Chris King celebrates Ten Years at MAPA

McLeod, Alexander, Powel & Apffel, P.C. would like to congratulate, celebrate, and thank Christopher C. King for his ten years of hard work and dedication.

Chris associated with the Firm in 2007 and became a Firm Officer in 2016. His principal area of practice is litigation, with an emphasis on personal injury defense, mass toxic tort law, general civil litigation and railroad law. Chris represents a variety of clients, from private individuals to major companies such as BP Products North America, BNSF Railway Company, Lumber Liquidators, Inc., and Union Pacific, insurance companies such as Texas Windstorm Insurance Association, and governmental entities such as the City of Galveston and Galveston Central Appraisal District.  Chris also practices family law and is now accepting immigration cases.

In his personal time, Chris is active in the Gulf Coast Big Brothers Big Sisters organization and serves as Vice President of the Jamaica Foundation of Houston.

Chris was recently selected to the exclusive Texas Super Lawyers® Rising Stars list for 2017.

kingMAPA Square

Mediation and Arbitration

McLeod, Alexander, Powel & Apffel, P.C. offers alternative dispute resolution services as an effective and affordable means to resolve legal disputes. Through mediation, parties meet with a neutral mediator in a confidential and informal setting to resolve conflicts. Our attorneys act as resilient facilitators with the ability to navigate through complex legal issues and assisting clients and lawyers in reaching an amenable resolution.

Which Business Structure is Right for You?

 

By Amanda D. Wright

            Of all the choices you will make in starting a business, one of the most important will be choosing the type of legal business structure for your company.  This decision can affect the amount you pay in taxes, the ease or difficulty in selling shares or interests in your company, the corporate formalities that you will have to adhere to, continuity, and the protection of your personal assets from business debts and liabilities.  This important decision should be made in consultation with an attorney and your certified public accountant.

            In the State of Texas there are a number of business structures to choose from:

Sole Proprietorship

            The Sole Proprietorship is the most common and simplest business structure.  In a sole proprietorship a single individual conducts business without formally incorporating his or her business.  A sole proprietorship can operate under an assumed name if the proper form has been filed in the County’s records.  A sole proprietorship may use the terms “Company” or “Co.” in its assumed name but cannot use any term to imply incorporation such as “Inc.” or “LLC.”  Because the sole proprietorship is not formally incorporated and entirely owned by one individual, its owner is personally liable for all financial obligations of the business.  Sole proprietors generally need to make quarterly estimated tax payments, which include both income tax and self-employment taxes for Social Security and Medicare.

Corporation

            A corporation is a legal person which provides limited liability, centralization of management, perpetual duration, and ease of transferability of ownership interests that has formally filed incorporation records with the Secretary of State for the State of Texas.  Owners of a corporation are referred to as “shareholders” while the people who manage the business and its affairs are called “directors.”

            Texas State law requires that shareholders enter into an agreement which provides for the management of the corporation and process for eliminating and replacing directors.

            There are two common types of corporations: a “C” corporation and an “S” corporation:

  • “C” corporations are separately taxable entities which file a Form 1120 corporate tax return and pay taxes at the corporate level.  As a result, “C” corporations face the possibility of double taxation if the corporate income is distributed to the shareholders as dividends.  Tax on corporate income is paid first at a corporate level and again at the individual level on dividends.
  • “S” corporations are pass-through entities; meaning they file an informational federal tax return (a Form 1120S), but no income tax is paid at the corporate level.  Profits and/or losses of the corporation “pass through” the corporation and are reported on the shareholders’ personal tax returns.  Any tax due is paid at the individual level by the owners.

Because of the often complex legal and tax implications, it is important to seek the advice of an attorney before choosing the best management structure for your corporation.

Limited Liability Corporation

            A limited liability company (“LLC”) is a legal entity which enjoys the powers and benefits of both a corporation and a partnership. The owners of a LLC are called “members.”  A member can be an individual, partnership, corporation, trust, or any other legal or commercial entity.  A  LLC can be managed by its members or by managers, but the management structure must be stated in the LLC’s certificate of formation.  If more than one member owns the LLC, a member agreement is necessary to set forth the rights and obligations of the members.

            Generally, the liability of the members is limited to their investment and they often enjoy the pass-through tax treatment afforded to shareholders of an “S” corporation.

            Because of the tax classification rules and structural flexibility afforded to its members, those contemplating forming a LLC should consult with an attorney before choosing this type of business structure.

General Partnership

            A General Partnership forms when two or more people associate to carry on a business for profit.  The general partnership typically operates in accordance with a formal agreement between the parties known as a partnership agreement.  There is no requirement that the agreement be in writing or filed with the State, but if the agreement is unwritten, the State implies many terms.  Therefore, much care should be exercised to understand the implications of organizing in this manner.

            When using this form of business entity, an assumed name certificate (commonly known as a “doing business as” or “d/b/a”) should be filed in all counties where business is conducted under the assumed business name.

            It is important to understand that in a general partnership, all partners are personally liable for partnership debts and obligations.

Limited Partnership

            A limited partnership is a partnership which contains one or more general partners and one or more limited partners.  A limited partnership operates in accordance with a written or oral agreement between the partners, known as a partnership agreement.  The partnership agreement dictates the general affairs of the limited partnership and how it conducts its business.  The partnership agreement is not required to be publicly filed, but the limited partnership must file a certificate of formation with the Secretary of State. General partners are personally liable, but only for partnership debts. Limited partners can enjoy the same protections from partnership liabilities which corporate shareholders enjoy. For liability reasons, many limited partnerships have a corporation or an LLC as their general partner.

Limited Liability Partnership

            A limited liability partnership is a limited partnership which has elected to limit its general partner(s)’ liability.  Because of the limited liability afforded to the general partner, at least one managing partner of the limited liability partnership must bear liability for the entity’s actions in the same way owners of a general partnership are exposed.  While limited liability partnerships share the same tax advantages of a limited liability corporation, their owners cannot be a corporation.

Non-Profit Organization

            A non-profit organization is a business entity which uses its surplus revenues to achieve its stated goals rather than distributing them as profits or dividends. If a non-profit wishes to accept tax-deductible donations from donors, it must also apply for a designation as a charitable organization from the Internal Revenue Service.

Unincorporated Social Clubs

            An unincorporated social club is an organization that is formed for “pleasure, recreation, and other similar purposes.” These organizations do not provide any goods or services to the general public.  Common examples of social clubs include country clubs, college fraternities, homeowners’ associations, and hobby clubs.

            Unincorporated social clubs are typically supported by membership fees, dues, and assessments and do not generate any profit.  The organization’s net earnings cannot be for the benefit of any particular individual having a personal and private interest in its activities.  Unincorporated social clubs may receive tax exempt status if they meet strict requirements specified by the IRS.

            Choosing the right business structure can be a daunting decision.  With the assistance of a skilled corporate attorney, you can make an informed and reasoned decision as to which type of business structure best suits your needs.

This article has been prepared for educational and informational purposes only and does not constitute legal advice. The laws of other states and nations may be entirely different from what is described in this article. Because of these differences, you should not act or rely on any information on this article without seeking the advice of a competent attorney licensed to practice law in your jurisdiction for your particular problem. The author has endeavored to comply with all legal and ethical requirements in writing this article and does not desire to solicit or represent clients based upon their review of any portions of this article which do not comply with the legal or ethical requirements of the jurisdiction in which the client is located. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship.

 

Christopher C. King Recognized in Super Lawyers® Rising Stars 2017 List

McLeod, Alexander, Powel & Apffel, P.C. is proud to announce that Firm Officer Christopher C. King was selected to the exclusive Texas Super Lawyers® Rising Stars list for 2017.

Mr. King associated with the Firm in 2007 and is now a Firm Officer. His principal area of practice is litigation, with an emphasis on personal injury defense, mass toxic tort law, general civil litigation and railroad law. Mr. King’s docket spans Galveston, Harris, Fort Bend, Brazoria and Jefferson County. Mr. King also practices family law and is now accepting immigration cases.

king

Mr. King represents a variety of clients, from major companies such as BP Products North America, BNSF Railway Company and Union Pacific Railroad, to insurance companies such as Texas Windstorm Insurance Association, and governmental entities such as the City of Galveston and Galveston Central Appraisal District.

In his personal time, Chris is active in the Gulf Coast Big Brothers Big Sisters organization and serves as Vice President of the Jamaica Foundation of Houston.

MAPA Founder Bob Alexander

Alexander 2It is with a heavy heart that MAPA announces that one of its founders, Robert “Bob” Warren Alexander, 96, passed away peacefully January 31, 2017, in Muleshoe, Texas. He was born February 19, 1920 in Paris, Texas to Morgan Provine and Grace Clara Alexander. Bob grew up in Paris, Texas, graduated from Paris High School and attended Texas A&M University, graduating with a degree in Petroleum Engineering in 1941.

Bob married Donna Dilley White in 1942 in Council Grove, Kansas. They had three daughters, Julie White, Barbara Dee and Peggy Ann. They were happily married for 72 years. Upon his graduation from A&M he was commissioned as a 2nd Lieutenant and served honorably on the European Front during WWII. Bob was a member of the 9th Armored Division serving as a staff member under General John W. Leonard. He attained the rank of Captain and was awarded the Bronze Star for valor.

Following his discharge from the Army he returned to Austin, Texas where he attended Law School at the University of Texas, graduating with his LLB in 1948. He joined the law firm of Wigley, McLeod, Mills and Shirley in Galveston, Texas and practiced there until 1965 when the Firm was named McLeod, Mills, Shirley, & Alexander. In 1965 he and his partners established the Law Firm of McLeod, Alexander, Powel & Apffel where he practiced until his retirement in February of 1979, handling a number of legal matters for Allstate Insurance and served as Designated Counsel for Atchison, Topeka and Santa Fe Railway (now BNSF Railway).

Shortly after his retirement, Bob and Donna moved to their ranch in Bandera, Texas.

Bob was preceded in death by his parents, his wife, Donna, his brother, George, and his sister, Virginia.  He is survived by his three daughters, Julie Alexander Cage and husband J.D. of Muleshoe, Texas, Barbara Alexander of Eugene, Oregon and Peggy Alexander Frese and husband A.C. of Birmingham, Alabama, eight grandchildren and thirteen great grandchildren.

McLeod, Alexander, Powel & Apffel, P.C. is eternally grateful for the leadership, hard work and example set by Bob  in founding our Firm and the Firm continues uphold his legacy of  integrity and ethics.

FMC Affirms Access Fees Ruling in Favor of Port of Galveston

By: Amanda D. Wright

On June 16, 2014, three private parking lot operators filed a legal action with the U.S. Federal Maritime Commission (“FMC”) against The Port of Galveston and its subsidiary, the Galveston Port Facilities Corporation (“GPFC”) alleging that access fees assessed against the companies to drop off and pick up cruise ship passengers at the Galveston Island Cruise Terminal violated Sections 41102(c), 41106(2), and 41106(3) of the Shipping Act of 1984.

On November 21, 2014, Senior Administrative Law Judge Clay C. Guthridge issued a ruling in favor of the Port and GPFC dismissing the parking lot operators’ claims under Sections 41102(c) and 41106(3) of the Shipping Act.  Judge Guthridge subsequently dismissed the parking lot operator’s remaining claim under 41106(2) of the Shipping Act, with prejudice to refiling, on December 4, 2015.

The private parking lot owners appealed this decision to the FMC itself. On January 13, 2017, the full United States Federal Maritime Commission unanimously affirmed Administrative Law Judge Clay C. Guthridge’s rulings in favor of the Port.

Anthony P. Brown, acting as lead counsel, along with David E. Cowen, Amanda D. Wright, and Jocelyn A. Holland of McLeod, Alexander, Powel & Apffel, P.C. represented the Port entities.

News of this decision is being reported in various cruise industry publications, such as Cruise Industry News.

Insurance Defense

McLeod, Alexander, Powel & Apffel, P.C. represents a number of state, national, and international insurance companies on a wide variety of insurance matters in both state and federal courts.  The Firm has significant experience in successfully defending insurance carriers against claims arising from a variety of matters, including:

  • Windstorm & Hail Claims
  • Property, Fire & Casualty Claims
  • Insured Liability Disputes
  • Insurance Coverage Disputes
  • Bad-Faith Litigation
  • Premises Liability Claims
  • Products Liability Claims
  • Motor Vehicle Accidents
  • General Liability Claims
  • Personal Injury Claims

The Firm is knowledgeable and experienced in mediation, arbitration, negotiation, trial, appeals, and appraisal of a wide range of insurance matters.

MAPA Law receives “Best Law Firm” Recognition

U.S News & World Reports’ Best Lawyers ® has selected McLeod, Alexander, Powel & Apffel, P.C. as one of its 2017 Best Law Firms.  The Firm was nationally recognized as a “Tier 1” law firm in Railroad Law.  The Firm also received the designations of a “Tier 1” in Railroad Law and “Tier 2” in Personal Injury Defense Litigation law firm in the Houston Metro area.

best-law-firms-home-page

Water Rights: “The Supreme Court Giveth and it Taketh Away”

By: Jocelyn A. Holland and James B. Galbraith

In a watershed decision issued in May 2016, the Texas Supreme Court established that groundwater rights, like mineral rights, are a dominant estate over the surface rights.  See Coyote Lake Ranch, LLC v. City of Lubbock, No. 14-0572, ___ S.W.3d ___, 2016 WL 3176683, at *1 (Tex. May 27, 2016).  Although the Court tempered this holding by applying the accommodation doctrine to water rights, the opinion may ultimately take more from Texas landowners than it gives.

In Coyote Lake Ranch, LLC v. City of Lubbock, the Court was asked to decide whether the City of Lubbock’s groundwater rights in 26,600 acres owned by the Coyote Lake Ranch permitted the City to drill wells and install power lines for water extraction, without regard for the Ranch’s surface rights. After concluding that a severed groundwater estate has the same right to use the surface that a severed mineral estate does, the Court turned to the groundwater deed for guidance on limitations on the City’s use.

The deed granted the City the “full and exclusive rights of ingress and egress” over the Ranch, along with the right to use all of the Ranch lands “necessary or incidental to the taking” of the groundwater.  The specific language in the deed provided as follows:

Grantors convey … all of the percolating and underground water in, under, and that may be produced from the hereinafter described tracts of land … together with the exclusive right to take such water from said tracts of land … together with the full and exclusive rights of ingress and egress in, over, and on said lands, so that [the City] may at any time and location drill water wells and test wells on said lands for the purpose of investigating, exploring producing, and getting access to percolating and underground water … together with the rights to use all that part of said lands necessary or incidental to the taking of percolating and underground water and the production ….

2016 WL 3176683, at *2 n.6.  The Ranch argued this language meant the City could only do what was incidental and necessary to access the groundwater subject to the Ranch’s restrictions on the use of the land, so long as the Ranch did not prohibit the City from having full access to the groundwater.  The City argued the language meant it could do everything necessary or incidental to drilling anywhere.

The Court concluded the Deed language was ambiguous and turned to the accommodation doctrine for guidance.

The accommodation doctrine is based on the principle that surface and mineral owners who hold conflicting estates should act with due regard for each other’s rights. After listing the similarities between groundwater and mineral estates, the Court concluded the accommodation doctrine was a proven rule for determining the instant dispute:

What is reasonable, necessary, or incidental for the severed estate cannot be determined in the abstract but must be measured against, and with due regard for, the rights of the surface estate. That is the accommodation doctrine, and we are reluctant to search for a new approach to resolving disputes over a severed estate’s implied right to reasonable use of the surface when a proven rule is at hand.

2016 WL 3176683, at *9. The Court specifically declined to address how the accommodation doctrine would work if both the minerals and groundwater are severed.

Thus, following the Coyote Lake Ranch decision, a Texas landowner may seek relief under the accommodation doctrine from the groundwater owner’s actions.  While on its face the Coyote Lake Ranch decision appears to provide some relief for landowners, the accommodation doctrine imposes a heavy burden of proof.  To prevail, the surface owner must show that,

(1)  the groundwater owner’s use of the surface completely precludes or substantially impairs the existing surface use,

(2)  the surface owner has no available, reasonable alternative to continue the existing use, and

(3)  given the particular circumstances, the groundwater owner has available reasonable, customary, and industry-accepted methods to access and produce the water and allow continuation of the surface owner’s existing use.

While the accommodation rule does give the surface owner some basis to argue for consideration of his surface use needs, the limitations on the application of the accommodation rule historically has provided scant comfort to surface owners.  See, e.g., Merriman v. XTO Energy, Inc., 407 S.W.3d 244, 249 (Tex. 2013) (holding that the “surface owner’s burden to prove that his existing use cannot be maintained by some reasonable alternative method is not met by evidence that the alternative method is merely more inconvenient or less economically beneficial than the existing method.”); Sun Oil Co. v. Whitaker, 483 S.W.2d 808 (Tex. 1972) (refusing to apply accommodation doctrine, despite destruction of landowner’s crops and loss of groundwater, because mineral owner needed underlying groundwater to produce additional oil); Davis v. Devon Energy Prod. Co., L.P., 136 S.W.3d 419, 425 (Tex. App.—Amarillo 2004, no pet.) (accommodation doctrine did not prevent mineral lessee from building caliche roads across land: while caliche might cause some problems, there was no evidence it would destroy landowners’ ability to conduct a profitable farming operation).

It therefore remains to be seen whether surface owners are able to use the accommodation doctrine to their benefit.

In addition, because the Court’s decision turned on the interpretation of the specific contract language, Coyote Lake Ranch underscores the importance of carefully drafting. The majority concluded the groundwater deed did not address whether the City could do everything necessary or incidental to drilling anywhere; the three concurring justices, however, disagreed.  They thought the deed language expressly addressed this issue, and therefore the accommodation doctrine did not apply: “Because the express terms of the parties’ agreement address the issue, the accommodation doctrine does not apply and the Ranch cannot rely on the doctrine to require the City to adopt an alternative plan for different well sites.”

This begs the question: how specific must deed language be to foreclose application of the accommodation doctrine and protect the surface owner’s rights?  The Coyote Lake Ranch decision does not make this clear.  Given the importance of the rights at issue, and the Court’s emphasis and reliance on the conveyance language used deeds or contracts, it would be wise for anyone dealing with groundwater severances to protect their rights by consulting an attorney.

This article has been prepared for educational and informational purposes only and does not constitute legal advice. The laws of other states and nations may be entirely different from what is described in this article. Because of these differences, you should not act or rely on any information on this article without seeking the advice of a competent attorney licensed to practice law in your jurisdiction for your particular problem. The author has endeavored to comply with all legal and ethical requirements in writing this article and does not desire to solicit or represent clients based upon their review of any portions of this article which do not comply with the legal or ethical requirements of the jurisdiction in which the client is located. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship.

McLeod, Alexander, Powel & Apffel, P.C. becomes a member of the American Association of Port Authorities

McLeod, Alexander, Powel & Apffel, P.C. is proud to announce its new membership in the American Association of Port Authorities (AAPA).  The AAPA acts as a unified voice of the Americas’ sea port industry, representing over 130 public port authorities in the United States, Canada, Latin America, and Caribbean.  The group provides advocacy and promotes the common interests of the port community in the areas of security, trade, transportation, infrastructure, environmental and other issues related to port development and operations.

The Firm has proudly represented the Port of Galveston since the 1940s.  Firm Officer, Anthony P. Brown currently acts as the Port’s general counsel.