Firm News, Recent Victories |
On October 4, 2010, the United States Supreme Court ruled in favor of Preferred Medical Systems, LLC by denying the Petition for a Writ of Certiorari filed by Medison America. The Petition sought review of Preferred Medical’s successful defense of an $18 million lawsuit filed in federal district court in 2005. The suit included a claim under the Federal Lanham Act, as well as ten additional claims under state law. The district court had previously denied all claims, granting summary judgment in favor of Preferred Medical. Medison appealed, but on December 18, 2009, the U.S. Court of Appeals for the Sixth Circuit affirmed the district’s court decision. Medison then petitioned the U.S. Supreme Court for review. Representing Preferred Medical, attorneys John Cook and Jon Lakey responded that the case did not warrant review and that the original judgment should stand. The Supreme Court agreed, bringing this case to an end.
Posted in Firm News, Recent Victories |