Category Archives: Business

SELECTIVE INSURANCE COMPANY OF AMERICA V. MEDICAL ALLIANCES, LLC

SELECTIVE INSURANCE COMPANY OF AMERICA V. MEDICAL ALLIANCES, LLC

Selective alleges that the practice structure of Medical Alliances, LLC, Prema, LLC, and Neurological Testing Services, LLC is contrary to longstanding jurisprudence in this state, and elsewhere, holding that professional services such as law and medicine may not be practiced in a corporate format, except pursuant to specific, legislative or regulatory exceptions.FN1

FN1. The Legislature has carved several statutory exceptions from this common law ban against the corporate practice of professional services to permit hospitals, nursing homes and certain other “ambulatory care” facilities to operate as general business corporations. See N.J.S.A. 26:2H2a; see generally, A. Wilcox, Hospitals and the Corporate Practice of Medicine, 45 Cornell L.O. 432, at 466-85. The rationale for this exception is that the adverse influences….

Review the Model Professional Corporation Supplement in Appendix G and answer the following questions concerning Mark

Mark Foster is a corporate paralegal in the law firm of Jones, Smith and Cohen, P.C. Mark acted as incorporator to form the professional corporation for the firm. Review the Model Professional Corporation Supplement in Appendix G and answer the following questions concerning Mark:

a. What officer position(s) may he hold in the professional corporation?

b. May he be a director?

c. May he be a shareholder?

d. Is he liable for his own negligence?

e. Is he liable for the negligence of the senior attorney who supervises his work?

f. Is he liable for the lease of the office space that has been entered into with the professional corporation

Which professions are authorized to conduct business as professional corporations?

Review your local statutes that authorize the formation of professional corporations or associations and determine the following:

a. Which professions are authorized to conduct business as professional corporations?

b. Find at least three differences in the statutory authority to form and operate a professional corporation among the professions so authorized and explain the policy reasons behind the variations.

c. What names are permitted in your state for professional corporations or associations? Do they differ among professions, and if so, why?

d. To what extent does the existence or nonexistence of insurance affect the individual liability of the shareholders of a professional corporation or association? Does it differ among professions, and if so, why?

. Write a “Risk Factor” that can be included in the prospectus to warn investors that such problems may arise in the future as well.

Assume that you are working for a law firm that represents ORYX Communications, Inc. (the defendant in the Akerman case at the end of this chapter). You have been told about the problem with the earnings and sales of the company before the final registration statement and prospectus have been prepared.

a Write a paragraph of disclosure that you believe would be necessary to disclose the problem fully to the public investors.

b. Write a “Risk Factor” that can be included in the prospectus to warn investors that such problems may arise in the future as well.

c. Using the http://www.sec.gov Web site, locate the Attorney Conduct Rule adopted by the Securities and Exchange Commission under the SarbanesOxley Act of 2002. With the information you have been furnished….

CHARLES A. TORRENCE COMPANY v. CLARY

CHARLES A. TORRENCE COMPANY v. CLARY

The undisputed facts show that plaintiff provided services to Clary, Martin, McMullen & Associates, Inc. (the Corporation), between 24 April 1991 and 26 March 1992, upon which there remains an account balance of $14,230.49, plus interest. The Corporation’s charter was suspended on 17 November 1989, pursuant to N.C.Gen.Stat. § 105-230, for failure to pay franchise taxes and remained in a state of suspension through the date of the trial of this action. The defendant, a shareholder, president and director of marketing of the Corporation, did not learn of the corporate charter suspension until September 1992. All invoices and statements for monies due to plaintiff were sent to the Corporation and not to any of its owners, including defendant. The defendant did not….

Prepare a memorandum on the advantages of incorporation or partnership for this business.

Steven Levine owns a lumber business, which he founded thirty years ago. His business, Emperor Lumber Company, has business offices at 200 West 14th Avenue, New York, New York; a lumber yard and mill in Atlanta, Georgia; and sells retail lumber to consumer customers. The business has been improving, and presently nets approximately 450,000 per year before taxes. Levine has operated the business as a sole proprietor with seven full-time employees, including an employee-manager of the lumber yard, Rick Duffy. Levine’s son, Magic Levine, has been working with the business since he graduated from high school. Magic is presently 18 years old. In addition to his lumber business, Steven owns other investments and nonbusiness property that afford him approximately 100,000 per year in income.

Steven is exploring several possibilities for….

STROH v. BLACKHAWK HOLDING CORPORATION

STROH v. BLACKHAWK HOLDING CORPORATION

[Blackhawk Holding Corporation was organized under Illinois law in November 1963. The articles of incorporation authorized the issuance of 3,000,000 shares of Class A stock with a par value of $1, and 500,000 shares of Class B stock without par value. The articles of incorporation provided that Class B stock was not entitled to any dividends.]

The only issue before this court is the validity of the 500,000 shares of Class B stock, which by the articles of incorporation of Blackhawk were limited in their rights by the provision “none of the shares of Class B stock shall be entitled to dividends either upon voluntary or involuntary liquidation or otherwise.” It is the plaintiffs’ contention that because of the foregoing limitation—depriving the Class….

STAAR SURGICAL COMPANY v. WAGGONER

STAAR SURGICAL COMPANY v. WAGGONER

In this latest dispute between the parties we determine the validity of two million shares of STAAR Surgical Company (“STAAR”) common stock issued to STAAR’s former President and CEO, Thomas R. Waggoner and his wife, Patricia Waggoner “Waggoner” or “Waggoners”).

STAAR was facing severe financial difficulties in 1987. At that time, STAAR had an open line of credit with the Bank of New York (“BONY”) secured by certain of STAAR’s account receivables and inventory. In September, 1987, STAAR’s accountants caused the company to write-down its accounts receivables. The write-down left the BONY line of credit undercollateralized by almost two million dollars.

At approximately the same time, certain STAAR shareholders were concerned about the financial performance of the company. The stockholders conferred in November….

What is the minimum amount required for the corporation’s stated capital account?

The 3N Corporation has developed its financial structure during the past decade by issuing and selling the following securities: (1) 500 bonds, with a principal amount of 1,000 each, interest at 6% plus .0025% of profit per year, without security, each exchangeable for 200 shares of common stock at the holder’s option. The money received from the bonds has been used exclusively to purchase equipment for the corporation; (2) 500 shares of preferred stock, 1 par value, with a 5% dividend preference and no voting rights; and (3) 1,000 shares of common stock, 5 par value. Answer the following questions concerning this financial structure:

a. Are the bonds best described as

(1) 6% convertible equipment bonds;

(2) income bearer equipment bonds;

(3) registered participating redeemable debentures; or

(4) participating convertible debentures?

….

BECKER v. GRABER BUILDERS, INC.

 

BECKER v. GRABER BUILDERS, INC.

[Pamela Becker contracted with Graber Builders, Inc. to build a house and alleges that the septic system was inadequate. Graber Builders, Inc. was administratively dissolved. Dwight E. Graber continued the construction business under the name Graber Homes, Inc., with the same assets of the dissolved corporation. Ms. Becker sued both Graber Builders, Inc. and Graber Homes, Inc. to recover her damages for breach of contract].

The general rule is that a corporation that purchases all, or substantially all, of the assets of another corporation is not liable for the old corporation’s debts. G.P. Publica tions, Inc. v. Quebecor Printing-St. Paul, Inc., 125 N.C.App. 424, 432, 481 S.E.2d 674, 679, disc. review denied, 346 N.C. 546, 488 S.E.2d 800 (1997). Plaintiff alleges no….