Administrative Hearing Commission

Editor:
Richard Maseles, Esquire

Nurse not subject to discipline for possession of controlled substances because she had a prescription for them. State Bd. of Nursing v. Bonderson, No. 10-1868 BN (Mo. AHC, Oct. 25, 2011), Dandamudi, C.

Bonderson, a registered nurse, had valid prescriptions for Percocet and Xanax. At her employer’s request, she submitted to a drug test for Percocet, which came back positive for opiates and benzodiazepines (Percocet is an opiate, while Xanax is a benzodiazepine). The Board sought discipline against Bonderson’s license on grounds that she unlawfully possessed controlled substances and that she committed incompetence, misconduct, gross negligence, fraud, misrepresentation, or dishonesty.

Decision
: The Commission granted summary decision in Bonderson’s favor. Section 195.202.1 makes it unlawful for a person to possess a controlled substance, except as authorized by §§195.005 to 195.425. Section 195.180 provides for lawful possession when the controlled substance is obtained by a valid prescription. Bonderson also did not commit incompetence, misconduct, gross negligence, fraud, misrepresentation, or dishonesty by possessing drugs for which she had a valid prescription.


LLC with principal place of business in Missouri, but organized in Delaware, liable for use tax on purchase of airplane; liability did not violate four-factor test of Complete Auto Transit, Inc. v. Brady.  JNM Air Delaware LLC v. Director of Revenue, No. 10-1619 RS (Mo. AHC, Nov. 2, 2011), Winn, C.

JNM, a single-member LLC organized in Delaware (but with its principal place of business in Missouri), bought an airplane in 2001 and paid no sales or use tax on the transaction. The aircraft was hangared at airports in St. Louis for the rest of 2001, and was used to fly JNM’s principal and his business associates to and from meetings throughout North America. In 2001, the aircraft spent 8.66% of its air time in Missouri air space, but for 117 of the 153 days in question, it was hangared in Missouri. The Director assessed use tax, additions, and statutory interest against JNM for 2001, and JNM appealed.

Decision
: The assessment was upheld. There was a substantial nexus between the tax and the taxed activity even though JNM was organized in Delaware and the agreement to buy the plane was governed by Delaware law, because JNM had a substantial physical presence in Missouri. Also, the use tax was fairly apportioned, because Missouri’s system of credits for taxes paid to other states would have apportioned the tax fairly, had JNM paid such taxes. Further, the tax did not discriminate against interstate commerce, because it only imposed an equivalent tax on property bought in another state to the tax that would have been imposed had it been bought in Missouri. Finally, the tax was fairly related to services provided by Missouri—police and fire protection, law, courts, public infrastructure, and other advantages of civilized society. (Complete Auto Transit is found at 430 U.S. 274 (1977)).


Sale of foreign-based conglomerate’s subsidiary’s assets into a new entity did not render capital gain income of the transaction as taxable income under Multistate Tax Compact. Ensign-Bickford Industries, Inc. v. Director of Revenue,No. 09-0709 RI (Mo. AHC, November 30, 2011), Chapel, C.

Ensign-Bickford Industries (EBI) owned, among other assets, a commercial explosives business that had no assets and did no business in Missouri. It merged that business with Dyno Nobel Holdings AS, contributing substantially all of those assets to the merged business, an LLC. It reported the capital gains income deriving from the merger agreement as non-business income, but the Director disagreed and assessed income tax.

Decision
: The assessment was abated. The sale of the assets did not constitute business income and thus was not Missouri taxable income under the Multistate Tax Compact. There was no minimum connection between the assets and Missouri to justify taxation under the Due Process or Commerce clauses. EBI’s income was not subject to taxation under the unitary business principle, because there was neither functional integration of all of EBI’s businesses nor centralized management, and economy of scale was not a factor. EBI’s filing of a consolidated corporate return did not constitute an exchange of value sufficient to satisfy the unitary business requirement, and the fact that EBI and Dyno Nobel’s merger of explosives assets into the LLC did not render the merged business a partnership or joint venture that would make the business unitary.


Auto dealership’s Motor Vehicle Franchise Practices Act action failed due to its insolvency. Moore Jaguar/Aston Martin, Inc. d/b/a Moore Jaguar v. Jaguar Land Rover North America, LLC, No. 11-1094 FV (Mo. AHC, November 15, 2011), Nelson. C.

Moore Jaguar filed Chapter 11 in January 2011, but its bankruptcy case was dismissed in March. Moore Jaguar had defaulted on its floor plan financing,paying for parts it bought from Jaguar Land Rover, and another creditor replevied most of its assets in July. After Jaguar Land Rover terminated the franchise agreement in May, Moore Jaguar brought this action under the Motor Vehicle Franchise Practices Act. Jaguar Land Rover sought summary decision on grounds that Moore Jaguar’s insolvency was a defense to the action under § 407.830, RSMo.

Decision
: The Commission granted summary decision. Moore Jaguar’s bankruptcy schedules belied its claim that it was not insolvent. First, the schedules showed assets of $2.2 million and liabilities of $8.8 million, failing the balance sheet test for insolvency. Second, Moore Jaguar was effectively out of business—its assets had been replevied and it could not obtain new inventory from Jaguar Land Rover. Third, Moore Jaguar’s argument that the schedules did not take into account its good will, intellectual property, and trade secrets was contradicted by the schedules, which took them all into account under bankruptcy law.