Indiana Business Lawyer Blog

Indiana farm business owners and Indiana lawyers should be aware that the Indiana Court of Appeals recently held that a farmer’s mycelium drying business constituted a nuisance.¹ In Bonewitz, the farmer’s neighbors complained that the mycelium drying business caused foul odors, noise and vibrations from delivery trucks, sawdust particles blowing onto their property, and gas and sawdust ash emissions from the dryer.² The neighbors sought monetary damages as well as a permanent injunction, but the trial court only ordered the farmer to discontinue unloading raw sawdust outside to mitigate the blowing sawdust.³

Under Indiana law, nuisance is defined as “whatever is injurious to health, indecent, offensive to the senses, or an obstruction to the free use of property, so as essentially to interfere with the comfortable enjoyment of life or property.”⁴ Indiana courts have stated that the competing interests of landowners must be balanced in deciding whether an activity constitutes a nuisance.⁵ Indeed, “reasonable use of one’s property may be a defense to a nuisance action” if the activity only causes “incidental injury” to a neighboring landowner.⁶ However, even a lawful business may constitute a nuisance if it causes harm that is greater than the neighbor should bear under the circumstances.⁷

Continue reading " WHEN DOES AN INDIANA FARMING BUSINESS CONSTITUTE A NUISANCE? " »

Lenders who take possession of collateral based on a default on a loan are often concerned about ensuring that the sale of such collateral would be found to be commercially reasonable by a court if challenged. Of interest to Indiana creditors and Indiana creditor lawyers, the Indiana Court of Appeals recently had the opportunity to address commercially reasonable sales in Moore v. Wells Fargo Constr. 907 N.E.2d 1038 (Ind. Ct. App. 2009). In Moore, the lender provided a company with an approximately $558,000 loan for the refinance of an excavator. However, to secure the loan, each of the principals of the company also executed a security agreement and personal guaranty for the indebtedness. When the company defaulted on the loan, the lender took possession of the excavator, which it planned to sell to satisfy a portion of the outstanding debt. The lender sent a Notice of Disposition of Collateral to both the company and a principal against whom the lender planned to pursue a deficiency action against. The lender had some difficulty selling the excavator, but it provided notice to both the company and the individual each time it attempted to sell the excavator. Eventually, the excavator was sold for $54,000, although an earlier higher offer had been countered by the lender, and the lender filed a deficiency action against the individual. After a decision in favor of the lender, the individual argued that the sale of the excavator had not been conducted in a commercially reasonable manner. Id. at 1039.

In determining the commercial reasonableness of the sale, the Court referred to its prior decision in Walker v. McTague, where the court recognized that the Uniform Commercial Code does not define commercially reasonable sale. Id. at 1041 (quoting Walker v. McTague, 737 N.E.2d 404, 410 (Ind. Ct. App. 2000)). In Walker, the court noted that where a fair sale price is not obtained, price alone is not determinative, and the court will consider “whether there were legitimate causes for the low price or whether the low price was caused by the secured party’s failure to proceed in a commercially reasonable manner” as well as “whether the collateral is sold on a retail or wholesale market . . . the number of bids received or solicited . . . that the time and place of the sale is reasonably calculated to bring a satisfactory turnout of bidders.” Id. (quoting Walker, 737 N.E.2d at 410. The Court also noted that the court in Walker recognized the factual nature of such determinations. Id. (citing Walker, 737 N.E.2d at 410).

Continue reading " Indiana Creditor Rights: What Constitutes A Commercially Reasonable " »

Indiana utilities and Indiana utility lawyers should be aware that the Indiana Supreme Court recently had the opportunity to consider the standard of review that courts follow in reviewing utility regulatory settlements of an administrative agency. N. Ind. Pub. Serv. Co. v. U.S. Steel, 907 N.E.2d 1012 (Ind. 2009). The case involved a dispute regarding a settlement agreement entered into between an Indiana public utility and a steel production facility. The agreement arose out of a previous dispute between the two parties, and had been submitted to the Indiana Utility Regulatory Commission (“IURC”) at the time for approval. However, years later when a provision of the agreement became effective, there was a disagreement between the parties regarding its interpretation. U.S. Steel filed a complaint with the IURC seeking to enforce its interpretation of the agreement, and the IURC ultimately granted summary judgment to U.S. Steel on this issue. Id. at 1015 However, the Indiana Court of Appeals reversed, and the Indiana Supreme Court granted transfer. Id.

In hearing the case, the Indiana Supreme Court discussed the standards of review which apply when considering decisions of administrative agencies. Id. at 1016. The Court stated that such reviews were multi-tiered, the first level of review being “whether there is substantial evidence in light of the whole record to support the Commission’s findings of basic fact.” Id. (citing Citizens Action Coalition of Ind., Inc. v. N. Ind. Pub. Serv. Co., 485 N.E.2d 610, 612 (Ind. 1985)). The Court noted that decisions of the IURC will stand under this standard “unless no substantial evidence supports it.” Id. (citing McClain v. Review Bd. of Ind. Dept. of Workforce Dev., 693 N.E.2d 1314, 1317-18 (Ind. 1998)). Under the standard, a court does not reweigh evidence or assess witness credibility but only considers evidence in a light most favorable to the IURC’s findings. Id.

Continue reading " Indiana Utility Law: Indiana Supreme Court Finds “Reasonableness” Standard of Review Applies to Review of Indiana Utility Regulatory Commission (IURC) Decisions Regarding Regulatory Settlements " »

The Internal Revenue Service (IRS) and Department of the Treasury have promulgated final regulations impacting tax-exempt organizations with gross annual receipts that generally do not exceed $25,000. The final regulations, and removal of temporary regulations, became effective July 23, 2009. The regulations are applicable to annual periods beginning after 2006.

In 2006, the Pension Protection Act was passed, including a requirement that the Treasury Secretary promulgate regulations regarding the time and manner in which certain tax-exempt organizations must file annual electronic notification. The regulations that followed amend the Income Tax Regulations (26 CFR Part 1, section 6033(i)(1)), which relate to requirements for notification by entities that are not currently required to file an annual information return under section 6033(a)(1).

After establishing temporary regulations in 2007, and twice revising the regulations in the same year, the regulations were again published in the Federal Register. The IRS and Department of the Treasury responded to four comments regarding the published regulations, confirming that there is no de minimis exception which would allow organizations with minimal income to avoid reporting under the rule, that all submissions must be made electronically, and that the regulations do not apply to Qualified State and Local Political Organizations. In addition, the IRS and Department of the Treasury stated the intent of the regulations is to provide the public with accurate information about tax-exempt organizations. The agencies noted that if an organization is the subordinate of a parent organization and is already included on the parent organizations return, the subordinate organization need not submit separate notification.

Under the final regulation, 26 CFR § 1.6033-6, tax-exempt entities under § 501(a) that are not required to file annual information returns as described in § 1.6033-2(a)(2) must submit electronic notification containing the legal name of the organization, any assumed business names, mailing and web address, tax identification number, name and address of principal officer, evidence of ongoing basis for exemption under § 6033(a)(1), and any additional information required for processing. Excluded from this requirement, however, are certain employer-created qualified pension, profit-sharing, and stock bonus plans, as defined in § 401(a) and certain religious and apostolic organizations, as defined in § 501(d). Additionally exempt are organizations that are tax-exempt under § 501(a) that are required to file, do file, or are not required to file returns under § 1.6033(a)(1).

By submitting the electronic notification, an organization acknowledges it is not required to file a return under § 1.6033(a) because its annual gross receipts do not normally exceed $25,000. The regulation contains requirements for record maintenance, as provided in § 1.6001. If the organization submits a complete Form 990 or 990-EZ, however, the requirements of annual electronic notification will be deemed satisfied. The final regulation does not relieve an organization from any other filing requirements.

The notification must be filed based on the annual accounting period of the organization; however, if the organization does not have an annual accounting period, notice shall be filed on the basis of the calendar year. Electronic notification must be submitted on or before the 15th day of the 5th calendar month after the close of the period for which the notification is being submitted.

The statements contained herein are for informational purposes only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have any questions regarding this article, please contact an attorney.

Have you been approached by a wind energy company soliciting your land for inclusion in a new wind farm proposed for the area. If you have, the promised compensation may look good for the fairly small acreage committed for the structures and related equipment. You may have been given a draft agreement for review and execution. It will likely be long and complicated, but the company representative may describe it as “standard” or in line with what other companies are offering. Don’t accept that at face value; these leases often vary widely from company to company and from project to project. You may be intrigued, and even interested, but what should you do next?

The attorneys at PARR RICHEY have represented landowners in several Indiana counties in lease negotiations with several wind energy companies. In so doing we have learned much about these companies, how these projects work, and what they are typically willing to agree to in assembling the land needed for a viable project. We do not represent any wind energy companies, so our interests are aligned with those of landowners.

There is strength in numbers, and normally better terms can be leveraged through coordination with other landowners in your area. Your group should check with your neighbors, the local Extension Agent, or your County’s planning director to learn as much as you can about the proposal and its status. Perhaps more importantly, check on the company’s experience and track record in bring projects on line. Much information is available on the Internet about these companies and wind farms in general. Does your county have an ordinance permitting or regulating these projects? How likely is this company to move forward with a project if enough land is obtained? Or is it merely attempting to assemble lease rights for parcels that it can later sell to another wind company?

Continue reading " Parr Richey’s Advice to Wind Energy Landowners –- Beware, The Written Documents Are Crucial! " »