Welcome to our Newsletter edition for the Second Quarter 2008. This forum provides an opportunity to highlight topics of interest to you. Of particular importance to our clients is the article providing updates concerning Retirement Plan Restatements. As always, we invite you to make requests for inclusion of future topics of interest to you by emailing us at newsletter@bcclegal.com. Our Newsletter also enables us to share with you the accomplishments of our attorneys and staff and involvement in our communities. Thank you for the opportunity to be of service. For further information on our attorneys and areas of practice, visit our website at http://www.bcclegal.com/.
The Attorneys & Staff
Burke Costanza & Cuppy LLP
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Important Update Concerning Retirement Plan Restatements
Burke Costanza & Cuppy is pleased to announce that the IRS has issued a favorable advisory letter for its volume submitter defined contribution plan document. BCC can now prepare the necessary restatement for your retirement plan. All retirement plans must be restated for changes to the law over the past six years (called the EGTRRA restatement). The deadline for your restatement will depend on your prior plan document. If BCC prepared your retirement plan (or you adopted a prototype or volume submitter plan) and you signed a certification to have the Firm restate your plan, your deadline will be April 30, 2010. If you do not sign a certification or have an individually designed plan, your deadline will depend on the sponsoring employer's EIN according to the following chart:
Last Digit of EIN | Cycle | EGTRRA RAP Ends On |
1,6 | A | January 31, 2007 |
2,7 | B | January 31, 2008 |
3,8 | C | January 31, 2009 |
4,9 | D | January 31, 2010 |
5,0 | E | January 31, 2011 |
Cycle A ended on January 31, 2007. However, Cycle A employers who certified their intent to adopt pre-approved plans prior to January 31, 2007 extended their deadline to April 30, 2010. Similarly, for Cycle B employers, the January 31 2008 deadline was extended for those employers who signed the certification. If you have not signed a certification and your deadline is in the future you simply need to sign the certification before your deadline.
BCC can restate your plan even if another provider prepared your last plan document.
You now need to give us your direction on the timing for the restatement. There is good reason to consider completing the restatement this year since an additional amendment is necessary this year for changes to IRS regulation section 415. If you restate this year, the Firm will include that amendment without additional charge.
If BCC prepared your current plan, you will receive a letter from the Firm explaining these requirements. If you have any questions, or would like to discuss this further, contact Attorney Gregory Lyman or Wendy Evans at Burke Costanza & Cuppy.
Greg Lyman, Of Counsel
lyman@bcclegal.com
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Northwest Indiana Business Development Potential
Todd Etzler, BCC Partner, was recently asked to comment for the Valparaiso Chamber of Commerce' magazine, Valparaiso Magazine, about the development climate in Porter County. Todd's responses were paraphrased in the recent 1st Quarter 2008 issue of the Valparaiso Magazine. We believe the business and economic growth of Northwest Indiana and the South Lake Shore merits a closer look. Below is the full text of Todd's responses to the questions posed by Valparaiso Magazine. These questions, comments and dialogue are equally relevant to Lake and LaPorte Counties. The questions and comments below relate to current development projects of Burke Costanza & Cuppy:
Q. Why do you think your specific projects [projects by BCC clients] are suited to this community?
Porter County is an integral part of Northwest Indiana. Many of the developers and commercial clients we work with do work not only in Porter County but all of Northwest and northern Indiana. As we have seen in the retail side, retailers do not look at political boundaries as obstacles. Rather, they locate new developments where the market dictates. Further, Porter County is primed to become a health care center for Northwest Indiana and Chicago. The location of Memorial Hospital along the highway 49 corridor will be instrumental for new medical industry and services locating and growing within Porter County.
Q. How does the new year look to you so far in your business?
The year 2008 looks very promising in all real estate development areas. Yes, the residential industry has felt the impact of the general economic slowdown. However, residential contractors continue to supply the needed housing for the growth that is occurring in all of Northwest Indiana. As can be seen by any success of Ameriplex at the Port, and the financing of industrial and commercial projects throughout Northwest Indiana, the future of commercial and industrial development is bright for years to come.
Q. How does the current Valpo market compare to, say, five years ago?
The diversity of development within Valparaiso has increased immensely. As seen in the projects above, the diversity is great: a new YMCA, Horizon Bank, a redevelopment retail project in Cumberland Crossing, the Memorial Hospital project, and new housing projects. This diversity is absolutely necessary. Otherwise, a community that relies too much on a single industry or becomes a bedroom community is subject to the economic downturn within that industry. Our economic diversity is our strength. Where before a single big-box retailer may locate in Valparaiso, many types of commercial services - downtown merchants, general retail, and other commercial services are seeing increased success. By providing these retail and commercial services to our city, we keep a lot of money in Valparaiso. Further, the extension of professional services, such as Memorial Hospital, will stimulate additional economic growth to Valparaiso and Porter County, in general.
Todd Etzler, Partner
etzler@bcclegal.com
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Indiana Property Taxes: Reformed?
On March 14, 2008, the Indiana Senate passed House Bill 1001 by a vote of 41 to 6. The bill was soon thereafter signed by Governor Mitch Daniels. H.B. 1001 has been more commonly referred to as the "property tax reform" bill. Although it promises to bring significant changes to property tax laws in Indiana, the ultimate effects of those changes are uncertain. Among other things, the law accomplishes the following:
- In 2009, imposing caps on tax bills of 1.5%, 2.5%, and 3% for owner-occupied residential, residential rental, and commercial and industrial properties, respectively.
- Beginning in 2010, imposing caps on tax bills of 1%, 2%, and 3% for owner-occupied residential, residential rental, and commercial and industrial properties, respectively.
- Increasing the State's sales tax percentage from 6% to 7%.
- Eliminating most township assessors, and the requirement that others maintain their positions only by a vote in a referendum.
- Requiring that major building projects, including certain projects whose costs exceed $12 million, be approved in public referenda.
- Shifting certain tax liabilities, such as the remaining portion of school operating costs, from local taxing units to the State.
- Increasing the renter's income tax deduction from $2,500 to $3,000.
- Increasing the earned income tax credit from 6% to 9%.
- Limiting property tax bills for property owners over age 65 to maximum annual increases of 2% so long as the taxpayer has individual income of $30,000 or less ($40,000 or less for joint taxpayers) and whose home's assessed value does not exceed $160,000.
Most legislators view the new law as a form of significant property tax relief, but one that will come at the cost of decreased funding for local government units, including schools - and increased sales tax. And, not all lawmakers agree on whether the law's effects will be lasting enough to avoid future legislation on the subject.
Taxpayers in Lake County should be aware that the percentage caps applying to their bills will be subject to an exception pertaining only to Lake and St. Joseph Counties. Existing debt service, or the interest accrued on bonds issued prior to this new legislation, will be generally exempt from the caps on liability. Therefore, the effective caps realized by Lake County taxpayers will likely be higher than those applicable to most other counties. The components of the ultimate tax calculation will surely be more complicated than many taxpayers will expect, and at least some taxpayers may be disappointed to see that the amounts of their tax bills exceed the caps advertised in much of the media coverage. Still, taxpayers in many taxing units, including many of those in Lake County, will enjoy smaller tax bills in the near future.
Even with the new caps, taxpayers should remain aware of the fact that their actual tax liabilities are affected by their properties' assessed values, just as it has been prior to this new legislation. Therefore, any taxpayer who suspects his or her property's assessed value might exceed its market value is well advised to consider their rights as they relate to prosecuting a tax appeal. Jon Schmaltz , Paula Neff, and Troy Barron represent the Firm's clients in property tax appeals.
Jon A. Schmaltz, Partner
schmaltz@bcclegal.com
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CASE NOTES
Recent Court Decisions
Homeowner's Insurance Coverage -Intentional Acts. A homeowner's policy's "intentional acts" exclusion barred coverage for intentional tort action arising from "fisticuffs." Economy Premier Assur. Co. v. Wernke, 521 F.Supp.2d 852 (S.D. Ind. 2007)
Probate - Surviving Shareholder Action. After shareholder's Will was admitted to probate, corporation and surviving shareholder brought action for declaratory judgment to enforce Buy-Sell Agreement. The trial court denied the personal representative's motion for judgment on the pleadings and entered summary judgment in favor of the plaintiffs. The personal representative appealed.
The appellate court reversed and remanded, holding that the plaintiffs were barred from pursuing claim against the estate and were required to pursue the claim against beneficiaries of the Will. Bettenhausen v. Godby, 878 N.E.2d 1277 (Ind. Ct. App. 2008).
Commercial Services - Collection of Debt. After a collection agency's Complaint against debtor was dismissed for failure to prosecute, the collection agency filed motion to reinstate complaint. The trial court granted the motion and the debtor appealed. The Court of Appeals reversed. The debtor then filed a motion to tax costs and to recover his appellate attorney fees.
The appellate court granted the debtor's motion to tax costs and remanded with instructions, holding that the debtor was entitled to an award of appellate attorney fees incurred in appealing an erroneous order reinstating the Complaint. Natare Corp. v. Cardinal Accounts, Inc., 878 N.E.2d 1290 (Ind. Ct. App. 2008).
Employment Law - Employee Benefit Plan. School system employee brought an action against the school system and its Employee Benefit Plan alleging breach of contract and bad faith in regard to the Plan's decision to deny coverage for Intravenous Immunoglobulin Replacement Therapy (IVIG). The trial court granted defendant's motion for summary judgment and the employee appealed.
The appellate court affirmed, holding that the Plan did not breach its contract with the employee by denying coverage for IVIG treatment. Ogle v. East Allen County Schools, 879 N.E.2d 614 (Ind. Ct. App. 2008).
Construction Law - Arbitration. Following arbitration in which arbitrator awarded builder $45,804.01, the builder's former clients filed a Complaint for interpleader against the builder, materials suppliers, and subcontractors, seeking to deposit arbitration award with the court clerk and to prevent multiple liability. The trial court ordered all subcontractors to seek compensation from the builder and not from the clients and that the award should be divided pursuant to agreed stipulation. The builder appealed.
On rehearing, the appellate court affirmed as clarified, holding that: (1) the trial court's order did not impermissibly modify the arbitration order, and (2) the arbitration and award were not affirmative defenses to clients' interpleader. Delta Building Group, Inc. v. Laurenzano, 879 N.E.2d 592 (Ind. Ct. App. 2008).
Corporate Litigation. A subsidiary corporation, that had loaned money to a former Director of the parent corporation, brought a breach of contract action against the Director seeking payment on the Note that was issued as part of a ‘corporate loan program' that allowed Directors to borrow money to purchase stock in the parent corporation. The trial court granted the subsidiary corporation's motion for summary judgment and the Director appealed.
The appellate court affirmed, holding that: (1) the subsidiary corporation that loaned money to Directors of the parent corporation was not an alter ego of the parent corporation; (2) the Director failed to state a claim for breach of fiduciary duty against the subsidiary corporation; (3) the Director did not reasonably rely on any representations by the subsidiary corporation regarding the finances of the parent corporation; (4) the Director was not entitled to assert Regulation U violations as an affirmative defense to a breach of contract action; and (5) any superior interests the parent corporation had to repayment of the money that Director had borrowed to purchase stock were relinquished. Massey v. Conseco Services, LLC, 879 N.E.2d 605 (Ind. Ct. App. 2008).
Real Estate - Property Line Fencing. The landowners' neighbors filed a Complaint against the landowners, alleging that landowners' eight-foot fence running parallel to the property line violated the ‘spite fence' statute. The trial court entered judgment in favor of the neighbors and the landowners appealed.
The appellate court affirmed, holding that: (1) a local permit granting landowners permission to build wooden fences parallel to the property line did not trump the ‘spite fence' statute, and (2) the landowner's erection of an eight-foot high fence parallel to the property line was a "nuisance," within the meaning of the ‘spite fence' statute. Gertz v. Estes, 879 N.E.2d 617 (Ind. Ct. App. 2008).
Chad Melchi, Associate
melchi@bcclegal.com
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BCC ATTORNEYS
IN THE COURTS AND THE COMMUNITY
Robert F. Parker ----- attended the Defense Research Institute's "Masters In Trial" program in Phoenix, AZ, an advanced level two day course in all aspects of trial practice, including jury selection, opening statement, expert cross-examination, motion practice and closing argument.
In his most recent litigation cases, Bob obtained summary judgment for the Commissioner of the Indiana Department of Insurance in a claim for additional compensation under the Indiana Medical Malpractice Act. Representing the Patient's Compensation Fund, Bob had previously prevailed in a case after an appeal, and the plaintiff sought to re-file the case, utilizing a novel theory. Summary judgment was entered in favor of the Commissioner on the ground that the "new" case was the same as the old case and, having once been decided, the Court would not entertain the case again.
Bob successfully represented an owner of rental property in a wrongful death case in South Bend, In. After a week-long trial, the jury deliberated less than an hour in exonerating the landlord in the suit arising out of a fire in a leased single-family residence that resulted in the death of a wife and mother of three. At issue in the case were the landlord's compliance with building codes and the presence, or absence, of functional smoke detectors in the premises.
Todd A. Etzler ----- received his certification as a civil practice mediator. The certification program was provided, in part, by his alma mater, the Indiana University--Indianapolis Law School, and its sister program, the School of Public and Environmental Affairs. The mediation program is unique because, in addition to general mediation training, it focused on mediation in the public arena - real estate and land use; public policy issues facing public remonstrance and large groups; and environmental issues.
Kevin E. Steele ----- was re-elected to a 3 year term on the Aberdeen Property Owners' Association Board of Directors.
Tory Prasco ----- was appointed Vice-Chairman of the Catholic Foundation for the Diocese of Gary, Inc. The new foundation was established to provide Catholics in Northwest Indiana with information about planned giving and to encourage the creation of endowments for the benefit of Northwest Indiana Catholics.
Kathryn D. Schmidt ----- was appointed Secretary of the Board for the Crown Point Community Foundation.
BCC Welcomes New Attorney to the Firm
Phillip Pluister joined the Firm in the Second Quarter of 2008. Phil brings his experience in foreclosure, bankruptcy and collection, and concentrates his practice in the Firm's Commercial Services practice group. He is a member of the American Bar Association, Indiana State Bar Association, the Lake County Bar Association, and the Kiwanis.
Phil is originally from Tinley Park, Illinois. He received his undergraduate degree in Communications from Valparaiso University and a Masters Degree in Journalism from Indiana University. He earned his law degree from Valparaiso University School of Law. Most recently, Phil practiced in Porter County where he worked in the foreclosure and collection practice areas. While away from the office, Phil enjoys running, golfing, reading and volunteering at the Boys & Girls Club.
Valparaiso School of Law Student Is Summer Law Clerk with BCC
Daniel Khokhar, a third year law student at Indiana University School of Law -- Bloomington is a Law Clerk this Summer at BCC. Dan is working in both the Business Transaction and Litigation practice areas. Dan is a Valparaiso High School graduate and holds an undergraduate degree from Indiana University in Bloomington.
Welcome, Phil and Dan!
