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July 13, 2013

Essay on Business Law

Case: 1 Analysis
Fog Cutter Capital Group, Inc. v. Securities and Exchange Commission

The National Association of Securities Dealers (NASD) is an electronic securities exchange that is listed on securities exchange. Under Rules 4300 and 4330, NASD has its disposal a legal authority to put in place extra or more stringent rules to issuers listed on Nada in case an "event, condition, or circumstance" makes application of stricter standards advisable. 14/ NASD can apply additional or more stringent standards to issuers as well to ward off fraud or manipulation of any kind and encourage just and equitable principles of trade, and to guard investors and the public interest. 15/ Fog Cutter does not dispute that Wiederhorn pleaded guilty to two felonies, payment of an illegal gratuity and filing a false income tax return.
Fog Cutter does not challenge the facts that came as the response from Board following Wiederhorn’g guilty plea. Nevertheless, Fog Cutter does contend that these events that these events substantiate the finding of Fog Cutter that its continued listing on Nasdaq undermined the public interest or integrity of Nasdaq that attempted to justify delisting Fog Cutter. 
Fog Cutter maintains that the payment of an illegal gratuity does not necessarily include criminal intent. It does not suggest that filing a false tax return require intent.(Miller & Jenz, 2009)

The conviction for the crime of filing a false tax return requires a solid proof that the taxpayer had really willfully signed a tax return which he or she knew to be false.
The Supreme Court of the United States maintains that in the case of filing a false tax
return, the term "willful" connotes a "voluntary, intentional violation of a known legal
duty." United States v. Bishop, 412 U.S. 346, 360 (1973) (summarizing previous
holdings that "willful" means "bad faith or evil intent," or "evil motive and want of
justification in view of all the financial circumstances of the taxpayer," or knowledge that
the taxpayer "should have reported more income than he did").

NASD maintained that Wiederhorn was Fog Cutter's Chairman, CEO, and majority of shareholder and tried to exert influence and control over Fog Cutter's state of affairs even during imprisonment. NASD failed to find any serious attempt on the part of Fog Cutter to hold back Wiiederhorn’s influence over the company despite his felony convictions. 
Fog Cutter concedes that Wiederhorn is critical to its operations.

We conclude that as Fog Cutter contends, the individual in JJGN was accused and convicted for filing a false tax return in regards to another business. On the other hand, Wiederhorn’s recent tax conviction was related to a personal return but such a distinction does not 
We recognize that, as Fog Cutter argues, the individual in JJFN was convicted for filing a false tax return in connection with another business while Wiederhorn's very recent tax conviction pertained to a personal return, but that distinction does not weaken the applicability of JJFN to Fog Cutter's situation.
The untruthful taxpayer commits a wrong if he or she files an untruthful tax return to the agency that depends on the truthful and credible reporting of an economic activity. The nature of this crime does not provide any reprieve to the taxpayer who has asked for either personal or business tax return.

Case 2
Citizen’s Communications Co. v. Trustmark Insurance

This case entailed a several high-dollar disclosures issue which compelled the court to intervene. The court was required to determine the validity of an agreement signed between the carrier and the group aimed at ensuring the renewal of stop-loss policy and imposing a $1 million laser on an individual and efficiently doing away with stop loss coverage for his claims. The Connecticut federal court, by implementing Connecticut law, enforced the laser over the Plaintiff group's objection and also reserved the related disclosure issues for the jury. It maintained that an MGU can he held liable for certain claims in this context in spite of the fact that it was serving at all times as an agent to ensure the stop-loss carrier without have any contract-based relationship with the group directly.
MGUs have for the most been successful in detaching themselves from cases filed by stop-loss insured groups refuting the claims of coverage. It maintains that since they do not have a contractual relationship between the MGU and the insured group of Plan, they cannot be held liable for any breach of contract even if the carrier can be.
 In this case the Plaintiff successfully weathered a pretrial motion for summary judgment directed to the counts of the Complaint emphasizing that the carrier's agent was legally responsible for violation of the duty of good faith and fair dealing and for breach of the Connecticut Unfair, Deceptive, and Prohibited Insurance Practices Act ("CUIPA") and Unfair, Deceptive, and Prohibited Trade Practices Act ("CUTPA") even though liability for breach of contract did not exist. See Opinion at pp. 16-18. 
In many states, the claim for a breach of a duty of good faith and fair dealing in a suit between the two parties to a given contract though the states do not have any consensus over the point whether the breach has any legal implications apart from those resulting from the breach of the underlying contract itself.
The dispute in this case was whether an entity this is not a party to the contract has any liability for the breach of the duty. The court’s decision came against the MGU:
"It is clear that the interaction between Citizens and RMTS occurred within the context of a contractual relationship, even if RMTS' role in the relationship was not as a party but as the agent of a contracting party.  As the agent of a party who had a duty of good faith based on a contract, RMTS also effectively had such a duty in its interactions in the contractual relationship”

Case 3
Vokes v. Arthur Murray, Inc
This case was an interesting one. The Plantiff took admission into Defendant’s school of dancing to pursue her dream of becoming an ‘accomplished dancer.’ The Plantiff’s dancing abilities did not enhance but her expenses certainly took a surge. Upon the encouragement of the Defendant to bind herself with several other contracts that required paying cash in excess of $30,000 for lessons and dance related trios, the Plantiff demanded cancellation of the contracts and return of money of course not in a good faith.  As per law, the allegations be well-grounded in the facts and is also necessary to allow overturning of the claims mischievously made. 
The claims of the Plaintiff, based on mere allegations of fraud, were dismissed. The decision went against the Plaintiff due to her inability to come up with a cause of action. Some described the outcome of dispute as a prejudiced one. The issue raised in this case was whether trade puffing could be treated as misrepresentation of a material fact that could be actionable in fraud.
In general, when a tradesman is involved in puffing to advance its services, it is not conceived actionable as fraud. In this case, however, it was apparent to Defendant that the expenses Plaintiff was undergoing were not justified by her abilities, and his puffing became fraudulent when he caused her to make expenditures in reliance of non-existent abilities.

Case 4
Stainbrook v. Low

David Stainbrook, being an individual representative of the Estate of Howard W. Stainbrook appeals in the court that the trial court’s grant of specific performance of a real estate agreement to Trent Low. We discover that the trial in the court resulted in the dismissal for the lack of verification as the Estate had failed to produce the motion until the start of the trial. 
The Estate presented three issues in the court appeal. Firstly, it questioned the court’s dismissal of the Estate on the ground that Low’s petition was not verified and secondly the court had misused its discretion by granting Low’s requested remedy of specific performance. 

To be sure, an Estate has a right at its disposal to request the written verification of an unverified petition if it makes a proper, timely motion for such an amendment. Stating that it “does not prevent an opposing litigant from insisting upon the filing of an amended petition, nor does it dispenses with proof of the necessary facts.”

Miller, Roger, Jenz, Gaylord (2009) “Fundamentals of Business Law: Excerpted Cases” Cengage Learning


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