Arizona Becomes First State to Sue GM for Safety Violations

Arizona has become the first state to sue General Motors. The lawsuit alleges that GM put Arizona drivers in danger by deliberately concealing information about vehicle defects “to avoid the cost of recall and replacement.”

GM has been hit with a number of lawsuits since it announced the recall of 2.6 million vehicles because of potential ignition switch problems that could cause the switch to slip out of position, disabling airbags, power steering, and power brakes.

Under Arizona’s Consumer Fraud act, civil penalties of up to $10,000 can be imposed. GM feels that it should not be faced with lawsuits on cars made before its bankruptcy proceedings. Arizona is seeking up to $3 billion in damages.

The Legal Broadcast Network is a featured network of the Sequence Media Group.


Harold Hamm’s Billion Dollar Divorce: Taxation Possibilities

Harold Hamm, CEO of Continental Resources, has recently gotten a divorce that comes with a price tag of about $1 billion. That sounds like a big divorce payment, but it could have been as large as $5 billion. As always, there will be tax ramifications depending on how the money transfers are handled. Tax attorney Rob Wood discusses the situation in this report, based on his Forbes article “Harold Hamm's Billion Dollar Divorce And The IRS.”

Rob Wood

Rob Wood

Wood notes that stories like these are interesting because the numbers are so big. However, the tax rules are the same, no matter how big the divorce. The rules are clear, Wood says but things get fouled up in a surprisingly large number of divorces.

It appears that most of what Ms. Hamm receives will be in the form of a property settlement, and transfers like that are not taxable under Section 1041 of the tax code. Alimony, however, is taxable income. It’s important for everyone involved to clearly define the terms of the divorce settlement.

In the settlement, Ms. Hamm gets $320 million up front, with monthly payments of $7 million or more to follow. Monthly payments, as Wood explains, “sounds like alimony, or . . . spousal maintenance.” Child support payments (when there are children involved) are not taxable.

Wood suggests that, if the Hamms decided to split their assets, whether by agreement or because of a court order, there would be no tax on the property. Under the estate and gift tax law, spouses can make such transfers without tax, and the same rule applies in a divorce. However, property transferred in this way “keeps its historic basis.” Meaning, Wood explains, that shares of stock (for example) would be transferred with a low basis, so that the ex-wife would pay taxes on the higher value should she sell the stock. The same thing applies to real estate.

If the monthly payments are spousal maintenance, they are deductible by him and taxable to her. A problem can occur when the parties to a divorce do not characterize the payments in the same way and the IRS compares the returns.

For more information on the subject, please refer to Mr. Wood’s article in Forbes. Robert Wood is a tax attorney with Wood, LLP in San Francisco, California and spoke with The Tax Law Channel, an affiliate of The Legal Broadcast Network.  The Legal Broadcast Network is a featured network of the Sequence Media Group.

Frederick T. Kuykendall, III Joins Hausfeld LLP as Of Counsel

 

Rick Kuykendall

Rick Kuykendall

Legal Broadcast Network commentator Frederick “Rick” Kuykendall announced that he has joined the firm of another regular LBN guest, Michael Hausfeld. Rick Kuykendall has been a frequent commentator on the Deepwater Horizon oil spill, most recently in his analysis of what role Justice Scalia might play in the handling and consideration of the case. Michael Hausfeld has spoken with LBN about O’Bannon v. NCAA, a case in which he was the lead attorney. For more information on Mr. Kuykendall’s move to Hausfeld, see this announcement at the Hausfeld website.

LBN looks forward to continuing contributions from both of these fine lawyers. It is a real treat for LBN viewers to have the insights and skillful analysis from the lawyers who are involved in the big cases they discuss.

Mr. Kuykendall began his law practice in Birmingham, Alabama with one of the most successful union side, labor law firms in the United States -- Cooper, Mitch, Crawford and Kuykendall. After becoming the managing partner, Rick presided over the firm’s evolution into a successful and powerful plaintiff/public interest law firm with a nationwide practice. Despite the firm’s rapid growth and financial success, Rick never allowed the firm to deviate from its core mission of helping those who needed it the most, despite the odds.

Rick’s practice, while focused on complex litigation all over the country, also involved active efforts in alternative dispute resolution. Since 1995, he has been lead counsel or co-counsel in cases which resulted in verdicts and/or settlements far in excess of two billion dollars (over 500 million dollars since 2003 alone). These cases range from individual personal injuries to national mass and class actions in the areas of environmental, consumer and pharmaceutical law. Rick has served as a court appointed special master in the Anniston, Alabama Monsanto litigation.

Since his days on Capitol Hill as a legislative assistant in the United States House of Representatives, Rick has maintained an active role in politics. He was appointed by the Chairman of the National Labor Relations Board to serve as a select committee member to oversee reforms of practice and procedure before the Board. Rick was appointed by the Governor of Alabama to his commission on environmental affairs, served as a trustee on the Kerry/Edwards Campaign and is currently a member of the Majority Trust of the Democratic Senatorial Committee. Rick has served multiple terms on the public affairs and elections committees of plaintiff side bar associations and plaintiff steering committees of MDLs.

Rick has been a frequent speaker at national meetings. He lives in Fairhope, Alabama with his daughter, Amalee. His son Frederick is an honors student at the University of Alabama who completed an internship with the majority leader of the United States Senate, Harry Reid (D-NV). Rick’s long time interests in his community and the environment have led to his active participation in the Water Keepers Alliance. After having helped co-found the Pensacola Water Keepers, he served on its first board of directors before eventually joining the board of directors of the Mobile Bay Water Keepers.

The Legal Broadcast Network is a featured network of the Sequence Media Group.