May/June 2021 Journal

Supporting Your Success

May/June 2021 • Vol. 90 • No. 3

Resolving Distressed Agricultural Loans

in this issue: Supplemental Needs Trusts – Now What?

Meet the KBF Scholarship Winners

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contents

FEATURES 10

A Message from the Chief Justice

30

Successfully Resolving Distressed Agricultural Loans in Kansas

45

My Client is the Trustee of a Supplemental Needs Trust – Now What?

60

A Perfect Ten: KBF Scholarships

Chief Justice Marla Luckert Michael D. Fielding Adam C. Dees

DEPARTMENTS 6

From the Kansas Bar Association President

8

From the Kansas Bar Foundation President

12

26

ALPS Quarterly

28

Temporary New Normal

64

Members in the News

A Nostalgic Touch of Humor

65

Classified Advertisements

16

Substance & Style

66

Obituaries

18

Law Practice Management Tips & Tricks

70

Appellate Decisions

21

Diversity Corner

85

Appellate Practice Reminders

23

Continuing Legal Education

86

Advertisers Index

www.ksbar.org | May/June 2021 3

2020-21 KBA Officers & Board of Governors President Charles E. Branson, CBranson@ksbar.org President-elect Hon. Cheryl Whelan, cwhelan@ksbar.org

2020-21 Journal Board of Editors Professor Emily Grant (Topeka), chair, emily.grant@washburn.edu Sarah G. Briley (Wichita), sbriley@morrislaing.com Hon. David E. Bruns (Topeka), brunsd@kscourts.org Richard L. Budden (Kansas City), rbudden@sjblaw.com Kate Duncan Butler (Lawrence), kbutler@barberemerson.com Boyd A. Byers (Wichita), bbyers@foulston.com Sarah Fertig, sarah.fertig@ks.gov Connie S. Hamilton (Manhattan), jcham999@gmail.com Lauren G. Hughes (McPherson), lhughes@bwisecounsel.com Michael T. Jilka (Lawrence), mjilka@jilkalaw.com Lisa R. Jones (Ft. Myers, FL), ljones@fgcu.edu Casey R. Law (McPherson), claw@bwisecounsel.com Deana R. Mead, Staff Liaison, dmead@ksbar.org Hon. Robert E. Nugent, Ret. (Wichita), bkybob73@gmail.com Professor John C. Peck (Lawrence), jpeck@ku.edu Richard D. Ralls (Overland Park), rallslaw@turnkeymail.com Karen Renwick (Kansas City), krenwick@wrrsvlaw.com Jennifer Salva (Kansas City), jsalva@ktk-law.com Teresa M. Schreffler (Wichita), tschreffler@gmail.com Richard H. Seaton Sr. (Manhattan), seatonlaw@sbcglobal.net Sarah B. Shattuck (Ashland), bootes@ucom.net Michael Sichter (Kansas City), msichter@wrrsvlaw.com Richard D. Smith (Topeka), rich.smith@ag.ks.gov Katherine Tracy (Overland Park), kc@ksmolaw.com Hon. Sarah E. Warner (Lenexa), warners@kscourts.org Issaku Yamaashi (Overland Park), iyamaashi@foulston.com The Journal Board of Editors is responsible for the selection and editing of all substantive legal articles that appear in The Journal of the Kansas Bar Association. The board reviews all article submissions during its quarterly meetings (January, April, July, and October). If an attorney would like to submit an article for consideration, please send a draft or outline to editor@ksbar.org.

Published by Peterson Publications, Inc., Topeka, KS, (785) 271-5801 The Journal of the Kansas Bar Association (ISSN 0022-8486) will publish combined issues throughout 2021 for a total of six issues this year.

Periodical Postage Rates paid at Topeka, Kan., and at additional mailing offices. The Journal of the Kansas Bar Association is published by the Kansas Bar Association, 1200 SW Harrison St., Topeka, KS 66612-1806; Phone: (785) 234-5696; Fax: (785) 234-3813. Member subscription is $25 a year, which is included in annual dues. Non-member subscription rate is $45 a year.

The Kansas Bar Association and the members of the Board of Editors assume no responsibility for any opinion or statement of fact in the substantive legal articles published in The Journal of the Kansas Bar Association.

Copyright © 2021 Kansas Bar Association, Topeka, Kan. For display advertising information, contact: Bill Spilman at (877) 878-3260 toll-free, (309) 483-6467 or email bill@innovativemediasolutions.com For classified advertising information call (785) 234-5696 or email editor@ksbar.org.

Publication of advertisements is not to be deemed an endorsement of any product or service advertised unless otherwise indicated.

POSTMASTER: Send address changes to The Journal of the Kansas Bar Association, P.O. Box 751080, Topeka, KS 66675-1080.

4 The Journal of the Kansas Bar Association

Vice President Nancy Morales Gonzalez, nancy.gonzalez@ssa.gov Secretary-Treasurer Laura Ice, lauraice@textronfinancial.com Immediate Past President Mira Mdivani, MMdivani@uslegalimmigration.com Young Lawyers Section President Katherine E. Marples Simpson, ksimspon@stevensbrand.com Immediate Past President Mitch E. Biebighauser, mitch_biebighauser@fd.org District 1 Michael J. Fleming, mike@kapkewillerth.com Katie A. McClaflin, kmcclaflin@mkmlawkc.com Katherine S. Clevenger, katherine@pcfamilylaw.com District 2 Bethany J. Roberts, broberts@barberemerson.com District 3 Angela M. Meyer, angela@angelameyerlaw.com District 4 Brian L. Williams, bwilliams.lawoffice@gmail.com District 5 Vincent Cox, vcox@cavlem.com Terri J. Pemberton, tpemberton@cox.net District 6 Tish S. Morrical, tish.morrical@hamptonlaw.com District 7 William L. Townsley, III, wtownsley@fleeson.com Hon. Jeffrey E. Goering, jgoering@dc18.org Megan S. Monsour, mmonsour@hinklaw.com District 8 Dell Marie Shanahan Swearer, dell@hutchcf.org District 9 Aaron L. Kite, aaron@kitelawfirm.com District 10 Gregory A. Schwartz, gaschwartz@schwartzparklaw.com District 11 Candice A. Alcaraz, calcaraz@wycokck.org District 12 Alexander P. Aguilera, alex.aguilera@leggett.com Bruce A. Ney, bn7429@att.com John M. Shoemaker, john.shoemaker@butlersnow.com At-Large Governor Eunice Peters, peterse28@gmail.com KDJA Representative Hon. Bruce T. Gatterman, 24thcj@pawnee.kscoxmail.com KBA Delegate to ABA House Natalie G. Haag, nhaag@capfed.com Eric K. Rosenblad, rosenblade@klsinc.org ABA State Delegate Rachael K. Pirner, rkpirner@twgfirm.com YL Delegate to ABA House Joslyn Kusiak, jkusiak@kellykusiaklaw.com KBF Representative Scott M. Hill, hill@hitefanning.com Executive Director of the KBA/KBF Stacey Harden, sharden@ksbar.org

OUR MISSION

The Kansas Bar Association is dedicated to advancing the professionalism and legal skills of lawyers, providing services to its members, serving the community through advocacy of public policy issues, encouraging public understanding of the law, and promoting the effective administration of our system of justice.

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from the kansas bar association president

Don’t Procrastinate, But If You Do, Here is a Tip!

By Charles E. Branson, KBA President, 2020-2021

P

rocrastinate: to put off intentionally or habitually or to put off intentionally the doing of something that should be done. Well, tax season is over. And again, I waited to the last minute to get it done. Now, it is time for the next thing I will probably put off until the last minute. CLE! Yes, the time is drawing near again. But wait, do not fret, the KBA has you covered and now more conveniently than ever.

Coming off the pandemic, we have all adjusted how we get our continuing legal education credits. It has been a long time since we sat in a hotel conference room, drinking really bad coffee, and sitting in uncomfortable chairs while trying to get the Wi-Fi to work. I, for one, am not eager to go back to that.

Instead, most of my CLE has been through the KBA and its On-Demand Library. The On-Demand Library has made obtaining my CLE credits so easy, not only for this compliance period but next year's too. The On-Demand Pass has allowed me to select when I want to work on my CLE hours and freed up my time during the day to permit me to focus on my practice.

This all-access pass entitles you to unlimited access to the KBA’s On-Demand CLE Library, where new programs are being added all the time. You may complete as many of the programs as you wish, and the KBA will report your credit to Kansas CLE upon your completion of all requirements for a CLE program. These programs are all approved in Kansas.

For the compliance year ending June 30, 2021, the Kansas Supreme Court has issued an administrative order allowing Kansas attorneys to receive all 12 required CLE hours via On-Demand programming. Ordinarily, attorney credits for On-Demand programming are restricted to 6 hours per compliance year. With the On-Demand Pass you can knock out this year’s hours and at least half of next year's for an unbeatable price of $499, which is around $28 per CLE credit. The On-Demand Pass doesn’t expire until December 31, 2021, and is an exclusive member benefit. So, remember, it is never too late to join or renew your KBA membership.

There are many diverse topics to choose from, for example: “How to Present a Better Case Via Remote Hearing” presented by Judges Bill Ossmann and Amy Hanley, “Staying Ethical During a Pandemic” by Stephanie Goodenow, and “Getting Things Done: Overcoming Stress and Productivity” by Danielle Hall. To find all CLE offerings, go to ksbar.org under the “For Attorneys” menu, select CLE and then browse the On-Demand seminars. There is something for everyone no matter how specialized your practice.

The KBA is always looking for ways to help you succeed. The KBA is supporting your success. u Charles E. Branson is President of the Kansas Bar Association for 2020-2021. He is an attorney with Fisher, Patterson, Sayler and Smith in the firm’s Topeka office. Branson is the former Douglas County District Attorney and held office for 16 years. Prior to public service, Branson was in private practice in Lawrence; his practice focused on civil and criminal litigation. A long-time active member of the KBA, Branson has served on the Executive Committee of the Board of Governors, has been the KBA Representative on the Board of Trustees of the Bar Foundation, and has also been a member of the KBA Bench-Bar Committee and the KBF Scholarship Committee. Charles and his wife Kathy have two children, Chance and Grace, and live in Lawrence.

CBranson@ksbar.org 6 The Journal of the Kansas Bar Association

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from the kansas bar foundation president

New Scholarship to Benefit Future Kansas Attorneys

By Scott Hill, KBF President, 2020-2021

I

n the January/February 2021 issue of the Journal, I wrote about the Kansas Bar Foundation’s (“KBF”) scholarship programs. Proudly, the KBF administers nearly $20,000 or more annually of scholarships to area law students. Scholarship awards vary from $500 to $5,000, and each scholarship includes specific requirements, but generally the scholarships focus on area (largely Washburn and University of Kansas 2Ls and 3Ls) law students and/or Kansas residents.

This year, the KBF Board of Governors, along with the Scholarship Committee, is focused on growing the scholarship program.

In that light, the KBF Board has created a new scholarship for the benefit of law students intending to practice in the state of Kansas. I share with you a portion of the letter that I recently sent to past Presidents of the Kansas Bar Association (“KBA”) and the KBF. Dear Past Kansas Bar Association President – I hope this letter finds you well. It has been my pleasure this year to serve as President of the Kansas Bar Foundation and as a board member on the Kansas Bar Association. I begin (if I have not done so already) by thanking you for your past and continued leadership and service to the KBA. In 2019, when I was elected as President-Elect of the Foundation, I began to consider what projects our Foundation might undertake during my future year of leadership. Unbeknownst to the world, what we anticipated for 2020-2021 would be nothing like what continues to transpire. Plans that included in-person interaction among Fellows and KBA members, opportunities for face-to-face recruitment, and opportunities to individually and publicly recognize our supporters have been proven impracticable.

Yet our work as a Foundation must continue, as does the work of the KBA. As you may know, the Foundation’s mission is “...to serve the citizens of Kansas and the legal profession through funding charitable and educational projects that foster the welfare, honor and integrity of the legal system by improving its accessibility, equality and uniformity, by enhancing public opinion of the role of lawyers in our society.”

I need not cite data to tell you that there continues to be significant need for quality law students, who we hope will become quality lawyers in the state of Kansas. I also need not cite data to tell you that the cost of a legal education has risen significantly since each of us attended law school. To truly accomplish our mission today, I believe we have to act

...I believe we have to act in the 'now' to ensure that we have a quality next generation of lawyers who will support our mission and our respective organizations into the future."

8 The Journal of the Kansas Bar Association

in the “now” to ensure that we have a quality next generation of lawyers who will support our mission and our respective organizations into the future. I believe we can accomplish that in part by tackling the obstacle of the increased legal education cost in the name of the Foundation.

I would like to establish a Kansas Bar Foundation/ Association President’s Scholarship … While the full parameters of the Kansas Bar Foundation President’s Scholarship would be left primarily to the guidance of Scholarship Committee, at the least it would be awarded only to those lawyers attending a Kansas law school who can demonstrate a bona fide intention of practicing law in the state of Kansas. … I would ask that you join me in contributing to this fund. … My hope is that we and future Past-Presidents will have an opportunity to grow this endowment over time.

Thank you for your time and support.

I share this with the membership at large for two reasons.

First, please consider this my effort to again reach out to those past Presidents of the KBA and the KBF to contribute to this worthy cause. Second, I share with you to evidence that these sorts of scholarships can be created to help guide your own personal goals at shaping the future practice of law, whether it be through a memorial scholarship or simply as a recruitment tool for quality future lawyers in a particular geographic or practice area. The KBF welcomes your support.

Thank you. u Scott Hill is a partner at Hite, Fanning & Honeyman L.L.P. He concentrates his practice in banking, business transactions, business litigation and real estate. Scott sits on his firm’s management committee and devotes substantial time to his firm’s management and marketing efforts.

Scott was raised in Independence, Kansas. He graduated from Pittsburg State University and Washburn University School of Law. Scott earned his MBA at Washburn during law school.

Scott is married to Jennifer Hill of McDonald, Tinker. He has two sons (age 11 and 7). hill@hitefanning.com

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2021 mid-year update

A Message from the Chief Justice

By Chief Justice Marla Luckert

A

s we reach the mid-year point of 2021, I would like to provide you with some judicial branch updates and plans going forward.

Judicial administrator

In April, my colleagues and I selected Stephanie Bunten as the next judicial administrator, the state’s highest ranking nonjudicial position in the Kansas court system. Bunten brings a wealth of knowledge, experience, and skill to her new role. Most recently, she served as chief financial officer for the courts, a position she held since 2015. Earlier, she served as assistant fiscal officer and as a research attorney for a Court of Appeals judge. In between her terms with the court system, she was a tax accountant for Mize Houser & Company, PA, in Topeka. Combined, these provide her a solid foundation on which to take strategic, decisive actions that will help us deliver a modern, well-run judiciary to the people of Kansas.

Most statutory deadlines reinstated April 15

Through Administrative Order 2021-PR-020, I reinstated most statutory deadlines for court proceedings effective April 15, 2021. This action impacted several administrative orders I had previously entered under 2020 House Substitute for Senate Bill 102 and its amendments. The legislation allows me to enter certain orders during any state of disaster emergency upon a finding that the orders are necessary to secure the health and safety of court users, staff, and judicial officers. Effective March 19, 2020, I ordered all statutory deadlines suspended.

Although Administrative Order 2021-PR-020 reinstates most statutory deadlines, some suspensions continue. My order continues these suspensions: • • • •

statutory speedy trial deadlines under K.S.A. 22-3402 in the Code of Criminal Procedure; statutory trial and hearing deadlines under K.S.A. 22-4303 in the Uniform Mandatory Disposition of Detainers Act; time requirements for filing actions under K.S.A. 60-1501 and K.S.A. 60-1507; and time requirements for a defendant’s appearance in limited action cases under K.S.A. 61-3002(b).

Health and safety guidance continues to drive my decisions about deadlines.

Other legislation, 2021 HB 2078, published in the Kansas Register on March 31, 2021, temporarily suspends provisions of K.S.A. 22-3402. This temporary suspension is a statutory provision that exists independent of my administrative order.

District and appellate court operations

Since March of last year, my colleagues and I have issued court operations orders in efforts to keep court users, staff, and judicial officers safe during the COVID-19 pandemic. Those orders have evolved alongside public health recommendations and the changing nature of the pandemic. My colleagues and I continue to closely monitor public health recommendations to provide updated court operations orders.

Since the beginning of the COVID-19 pandemic, our profession has faced more firsts than at any other time in my career. The judicial branch has continued to provide access to justice through the incredible efforts of its judges, employees, and members of the bar. Thank you for your continued resilience and adaptability.

10 The Journal of the Kansas Bar Association

Jury trials

Kansas courts have made tremendous strides in addressing the challenges of conducting jury trials during COVID-19.

Although only 1.13 percent of criminal cases were resolved by jury trial in fiscal year 2019, jury trials remain a pillar of our justice system. We are committed to upholding the constitutional right to a jury trial while providing jurors, witnesses and the public assurance that courtrooms are safe.

District courts across Kansas can conduct a jury trial and are doing so. Courts must consult with the local public health department and comply with health guidelines in supreme court administrative orders. They also must operate in accordance with an approved jury plan to help ensure the safety of all participants.

Kansas judges have worked with their county commissioners – who control courthouses and local budgets – to adapt court facilities for jury use during the pandemic. Federal pandemic grants funded many modifications to courtrooms designed to comply with public health guidelines. Some Kansas courts are also using alternative sites including arenas, fairground buildings, civic centers, and theaters to conduct jury trials while following public health guidance.

...health and safety protocols are not the only factors that impact trial scheduling." hearing. The second, presented by Justice Melissa Standridge, Chief Judge Karen Arnold-Burger, and Judge Michael Buser, provided an appellate court caselaw update. Through this partnership, we offered these important programs to a wide audience of attorneys and judges at a low cost to participants.

On behalf of myself and the judges and employees of the Kansas Judicial Branch, I want to thank the KBA’s Board of Governors for supporting the Kansas judicial branch’s requested budget enhancements this legislative session. We appreciate the KBA’s work in support of the judicial branch’s need for raises for court employees, raises for judges, and more court services officers. u

Jury trials take longer to conduct and require more space today than they did before the pandemic because of the health and safety protocols needed to respond to COVID-19.

This will affect scheduling. But health and safety protocols are not the only factors that impact trial scheduling. Other considerations include security, witness availability, court reporter and court staff capacity, judicial capacity, courtroom capacity, calendars of trial counsel and juror availability. In criminal cases, courts also consider whether jail staff are available to transport and guard inmates, relative prejudice to the defendant, and the defendant’s assertion of the right to speedy trial.

Judges are actively managing cases, including through mediation, to address the existing jury trial caseload. And senior judges will assist districts with jury trials or other cases to increase judicial capacity.

As the number of jury trials increase throughout Kansas, I want to extend my gratitude to the Kansas Bar for meeting this challenge with us.

KBA partnership and support

Finally, I want to express my gratitude to the KBA for their partnership and support of the Kansas judicial branch. The KBA partnered with the Supreme Court on two continuing legal and judicial education programs this year. The first program presented by Judge Bill Ossmann and Judge Amy Hanley focused on how to better present a case by remote www.ksbar.org | May/June 2021 11

a nostalgic touch of humor

Are You Having a Midlife Crisis?

By Matt Keenan

Y

ou want to ride a bike across Kansas? What is wrong with you?

“Are you having a midlife crisis?”

My wife had her head tilted to the side as she pondered another question. “I can’t imagine anyone riding a bike across Kansas. How many miles is it anyway? Thousands?”

It was March of last year. The world was tilting off its axis. Her reaction, all things considered, was not irrational in the least.

I paused and tried to mount a meager defense. “I don’t know” I said, “but a lot of people do it. It’s called the Bike Across Kansas.”

She wasn’t buying it.

“And there is another problem you have” she said, “you don’t own a bike. And based on the news stories, you can’t get one.”

She was right. Bike stores had no inventory. Those that had bikes had restricted access and customers waited outside for hours to get a glimpse. I wanted to get off the couch, ditch my sweats, sandals and T-shirt and go see something outside I heard was above the clouds. Some call it the sun.

My older brother Tim planted this bike idea in my head. Tim and his son John had participated the preceding two years. BAK originated in the 70’s. According the official BAK website, less than 100 riders participated the first year – June 1975 – but the numbers began to grow. Now there are thousands.

I found a bike on Craigslist and was soon looking for those special pants that invite long stares from car drivers. And just

12 The Journal of the Kansas Bar Association

when I was ready to train, BAK 2020 was cancelled. But my zeal remained.

I decided to post a note in the KBA Journal asking for stories among those who have participated. I did, and my in box filled up. Here are some of the Kansas lawyers who threw caution to the wind.

Joe Dickinson – Newton Bruce Swenson – Derby Bryce Abbott – Wichita Tim Connell – El Dorado Sean Brennan – Wichita Greg Nye – Newton Trish Rose – Hutchinson Joe Knopp – Manhattan Clark Owen – Wichita Tom Lasater – Wichita Bill Sorenson – Wichita Jan Hamilton – Topeka

Tim Keenan – Great Bend Carolyn Patterson – Hutchinson

These are the types of memories I have from nearly three decades of riding across the state on Biking Across Kansas.

Here are a few stories from the devoted riders in the Kansas bar.

From Sean Brennan:

From Jan Hamilton:

On BAK in 1991, my son, Ryan, and I were biking on one of the back roads ... a typical BAK day in western Kansas. Ryan was 11. I was 43. We weren’t in any hurry, but we had covered a lot of miles and had a good ways to go.

We came upon an old International pickup truck parked nose end toward the two-lane black top. I could see there was an old man in the cab. I told Ryan we needed to stop, and we went up to the truck. I gave him what I hoped was a friendly grin as I approached. The old man was likely in his early to mid 80s. His dog, a good-sized affable mutt, sat upright in the seat beside him. I told the old guy we needed to stop for a water and shade break. I introduced us to him, and he told me his name. I have long since forgotten his name, but not his face or his rusty pickup.

In 2017, BAK followed a route that generally ran along I-70.

In the middle of the ride, we were scheduled to ride from Chapman to Rossville. The route was exceptionally hilly, and the day was exceptionally hot. In short, it was a rough day.

After fighting through the hills surrounding Manhattan, we pulled into the small town of St. Marys. With the temperature over 100 degrees, the people of St. Marys welcomed us with a fire engine raining water down onto the street as we passed underneath. It was a beautiful sight and an act of generosity that got me through a very hard day.

His face was weathered from a lifetime of working outdoors.

He appeared relaxed and not bothered by too much. He was just watching the cyclists go by and wondering what was going on. He told us he had been a farmer for all of his working years but had retired because poor health and the extraordinary amount of money it took to keep a farm going and profitable. His only complaint was that he was lonely, as his wife had recently passed on. They had been married 50 some years. His face dropped into sadness for a bit.

Then, he asked us a question that would come to anyone’s mind: What on God’s green earth were we doing riding bicycles out here in the middle of nowhere. I told him about BAK and how I enjoyed meeting people, like him, along the way. He shook his head in mild disbelief. He thought that was just plain nuts. I laughed and told him that many shared his view. He talked a little more about his farm, the area he lived in and his dog. We were ready to ride on, so we bid him a good day and pedaled on.

I remember thinking that had we been in a car, we would have never had that conversation. We likely would not have even been on that road. Meeting that old farmer and his flop-eared dog was just one of those special moments. Ryan and I rode in silence for a while. I don’t think Ryan was as impressed with the encounter as I was, but at least he got to get off his saddle and get a good drink of water.

Everyone has a story. Not everyone is willing to listen. That is a shame.

Brennan in blue shirt.

From Tom Adrian:

The Lincoln Stop One year our overnight stop was in Lincoln, Kansas. When we arrived at the designated high school building, we were told the gym was not air conditioned, and it was very hot.

So BAK and the community arranged for those willing to spend the night in local residences. That was very unusual but welcomed. Ninth Judicial District Judge Joe Dickinson was part of our riding group of three. Somehow, he arranged for the three of us to taken in by a family who had asked for females only. They welcomed us despite the gender problem.

As I was in the basement showering, one of the hosts asked one of our riders about what TV channel we would like. He

u

www.ksbar.org | May/June 2021 13

a nostalgic touch of humor t said we usually watch MSNBC. She immediately replied in hush tones, but with excitement, “You’re one of us!”

Larned to Ellinwood We left our overnight stop in Spearville headed to Ellinwood.

The first part of the ride was easy and delightful. We stopped in Larned for lunch and lingered longer than we should.

As we left Larned, we started seeing storm clouds. As we approached a turn onto Dundee Drive off of Highway 56, I experienced my 3rd flat tire. Since by then the storm clouds had turned to driving rain, we sought shelter and a nearby garage. The owner graciously opened her garage door. The rain intensified. As we visited with our host, she apparently began to sympathize and offered to give us and our bikes a ride to Ellinwood. She hardly finished the invitation before we were loading our bikes in her extended cab pickup. As we were traveling toward Great Bend, I asked her about her thought process – allowing four men, who she didn’t know, into her pickup. “I figured if you were going to do anything, you would have done it already.”

Ethics Lecture One lawyer who typically does the ride noted that we were spending one night in Rossville. It is so close to Topeka and he thought it a good idea to asked Stan Hazlett to be at Rossville High School at the end of the ride that day to lecture willing lawyers on legal ethics for one hour of credit. Most lawyers do that ride to escape thoughts of law. But as it turned out, there were somewhere around a dozen lawyers willing to spend an hour sitting in a classroom still in their biking clothes along with the dirt and road grime on themselves to hear Stan speak. Before he started the lecture, Stan told us that he had been standing by the window watching

all arrivals. The only thought that came to his head was understandable – “You guys are crazy.”

We then heard about ethics.

From Bryce Abbott:

I rode my first BAK in 1982. There were always two remarkable things about BAK in those years. First, were the people. Many different backgrounds and lots of smiles. The second is the scenery. I have ridden up Stagg Hill road with a group of nuns from Illinois. I have ridden through the Smoky Hills with Mennonite girls wearing long dresses and running shoes. I have eaten a lifetime of pulled pork and pie. I have been rained on, hailed on, sleeted on, blown on and sprayed with a fire hose when it was so hot I didn’t think my tires would survive.

Sign me up for next year.

From John Keenan:

The day before the final day of the trip, we woke up and it was cold, windy, and raining. As we left the city I once again thought, “I can’t believe we’re actually doing this.” It was the longest day; I think 80 miles or so. The rain didn’t last too long, and it was nice for the middle part of the ride. However, as we got closer to the next city it started getting really hot.

We saw both extremes that day and it was the final test. Once we did that, we knew the final day of 50 or so miles were going to be a cakewalk.

An official photographer followed the route. Every time I rode by that dude, I gave me him cheesy smile and pointed at him.

It got funnier because he would immediately put his camera down. When we got the official pictures back, I had a bunch of the exact same pose.

We have a beautiful state from west to east and I did not know how beautiful it really was. Also, most people think Kansas is flat and they’re full of it. Kansas is not flat. I dreaded the ride and didn’t think I could do it. Especially day two when we first got started. I learned some valuable lessons, though. Any goal, especially seemingly impossible, can be achieved by breaking it up into pieces. When I only focused on the next stop or the next town, next water tower, it became easy. When you think of the entire state and you are only at Hays, it seems impossible. When I flipped my mind to “we only have to get to that water tower or over that hill” it was manageable.

Judge Joe Dickinson, Tom Erwin, Dr. Joe Lickteig, Judge Bryce Abbott, Tom Adrian. (Yes, that is the Kaw River ... which explains the smiles.)

14 The Journal of the Kansas Bar Association

From Carolyn Patterson:

On BAK, we ride on state highways and sleep in the local schools. My husband and I have

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John Keenan and his dad, Timothy.

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ridden in 103 of the 105 Kansas counties (excluding Gove and Wyandotte) and in 445 of the 627 incorporated cities in the state, to say nothing of plus (or minus) hundreds of unincorporated or “dead” towns between the Colorado and Missouri borders. We could serve as consultants to the Kansas legislature on the state of the State.

process or represent survivors in a variety of litigation.

HELP DESK: HOUSING AND ELDER LAW Take a shift at the housing help desk assisting pro se litigants with eviction defense, or man the elder law hotline and assist area seniors with legal

Beginning points have been Elkhart, Johnson City, Syracuse, Tribune, Sharon Springs, Goodland, and St. Francis. Final destinations were Hiawatha/White Cloud, Troy/Elwood, Holton/Atchison, Oskaloosa/Leavenworth, Baldwin/ Louisburg, Garnett/La Cygne, Humboldt/Alma/Ft. Scott, Parsons/Pittsburg, and Oswego/Galena.

Favorite towns of recent years along the way were Lucas, Clay Center, Burden, Elk Falls and Cottonwood Falls/Strong City.

It has been a real hoot every year. u

questions.

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***The officials at BAK have decided to restart the tradition in June 2022. Will you be joining them? I will.

Matthew Keenan has practiced with Shook, Hardy & Bacon LLP, Kansas City, Missouri, since 1985. mkeenan@shb.com

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www.ksbar.org | May/June 2021 15

substance & style

Cleaning Up Quotations

By Emily Grant

O

ver the past couple of years, I’ve become active on Twitter. Sometimes I post ridiculous things like the story of the 24-hour exchange my son and I had with a phone scammer who tried to convince me that I had won $2.5 million in the Publishers Clearinghouse Sweepstakes.1 Sometimes I tweet about how amazingly resilient my students are or about something noteworthy that happened in class.

And sometimes I join in conversations as part of #LawTwitter or #AppellateTwitter. This idea for this column came from that last category of interactions.

In 2017, attorney Jack Metzler tweeted this: I propose a new parenthetical for quotes that delete all messy quotation marks, brackets, ellipses, etc.: (cleaned up).2 Nearly four years later, he posted the following screenshot from the unanimous United States Supreme Court opinion in Brownback v. King,3 authored by Justice Clarence Thomas:

by, for example, changing the verb tense or removing some words. Each of those changes adds clutter in the form of new punctuation: brackets, ellipsis, single quotation marks within double quotation marks. When another court uses this nowmodified language and may need to modify it again to fit with the flow of the new opinion, the typographical clutter increases exponentially.4 The (cleaned up) parenthetical allows legal writers to “drop superfluous material like brackets, ellipsis, quotation marks, internal citations, and footnote references from their quotations” and to signal that “none of it matters for either understanding the quotation or evaluating its weight.”5 Although the Bluebook offers tools for indicating that quoted language has been modified, it suggests single quotations marks within double quotation marks, a (quoting) parenthetical, and parentheticals noting (brackets omitted) or (ellipsis omitted) or (alteration in original). Under this system, a writer must essentially choose between excess punctuation in a quotation or a series of parenthetical explanations in the citation. Neither option is necessary or particularly helpful to the reader in understanding the substance of the text.

Metzler offers these instructions for using (cleaned up):

What does the (cleaned up) parenthetical indicate? Is it significantly different from (quotations omitted) or (citations omitted)? Does it enhance legal writing?

Directly quoting language from a court opinion is important to increase credibility of legal writing; it is a way of assuring a reader that this proposition has been adopted by a court in these exact words. But that benefit occasionally conflicts with readability and flow, so writers often modify quoted language 16 The Journal of the Kansas Bar Association

To quote language from an opinion that includes a quotation from another opinion, simply enclose the words of the quotation itself within a single set of double quotation marks, leaving out brackets, ellipses, internal quotation marks and citations, and footnote reference numbers. Capitalize the first letter of the quotation if it begins your sentence; make it lower case if it does not. Cite the source of the quotation as if the words were original to the court you’re citing, and add (cleaned up) to the citation.6 For example, let’s go back to Justice Thomas’s writing. I’ve highlighted for comparison purposes the relevant words (see Chart 1).

Thus, the (cleaned up) parenthetical allows a writer to treat the quoted words as if they were the intended words of the source opinion, which they are, without also copying the alterations that were necessary to the flow of the source

Original Source7

Cleaned Up Version8

Bluebook Version

The original connotation of an “on the merits” adjudication is one that actually “pass[es] directly on the substance of [a particular] claim” before the court.

Under that doctrine as it existed in 1946, a judgment is “on the merits” if the underlying decision “actually passes directly on the substance of a particular claim before the court.” Id., at 501–502, 121 S.Ct. 1021 (cleaned up).

Under that doctrine as it existed in 1946, a judgment is “on the merits” if the underlying decision “actually ‘pass[es] directly on the substance of [a particular] claim’ before the court.” Id., at 501–502, 121 S.Ct. 1021.

Chart 1

opinion. A reader doesn’t need to know that the quoted words were originally in a slightly different form in an earlier source.9 Admittedly, not all legal writers respect this option. Lawyers tend to stick to tradition, and some might therefore be reluctant to try a new approach to citation. Some legal writers suggest that paraphrasing is a better option than quoting anyway.10 Certainly, there is a risk that (cleaned up) “may be used to sweep some complexities under the rug, and may sometimes be used outright dishonestly. But that’s a possibility for any alteration . . . .”11 As always, when modifying quoted language, writers are cautioned not to introduce any change to the substance of the quotation.12 Thoughts on the (cleaned up) parenthetical? Like its potential? Worry about ambiguity? Feel free to tweet me your thoughts @emily7grant. Or follow me just to stay current on the latest escapades of my 14-year-old son and my alwayseager law students. u

References 1. I had not. But you can read about that adventure here: https:// twitter.com/emily7grant/status/1341953077574832129 2. https://twitter.com/SCOTUSPlaces/status/842223292752760832 He explained the concept more fully in an article later that year.

Jack Metzler, Cleaning Up Quotations, 18 J. App. Prac. & Process 143 (2017).

3. https://www.supremecourt.gov/opinions/20pdf/19-546_7mip.pdf 4. Jack Metzler, Cleaning Up Quotations, 18 J. App. Prac. & Process 143, 144-47 (2017).

5. Id. at 147.

6. Id. at 155.

7. The original source material, from Semtek Int’l Inc. v. Lockheed Martin Corp., 531 U.S. 497, 501–02 (2001).

8. With the (cleaned up) parenthetical, as written in the Brownback v. King opinion (the Id. cite refers to the Semtek case).

9. https://www.lawprose.org/lawprose-lesson-303-cleaned-upquotations-and-citations/ 10. https://lawprofessors.typepad.com/appellate_advocacy/2019/09/ cleaned-up-citations.html 11. https://reason.com/volokh/2018/07/24/new-twist-on-legalcitations-the-cleaned/ 12. https://www.lawprose.org/lawprose-lesson-303-cleaned-upquotations-and-citations/

Emily Grant is ... at emily.grant@ washburn.edu. (cleaned up)

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785-368-8275 www.ksbar.org | May/June 2021 17

law practice management tips & tricks

2021 ABA TECHSHOW

By Larry N. Zimmerman

T

he 2021 ABA TECHSHOW was held virtually using Cvent Event Management software. The organizational features made picking and choosing from 102 sessions seamless and it was surprisingly easy to find and chat up colleagues from around the country using the various meeting options. It cannot possibly be a cheap product, but Cvent’s tools took some of the sting out of not being able to attend in person. (Missing out on deep dish pizza, Chicagostyle dogs, and Al’s Italian beef sandwiches was a pain no technology could solve, however.)

One of the first things that struck me about the TECHSHOW was the new (to me) 30-minute session format. Some more complicated topics were allotted a full 60 minutes but most of the sessions were the quicker format. It meant I could attend 22 sessions over the 5-day event and provided more slots for a much broader variety of knowledgeable and diverse presenters.

The primary reason for going to the TECHSHOW is to discover new products, ideas, and resources for serving our clients better, faster, and cheaper. I left with a lengthy to-do list to address issues around my office as well as some really deep issues to ponder.

Client-Facing Tools

Afterpattern (afterpattern.com) provides simple (relatively) tools to enable a lawyer to create online forms for document automation and integration with Clio, HelloSign, or payment systems. One lawyer improves initial consultation by pointing clients at the portal, so they arrive with a completed 18 The Journal of the Kansas Bar Association

information packet and a matter placeholder in Clio. The same lawyer sends email invoices with a click-to-pay button dramatically speeding payment. He used the free version to help build a portal for an expungement project to increase the number of clients his local bar volunteers could serve.

The lawyers who went remote due to COVID-19 or the desire to work from a beach favor tools like Egnyte (egnyte. com), Clinked (clinked.com), or Dubsado (dubsado.com).

Both provide secure collaboration portals between client and lawyer for sharing and collaborating on documents, calendaring meetings, and messaging. While some lawyers still (unwisely) use Google Drive and Docs for such collaborations, the exposure this creates for clients presents real ethics concerns eliminated by security-focused portal tools.

Chasing signatures is a persistent problem for my firm and many lawyers. Fortunately, the pandemic has expanded acceptance of electronic signature options. HelloSign (hellosign.com), PandaDoc (pandadoc.com), and DocuSign (docusign.com) all provide firm-branded, email delivered signing options for securing legal signatures on a variety of digital document formats. The ease of signing from a smart phone seems to tip the balance for a prompt return and is practically a necessity when working with clients under 50 who do not even own envelopes and stamps.

Technology and Culture

Renée DiResta, Research Manager at the Stanford Internet Observatory was the keynote speaker for TECHSHOW.

The primary reason for going to the TECHSHOW is to discover new products, ideas and resources for serving our clients better, faster and cheaper."

Logitech H390 Headset with Noise-cancelling Mic ($25) – The era of Zoom lawyering requires good sound and this inexpensive headset/mic performed demonstrably better than it has any right to during the presentation.

Ongood.com – Send an actual gift as easily as a Venmo payment. (You only pay if the recipient accepts the gift.)

Medito – A free app for iOS or Android that offers guided meditation. Meditation is important to lawyer wellness – especially in a high-speed, tech-rich, pandemic-altered profession. u Larry N. Zimmerman is a partner at Zimmerman & Zimmerman P.A. in Topeka and former adjunct professor, teaching law and technology at Washburn University School of Law. He is one of the founding members of the KBA Law Practice Management Committee.

The focus of her work is to study how disinformation is spread across social networks and to assist policymakers in evaluating responses. While that was compelling and highly topical, she touched on the topic of artificial intelligence (AI) at one point. She wrote part of an article and then input that into GPT-3 to teach it her language and style. The AI finished her article, and its efforts were so seamless that her own editors were none the wiser.

Briefcatch 2.0 (briefcatch.com) will not replace a legal writer as GPT-3 seems poised to do, but it does leverage AI and collected human input to punch up legal writing. This inexpensive tool focuses on improving your writing style for readability and impact, catches a variety of grammatical errors far beyond stock offerings in Word, and can even catch citation issues. It is apparently the best editor a lawyer can buy for $240 a year and even law students are buying in hoping to improve their competitive edge.

Several presenters demonstrated the dark side of these sorts of AI, however. Behind any AI are the creators who inadvertently and purposefully encode their biases into the algorithms breathing life into the AI. The most readily apparent demonstration simply ran an identical search on ten different case reporting systems. Not surprisingly, each search AI favored hits unique to the reporting system. Even the hits that were shared between the ten were ranked differently. The clear lesson was that it is incumbent on lawyers especially to be aware that AI is laden with biases that must be examined and challenged as carefully as any human’s.

Gadgets and Apps

The traditional last session is a fast 60 Tips in 60 minutes session, and it worked out surprisingly well virtually. I ended up with several items in my cart during the presentation.

SoLID Lavalier Lapel Microphones ($15 on Amazon) – These clip-on mics might not be as durable as a RØDE but they are amazing for the price and come with a little pouch full of accessories.

kslpm@larryzimmerman.com

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www.ksbar.org | May/June 2021 19

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diversity corner

An Interview with Hon. Cheryl A. Rios

By Diana Stanley

T

his is the second installment of a three-part interview series with Kansas judges. This issue we hear from district court judge Cheryl A. Rios. Judge Rios is the first Latina district court judge in Shawnee County and was appointed to the bench in 2008. She was recently recognized and inducted into the Ring of Honor of MANA, a national Latina organization.

Tell us a bit about yourself.

I grew up in Topeka, Kansas. I attended Our Lady of Guadalupe grade school and then Hayden Catholic High School. From there I took my prerequisites at Washburn University and was accepted into the Stormont Vail School of Nursing.

I eventually got my BSN from St. Mary of the Plains University and attended law school at Washburn University.

What was your journey to law school like?

I grew up in a segregated area on the east side of Topeka in a neighborhood commonly referred to as the Oakland community. I attended Our Lady of Guadalupe school and church. The entire school was comprised primarily of descendants of parents and grandparents who had immigrated to the United States from Mexico, seeking a better way of life. For many of my classmates, Spanish was their first language.

For me, the experience of growing up in a segregated community made me feel protected. I didn’t really know that I was different than others, until I went to high school where the majority of students were Caucasian. Probably the first thing that made me realize that others saw me differently was when some of my new friends had to get permission from their parents to hang out with me because I was a “Mexican.” One of my friends was smitten with my brother, but her parents made it clear that their daughter would not be allowed to date a “Mexican.”

My grandparents and many others from the Oakland community had emigrated from Mexico and found work at Santa Fe Railroad. My maternal grandmother bore twelve children. So I had the good fortune of growing up in this huge extended family with aunts, uncles and cousins. However, as the youngest of six children I learned early on that my parents could not afford to send me to college. As a result, I didn’t believe I could go to college. Nor did I believe that I possessed the basic intellect to get an advanced education. After I graduated from high school, I moved out of my family home and took a job working at the Dillons Bakery in central Topeka.

What happened next?

I quickly realized that the salary I was earning at Dillons was never going to be able to sustain even a meager lifestyle. I’d learned the real fear of not being able to pay my electric bill. I didn’t know a lot as an 18-year-old, but I did know that I didn’t want to live in fear and paycheck to paycheck. I needed to find work that would allow me to feel financially secure.

At the time, we still had a newspaper with want ads. After perusing available jobs in Topeka, I knew that I would need to set my sights higher. I went to Washburn and flipped through their course catalogue. I picked a career path—nursing—which would allow me to make a good wage and would also allow me to begin working within a couple of years at a higher wage than I could make anywhere else.

Now if you recall, I wasn’t sure that I was intellectually capable of completing college coursework. I didn’t know a lot of people who had gone to college. So, I made a deal with myself. I’d take the most difficult prerequisite courses needed to attain a nursing degree and if I did well, then I would continue taking courses.

u

www.ksbar.org | May/June 2021 21

diversity corner t I continued taking one or two courses at a time, and eventually earned my nursing degree. I began work as an ICU nurse, working part-time as an ER nurse and a flight nurse. Working as a critical care nurse required me to achieve numerous certifications and eventually to teach those courses to others.

When I felt I’d learned all that I could as a critical care nurse, I began to dream bigger. I considered many different advanced degrees but landed on pursuing a law degree. At the time, I thought that I would someday be able to work in the area of health care policy utilizing both degrees.

What was your first job out of law school?

I took a position working for Cherokee Nation of Oklahoma under Chief Wilma Mankiller, the first female Principle Chief of Cherokee Nation. Working for Chief Mankiller was in and of itself a remarkable experience. My former husband was Cherokee, and our two daughters are Cherokee, born on Cherokee land. To be able to live and work among this rich, beautiful native culture for a sovereign nation on American soil just cannot be replicated. In my work, I was able to tackle a mixture of legal issues involving municipal, county, state, federal and tribal law.

What made you switch over to the bench?

When I moved back to Topeka, I worked as a prosecutor for former District Attorney Robert Hecht. Because of my experience in critical care nursing, I was assigned to assist with homicides, violent crimes, and sex cases because I could quickly and easily assess medical records and identify medical issues. Much like my experience as a nurse and an attorney at Cherokee Nation, I was again in a position to help others to problem solve, and I was able to interact with family members and victims, helping them to navigate the criminal justice system at a time of crisis in their lives. Working in the district attorney’s office also allowed me to practice in front of and to learn from several district court judges. I truly enjoyed working in criminal law.

Upon leaving the district attorney’s office, I had the opportunity to serve as project coordinator for a quasilegislative committee working on criminal justice reform.

The “Criminal Justice 3 R’s Committee” was legislatively charged with rewriting the criminal code to improve parity in sentencing; rehabilitation of offenders that suffered from mental illness and drug additions; and successful re-entry of prisoners back into society.

Why did I switch to the bench? It’s as simple as this. One of my law school classmates, Judge Steven Ebberts, was the Administrative Judge at Topeka Municipal Court. He needed someone to help him out on a pro tem basis. I obliged and found that I really enjoyed the opportunity to problem 22 The Journal of the Kansas Bar Association

I believe it is essential in our American democracy that persons who utilize our justice system can feel they will be heard and treated fairly. solve in yet a different way. Thereafter, I applied for and was appointed to the Kansas District Court bench by former Kansas Governor Kathleen Sebelius in 2008.

In Judge Joseph Johnson’s interview in the March issue, he spoke about the importance of being able to see someone that looks like you in the courtroom and how that builds trust in the legal system. What’s your take on that?

I believe it is essential in our American democracy that persons who utilize our justice system can feel they will be heard and treated fairly. Judges wield tremendous power to make decisions about issues affecting domestic relationships, children, finances, or the liberty of people that appear in court. People are further challenged by a judicial system with rules, language, and protocols that are foreign to them. Seeing a person on the bench that is representative of them or of their community goes a long way to establishing trust in the judicial system. Something as simple as hearing your name pronounced correctly when your case is called can go a long way to making litigants feel confident that the person hearing your case sees you and will hear your case fairly.

Any closing thoughts?

I have been extremely fortunate and have enjoyed the journey that has brought me where I am today. I’ve been blessed with opportunities I never dreamed I would have and I look forward to helping other young people realize their dreams. u Diana Stanley is a 2020 graduate of the University of Kansas School of Law, where she was an Articles Editor for the Kansas Law Review. She is the Articles Chair of the KBA Diversity Committee and practices in Wichita. dstanley@depewgillen.com

continuing legal education

June 30 CLE Deadline Approaching; KBA Can Help

I

t’s hard to believe we’ve reached the end of another compliance year for Continuing Legal Education in Kansas. Some of you may be way ahead of the game and adding hours to your rollover while others might be feeling a rush to meet the requirements before June 30. Either way, we here at the KBA have you covered for all your CLE needs.

A few important notes: • The compliance deadline is June 30, 2021, for all Kansas attorneys. Every attorney must have completed 12 CLE hours, including at least two Ethics hours.

• If you complete a program through the KBA, we will report your attendance no later than 30 days after the program.

• Pursuant to Administrative Order 2020 RL 098, there is no cap on the amount of pre-recorded (“On-Demand”) courses you can take to meet your compliance requirement for 2021. This means you can take all your credits via our On-Demand library if you wish!

• If you complete more than the required 12 hours prior to the compliance date, your additional hours will roll-over for the 2021-2022 compliance year (additional Ethics hours will roll-over as general hours only).

your needs, along with a robust list of offerings in our OnDemand library.

If you’re in a pinch to get compliant, your absolute best bet, and best value, is to purchase our On-Demand All Access Pass ($499), which gets you access to every title in our OnDemand library through the end of December 2021. We are adding on-demand titles every week (we’re at over 45 hours right now) and we are sure to have programs to fit your interests and needs.

Finally, should you need any assistance during this time, please reach out to us! We are happy to assist. You can email us at cle@ksbar.org or call us at (785) 234-5696. If you have questions about your compliance record, you’ll want to reach out to Kansas CLE at kscle.org.

Thank you again for your loyalty to the KBA and for choosing our programs for your CLE needs.

Best wishes for an easy compliance deadline!

Sincerely, Amanda Wright Continuing Legal Education Director

We hope you will consider utilizing the KBA for your CLE needs this compliance period and next. We have a truly packed schedule in June, with many live webinars to meet www.ksbar.org | May/June 2021 23

ALPS quarterly

Ten Ways to Have a More Constructive Conversation with Your Clients

By Mark Bassingthwaighte, Esq.

I

n the context of a conversation between an attorney and a client, effective communication occurs when both the attorney and the client feel they have been heard. For example, at the outset of representation, a client is often looking for confirmation that their lawyer understands what the problem and desired outcome is. Similarly, a lawyer is often looking for confirmation that the client has a clear understanding of what the lawyer can realistically do for the client given the circumstances at hand. The challenge here is that an effective communication can only occur by way of a constructive conversation, which requires both participants to enter a mutual conversation. There must be a balance between talking and listening.

This balance thing can be harder than it might seem. Suffice it to say, that while I can be a good listener at times, having a constructive conversation every time I open my mouth remains a challenge and it’s all about my being unable to find that proper balance between talking and listening. In fact, in my personal life I have been told more than a few times by my lovely wife that if I would just listen, it would become apparent that she isn’t looking to have me solve her problem.

Sometimes she just wants to be heard, to get it out, so to speak. Unfortunately, the lawyer problem solver in me just can’t shut up. I suspect I’m not the only lawyer who suffers from this conversational shortcoming. I don’t know about

According to Steven Covey, most of us don’t listen with the intent to understand, most of us listen with the intent to reply. The only way to maximize the relevancy of any reply is to first listen well."

26 The Journal of the Kansas Bar Association

you, but law school taught me how to problem solve. I never had any law professor pontificate on the virtues of being an effective listener. Quite the opposite in fact, I was taught how to debate and how to put forth a compelling argument.

If any of this is striking a chord with you, following through with even one or two of the following tips will enable you to have a more constructive conversation with your clients. All ten tips come from a Ted Talk by noted author, journalist, and speaker Celeste Headlee. The following are a summary of her points coupled with my trying to put an attorney-client conversation spin on them. If you care to view the entire Ted talk, and I encourage you to do so, you will find it at https:// www.ted.com/talks/celeste_headlee_10_ways_to_have_a_ better_conversation#t-653478.

In sum: 1) Don’t multi-task – Simply be present and pay attention. No texting, no thinking about other matters, no working through your email. You are in your client’s employ and this is his or her time.

2) Don’t pontificate – Enter every conversation with an assumption that YOU have something to learn.

Remember, the matter being discussed is the client’s matter. The more you learn, the better your advice will be.

3) Use open ended questions – Questions like “Will you tell me more about that?” invite your client to think and provide a more informative response. You don’t want to make it easy for a client to sit back and just confirm what you think you know or want to hear.

4) Go with the flow – Don’t get stuck on what you want to say next. To do so requires that you miss half of what your client has just told you because it’s quite difficult to concentrate on an important point you want to make and also listen at the same time.

5) If you don’t know something say so – Honesty instills trust. Faking it fosters doubt. It’s as simple as that.

6) Don’t equate the other person’s experience with yours – For example, as a client shares his or her story during intake, don’t try and relate by telling your story. Worse yet, don’t respond by talking about how many times you’ve heard this story before. Again, you are in someone else’s employ. These conversations are not to be about you.

7) Try not to repeat yourself – If you feel you haven’t been heard or understood, ask your client to make sure. Continuing to repeat yourself risks your coming across as condescending.

8) Stay out of the weeds – Most people really are not that interested in the minutiae or the nitty gritty details. Clients just want to know they’re in good hands.

9) Listen, truly listen – This does take a lot of effort and energy. According to Steven Covey, most of us don’t listen with the intent to understand, most of us listen with the intent to reply. The only way to maximize the relevancy of any reply is to first listen well.

10) Be brief – Share your thoughts and advice in a succinct manner. Demonstrate that the client matters to you as a person by confirming that he or she understands what has been discussed. Invite questions. u

accurate. Therefore, in providing this publication or document, ALPS expressly disclaims any warranty of any kind, whether express or implied, including, but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement.

Further, by making this publication or document available, ALPS is not rendering legal or other professional advice or services and this publication or document should not be relied upon as a substitute for such legal or other professional advice or services. ALPS warns that this publication or document should not be used or relied upon as a basis for any decision or action that may affect your professional practice, business or personal affairs. Instead, ALPS highly recommends that you consult an attorney or other professional before making any decisions regarding the subject matter of this publication or document. ALPS Corporation and its subsidiaries, affiliates and related entities shall not be responsible for any loss or damage sustained by any person who uses or relies upon the publication or document presented herein.

Mark Bassingthwaighte, Esq., ALPS Risk Manager Since 1998, Mark Bassingthwaighte, Esq. has been a Risk Manager with ALPS, an attorney’s professional liability insurance carrier. In his tenure with the company, Mr. Bassingthwaighte has conducted over 1200 law firm risk management assessment visits, presented over 400 continuing legal education seminars throughout the United States, and written extensively on risk management, ethics, and technology. Mr. Bassingthwaighte is a member of the State Bar of Montana as well as the American Bar Association where he currently sits on the ABA Center for Professional Responsibility’s Conference Planning Committee. He received his J.D. from Drake University Law School.

Guidance Tailored to the Needs of Attorneys Fee-Only | Fiduciary | Independent | Objective

Mbass@alpsinsurance.com Disclaimer: ALPS presents this publication or document as general information only. While ALPS strives to provide accurate information, ALPS expressly disclaims any guarantee or assurance that this publication or document is complete or

785-232-3266 716 S. Kansas Ave., Topeka, KS 66603 claytonwealthpartners.com

www.ksbar.org | May/June 2021 27

temporary new normal

The Temporary New Normal: Kansas Mock Trial in the Age of COVID-19

By Kate Duncan Butler

E

very year, the Young Lawyers Section hosts the Kansas State High School Mock Trial competition. It is one of YLS’s largest programs, featuring schools from all over the state. In a normal year, hundreds of high school students travel to courthouses in Wichita, Olathe, and Topeka to present their case in front of legal professionals, law students, and judges.

In March 2020, the Kansas Mock Trial program was thriving. The regional competition had just finished up, and six dedicated teams were preparing for the statewide competition.

And then, a global pandemic descended.

Within weeks, the mock trial competition was cancelled. And as masks, school closures, and social distancing became part of our everyday lives, questions arose about how the competition would weather the storm. Would the Kansas High School Mock Trial competition be cancelled in 2021?

Luckily, a little innovation and a dozen Zoom breakout rooms came to the rescue.

As always, the structure of the competition remained the same. Each team received a case problem with witness statements, diagrams, and potential trial exhibits. This year, students tackled a criminal case about an academic rivalry that ended in a deadly fire Hayden High School in Topeka took the championship. at a boarding school. The students split up roles, with some students acting as lawyers while the others played witnesses. Because the teams switch sides depending on the And as always, the students handled the pressure of round, the students had to create and master theories of unexpected objections and recalcitrant witnesses with the the case for both the prosecution and defense. The student kind of grace usually reserved for seasoned trial attorneys. attorneys developed opening statements, closing arguments, and witness examinations, while the student witnesses The decision to hold the tournament over Zoom was a nomemorized their accounts until they could testify accurately brainer. Most students, teachers, and legal professionals were even under intense cross-examination. already familiar with the platform. Each breakout room

28 The Journal of the Kansas Bar Association

evidence, but the students responded admirably. They showed “preparation and dedication,” to quote one of the judges.

In the end, only one Kansas school is able to advance to the national championship. The state competition was fierce, but Hayden High School in Topeka took the championship, with Blue Valley Northwest High School’s two varsity teams coming in second and third.

Second place varsity team from Blue Valley Northwest High School in Overland Park.

Finally, this article would not be complete without a shout-out to the incredible legal professionals who served as judges this year. More than 50 lawyers, law students, and judges devoted four or more hours of their time to helping these students learn and grow.

This program could not exist without them.

No one knows at this point what next year’s competition will look like. That said, it is YLS’s aim to spend the “off season” to grow and improve the Kansas High School Mock Trial program. If any KBA members are interested in lending a helping hand, please email Lisa Leroux-Smith at llerouxsmith@ksbar. org. It might not take a village to support a program like this one, but it certainly takes a courtroom. u

Third place varsity team from Blue Valley Northwest High School in Overland Park.

served as a separate courtroom, with the students and coaches moving between rooms from round to round. YLS left it to each school to decide how best to participate. For some schools, the students came to the building and wore masks throughout the competition. Students from other schools appeared from home, away from the rest of their classmates.

To ensure uniformity, students kept their microphone and camera turned off until it was their turn to participate. Even when students were in the same physical room, each Zoom window showed only one speaker at a time.

Kate Duncan Butler is an associate at Barber Emerson, L.C. in Lawrence where she practices civil and appellate litigation.

She is also a former high school teacher, which is a big part of why this program means so much to her.

The competition was smaller in this unprecedented time.

Ten teams from six schools participated in the regional tournament. Six teams, representing five of those schools, advanced to the statewide competition. Technical and timing issues sometimes hampered the smooth presentation of www.ksbar.org | May/June 2021 29

Successfully Resolving Distressed Agricultural Loans in Kansas

By Michael D. Fielding1

I. Introduction

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griculture is a major part of the Kansas economy.

According to the Kansas Department of Agriculture, in 2017, there were more than 58,000 farms that generated over $18.7 billion in agricultural output.2 The vast majority of the farms (84.6%) were family owned, while 6.2% were in partnerships, 5.3% were held by corporations and the remainder was owned by cooperatives, estates/trust, etc.3 In 2017, the average age of a Kansas farmer was 58.1 years and the average farm acreage was 781.4 A whopping 87.5% of 30 The Journal of the Kansas Bar Association

all Kansas land (over 45 million acres) is farmland of which more than 21 million is used for row crop operations and another 14 million for pasture.5 Overall, the agricultural section is the biggest economic driver in the state employing almost 13% of the Kansas workforce.6 Farming is also extremely difficult. The weather is always unpredictable, market prices are impacted by global events and operating margins are very thin. Furthermore, international trade disputes, COVID-19 and government

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payments to assist producers put farmers on an emotional roller coaster given that their financial condition is highly impacted by so many events which are out of their control. To put it mildly, farming in today’s economy is not for the faint of heart.

The sad reality is that many farmers are struggling today.

Because the vast majority of farmers use debt to finance their operations, lenders are also constantly struggling with how best to resolve the situation which minimizes losses.

Unfortunately, the answers are frequently difficult to find.

The aim of this article is to provide a high-level overview of key issues that arise in the context of distressed agricultural loans in Kansas so as to provide a means for more effectively and efficiently resolving distressed agricultural loans. In a perfect world there would be a book written on distressed agricultural loans in Kansas with a highly detailed chapter covering each topic. Unfortunately, time and space constraints prohibit such an exhaustive discussion. However, this article addresses from a high level each of these competing issues and provides a springboard from which a practitioner may take a deeper dive into the particular issues impacting his or her clients.

II. Pre-Loan Enforcement Considerations for Distressed Agricultural Loans

When signs of a distressed loan appear, it is critical that the lender develop a strategy for successfully resolving the troubled credit. Loan workouts can be golden opportunities to fix past mistakes and structure the deal to enhance the likelihood of full loan performance. The first step that should be taken is a deep assessment of where things stand. This begins with a review of the loan file. The lender should verify that key loan documents have been properly signed and documented. It should also determine whether the applicable promissory notes properly refer to the mortgages or security agreements that secure them. The lender should determine whether the applicable security documents adequately reference the collateral. Future advance clauses (also known as dragnet clauses) should be carefully considered. Do subsequent promissory notes appropriately reference the prior security agreement or mortgage – i.e., something more than just a date? If a new security agreement or mortgage was issued to secure a previously executed note, does the new security instrument properly describe that earlier note? If the lender spots any issues with the loan documents then its loan resolution strategy should have a high priority of “fixing” or correcting the errors.

Once the loan documents have been reviewed lenders should then determine whether liens have been property recorded such that the lender is perfected. In this regard lenders need to determine whether UCC financing statements were properly

filed and whether mortgages were properly recorded. Again, if recording errors have occurred a top priority for the lender will be to rectify these mistakes. In doing these lien searches lenders need to also determine their status vis-à-vis other secured creditors. These searches should not just be limited to obtaining UCC searches and title reports on real estate but should also be broad enough to include any possible state or federal judgment liens and any state or federal tax liens.

Lenders should also analyze any preexisting intercreditor agreements with other secured lenders to determine their respective rights and remedies as they prepare for possible legal action to enforce their loan documents.

In addition to normal collateral perfection issues, lenders also need to verify that they have been designated as the assigned party for the payment of any possible federal government payments and that they are noted as the loss payee on crop insurance proceeds. These notations are critical. If the borrower has not assigned federal government payments to the lender or if the borrower has not noted that the lender is the loss payee on crop insurance then the particular government agency or crop insurer will simply send the funds directly to the borrower even if the lender has a properly perfected security interest in general intangibles.7 In a similar fashion, lenders need to insure that they have properly issued Notices of Security Interest under the Food Security Act each year to all possible grain elevators, sale barns or other possible places where crops or livestock may be sold.8 Agricultural collateral can be broadly divided into a few discrete classes: real estate; equipment (including non-titled farm equipment such as tractors); titled vehicles and trailers; general intangibles (such as government payments, crop insurance, other contracts rights, etc.); and agricultural products (e.g., livestock and crops). Agricultural collateral is unique in that the livestock and crops are both fungible and easily moved. A closely related problem in distressed agricultural loans is poor documentation of the borrower.

This problem is particularly acute in situations where family members have on-going farming operations where the lines are blurred as to who owns particular items of collateral. For example, a lender may do an on-site visit and see a piece of equipment that the borrower regularly uses in their farming operations. Lenders sometimes assume or believe that the borrower owns the equipment. But in reality, it may be a close family member – someone who is not obligated on any of the lender’s loan documents – who actually owns the equipment.

Or it could be that the equipment was purchased in the name of one person but paid for from the sale of crop or livestock proceeds from another family member. Wise lenders will recognize these issues and should – at the outset of the loan – obtain signed statements from both borrowers and family members as to who owns or does not own non-titled assets. u www.ksbar.org | May/June 2021 31

distressed agricultural loans t A major issue with agricultural loans is the status of the collateral. If the collateral is livestock an immediate issue is whether the animals are tagged or microchipped so that it is easily discernible who owns what. Another key issue is whether the livestock are properly registered. Herd health is another critical concern. Is the borrower sufficiently caring for the animals or are shortcuts being taken (such as skipping vaccines) that could pose a threat of major loss for the lender?

The type and nature of the collateral as well as prevailing market conditions will greatly impact the course that the lender takes to preserve and maximize value. For example, if the collateral is growing (such as newborn livestock or newly planted crops) the lender has a major incentive that the collateral properly matures so as to maximize value. But in that regard the lender will want to make sure that the borrower has sufficient resources to bring that collateral to full maturity. If the borrower does not have those resources or if there is a major risk the borrower will abscond with the collateral, then the lender may seek the appointment of a receiver to take control of and manage the collateral.

In some instances, borrowers will operate a concentrated animal feeding operation (“CAFO”) where a large number of livestock are kept and cared for in a relatively small amount of space. CAFO operations create unique issues for the lender because of the possible environmental and third-party liabilities that exist. For example, it is critical for the lender to verify that the borrower is complying with all applicable state and federal regulations applicable to the facility and that animal waste is being legally and properly disposed. Furthermore, there is a risk to the borrower that it may become subject to nuisance lawsuits brought by nearby landowners. Lawsuits such as these can have a major adverse impact on producers given the razor thin margins in agriculture.

Aside from the nuts and bolts of legal perfection, lenders dealing with distressed agricultural loans need to take a global look at the borrower’s operation and determine how their loans fit into and impact the big picture. This begins by considering the farming operation itself – i.e., is it a sole proprietor, general partnership, limited-liability company, S corporation or something else. Furthermore, the lender needs to consider the different types of loans it has compared to that of other lenders – i.e., loans secured by real estate, operating loans, purchase-money security interest loans, or loans for side-businesses (such as trucking or other custom work).

Personal guaranties should also be reviewed. Typically, these are granted by any owners of legal entities that borrowed funds from the bank. The vast majority of lenders that loan to small farming operations will use form guaranties with broad language waiving virtually all possible defenses. Of course, a personal guaranty may be of little benefit to the lender if the 32 The Journal of the Kansas Bar Association

guarantor has no financial resources to satisfy the debt that has been guarantied. Given this reality, as a lender prepares to address a deteriorating loan situation it may seek to improve its position by requiring that – as part of a forbearance agreement – some additional third-party sign a personal guaranty of the debt.

Borrower incentives are critical to consider when addressing a distressed agricultural loan. A borrower’s age, existing financial resources, and ability to support the borrower and the borrower’s family will have a major impact on how they react to an unfavorable loan decision. The evaluation of borrower’s incentives should not be limited to dollars and cents analysis. For example, many Kansas farmers have farmland that has been in the family for many generations.

Even though there may be little to no equity in the property, the farmer may nonetheless have a very strong incentive to retain the property given the familial identity that is tied to the land. Accordingly, lenders should design a strategy that takes those issues into account when dealing with a distressed loan.

Timing is very important when dealing with distressed agricultural loans. The timing of the growing season and growth cycle of livestock can have a major impact on collateral value. Timing must also be considered in light of the remedy sought. For example, a nonjudicial recovery and sale of personal property can be done very quickly while a foreclosure of real estate can drag on for many months if not years.

Often the best approach and by far the most common approach to a distressed agricultural loan is seeking to work something out with the borrower. Can the lender educate the borrower about the keys to a successful workout? Lenders should emphasize that the borrower needs to be honest both with themselves and their lender about how they came to be in their current financial predicament. Poor performing loans are typically not just a product of market conditions but rather are a result of poor market performance coupled with one or more additional items such as poor farm management, obtaining too much debt, personal issues (e.g., substance abuse, marital problems), etc. Lenders should emphasize that the borrower needs to be prepared for meaningful discussions including preparation of detailed business records and business plans and making realistic proposals as part of a workout process. These proposals could include the liquidation of collateral to paydown debt, the abandonment of certain farming operations which are not profitable, or refinancing with some other lender. The following table details possible options that both lenders and borrowers have for resolving a distressed agricultural loan.

distressed agricultural loans

Table: Different possible options for resolving a distressed agricultural loan

Lender

Borrower/Producer

Amend or refinance loan documents

Pledge new collateral

Forbearance agreement

Provide one or more guaranties

Initiate legal action*

Liquidate or surrender collateral (remember taxes will be associated with selling appreciated land)

Foreclosure/liquidate collateral (real or personal property; judicial* or nonjudicial foreclosure)

Refinance with existing lender or some replacement lender

Appoint a Receiver*

File bankruptcy*

*Involves legal proceedings

III. Government Payments, Crop Insurance & Other Federal Liens

Federal government payments have been a lifeline to farmers. As a general rule, government payments are general intangibles for purposes of the Uniform Commercial Code and a lender perfects its security interest in those general intangibles by obtaining a security interest and filing the standard UCC-1 form financing statement. But the practical problem is the federal government does not review UCC filings when issuing governmental payments. This creates the real risk that a federal government payment may be made to the borrower who will use the monies for some purpose other than paying the lender despite the fact that the lender has a perfected lien in those funds. Thus, for a lender to ensure that a government payment comes to it the lender needs to comply with the Assignment of Claim Act.9 As a practical matter, what this means is that the borrower must go to the local Farm Services Agency office and complete the necessary paperwork showing that the lender has received an assignment of the government payments. Prudent lenders will have a system in place to ensure this essential step is taken so as to preserve and protect their “practical perfection” in the government payments.

Similar to government payments, crop insurance is also a general intangible under the UCC. But crop insurance is governed by federal law under the Federal Crop Insurance Act.10 State law is preempted to the extent that the lender seeks to obtain crop insurance proceeds from the Federal Crop Insurance Corporation or one of its agents.11 But once the proceeds are paid to the debtor/farmer then state law applies.12 As a practical matter, to perfect a security interest in crop insurance proceeds the lender needs to obtain an

assignment on the crop insurer’s form. This means that any payment will be by joint check to borrower and creditor.

Once the crop insurance proceeds are deposited in the borrower’s account (presumably with the signature of the insurance assignee) federal preemption is over and the UCC priority rules apply. At this point it is important to remember that “control” beats “proceeds of collateral” under K.S.A. § 84-9-327. If a crop insurance check (in which the lender has a security interest by assignment) is deposited into another bank that has control, then the lender will suddenly be in a second priority position. If the lender is the crop insurance assignee, then it would be wise not to endorse the joint check unless it is going to maintain control of the proceeds. In short, the critical point with crop insurance is that the lender needs to make sure it is properly perfected at each step of the crop cycle: UCC financing statement (for crops), assignment of crop insurance via the approved form (for crop insurance), and control over the deposit account once the funds are received.

Another federal statute that occasionally impacts distressed agricultural loans is the Perishable Agricultural Commodities Act (“PACA”).13 PACA was designed to protect the sellers of raw (unprocessed produce). As a general rule, fruits and vegetables that are sold in a raw or essentially raw condition (e.g., cut, washed, etc.) will be subject to the PACA statutory trust protections. PACA creates a floating statutory trust on the produce buyer’s assets. This floating trust takes priority over a secured lender’s lien in the buyer/borrower’s assets.

Common buyers of produce who may be subject to a PACA statutory trust include food wholesalers, food processors, supermarkets and wineries, distilleries, and breweries. Under PACA a lender may be required to disgorge monies if it is paid with statutory trust funds (e.g., revolving line of credit secured by accounts receivable).

The Packers and Stockyards Act (“PSA”)14 is another federal statute which may impact buyers of livestock. The PSA was designed to protect the sellers of poultry, livestock and livestock products. Similar to PACA, unpaid sellers of livestock and poultry will have rights in the statutory trust and will take priority over secured lenders. Common entities that may be subject to a PSA statutory trust include packers and poultry dealers. There is much more caselaw applying PACA statutory trusts than PSA trusts. Consequently, when faced with a PSA statutory trust situation courts tend to look at and apply the legal principles associated with PACA statutory trusts.

Whenever dealing with a distressed agricultural loan it is critical to determine whether the borrower is subject to any federal tax liens. The priorities governing federal tax liens are set forth at 26 U.S.C. § 6323. A Notice of Federal Tax Lien (“NFTL”) must be filed by the federal government as a

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distressed agricultural loans t condition precedent to taking priority over a secured lender.

There are two scenarios where a lender’s lien will take priority over a NFTL. The first is known as the 45-day Disbursement Rule and has three requirements: (1) the lender must be fully perfected prior to filing of the NFTL; (2) any disbursement made within 45-days of the NFTL filing must be without notice that an NFTL had been filed; and (3) the security interest only attaches to property owned by borrower at the time of the NFTL filing.15 The second scenario is known as the 45-day commercial transaction financing and has four key parts: (1) Property must be acquired by the taxpayer within 45-days of the NFTL filing; (2) the lender must not have notice of the NFTL; (3) the loan must be made in ordinary course of borrower taxpayer’s business; and (4) the collateral is limited to specified categories (e.g., raw materials, inventory, accounts receivable, etc.).16 The flipside to these two scenarios is that an NFTL will take priority over the lender’s lien if either (a) the property was acquired after the lender had actual notice of the NFTL or (2) the property was acquired 45-days after the filing of the NFTL. As a practical matter, a lender who fails to act quickly after receiving an NFTL may be subordinated due to its own inaction. Thus, if federal tax liens are prevalent or are anticipated to be soon filed, it may be wise to try and obtain a subordination agreement with the IRS.

IV. Non-UCC Agricultural Related Liens

Under K.S.A. § 84-9-109, the general rule is that nonpossessory statutory liens on farm products are subject to the perfection, priority and enforcement provisions of Article 9 of the Uniform Commercial Code. Stated more plainly, the general rule is that a nonpossessory statutory lien will not prime a lender’s position in collateral unless either (a) its holder has a properly perfected lien in accordance with Article 9 of the UCC; or (b) there is some special state statute which allows the nonpossessory statutory lien to be perfected without complying with Article 9’s perfection requirements.

The problem is there are several liens which people would normally consider to be “agricultural liens”17 but Kansas has specifically exempted them by classifying them as “statutory liens.” Common Kansas “statutory liens”18 impacting agriculture operations include: • • • • • • • • • •

K.S.A. § 34-239–Form of receipt for storage grain; K.S.A. § 47-836–Lien for veterinary services; K.S.A. § 58-201–Liens for materials and services; K.S.A. § 58-203–Lien for threshing or husking; K.S.A. § 58-207–Lien for feed and care of livestock; K.S.A. § 58-218–Liens for seeding and baling broomcorn and baling hay; K.S.A. § 58-220–Agister’s lien; K.S.A. § 58-242–Agricultural production input lien; K.S.A. § 58-2524–58-2528–Rent as lien on crop; and K.S.A. § 84-7-209–Lien of warehouse

34 The Journal of the Kansas Bar Association

Statutory liens are exempt from UCC Article 9’s perfection requirements. Rather, perfection for the various statutory liens will depend upon the wording of the particular statute.

These statutory liens create challenges for lenders who may believe they are in a first-priority position only to learn that, in reality, they are in a subordinate position with respect to a portion of the borrower’s collateral. These challenges are compounded when the agister or custom cutter is a member of the local community, or, even worse, a customer of the lender.

V. Farm Personal Property

UCC Generally As a general rule, for a security interest to attach to collateral there must be value given, the Debtor must have rights in the collateral and there must be a security agreement that provides description of the collateral.19 There is no timing requirement to these three elements; rather, attachment occurs once all three elements are present.20 Furthermore, it is not essential that the word “grant” appear anywhere to create a security interest.21 A “description of personal or real property is sufficient, whether or not it is specific, if it reasonably identifies what is described.”22 “[A] description of collateral reasonably identifies the collateral if it identifies the collateral by:. . .(2) category;. . .or…any other method, if the identity of the collateral is objectively determinable.”23 Perfection in personal property is typically done by filing a financing statement.24 But perfection in titled vehicles must be done through filing a notice of security interest with the Kansas Department of Revenue.25 Perfection in proceeds of collateral is governed by K.S.A. § 84-9-315. The general rule regarding priority is the entity that is either first in time of filing or perfection is senior.26 However, there are certain types of collateral that require control for priority purposes.

Perhaps the most common of these items are deposit accounts.27 But control also extends to letter of credit rights28 and to purchasers of chattel paper.29 Special priority rules apply to purchase-money security interests.30 Farm Products Farm products present a particularly unique challenge because of the conflicting treatment that is given to them under the federal Food Security Act31 (“FSA”) and the UCC. To begin, it is important to note that the definition of “farm products” under both the UCC and FSA is substantively the same. The UCC defines farm products as “goods…with respect to which the debtor is engaged in a farming operation and which are [c]rops grown, growing, or to be grown… livestock, born or unborn…supplies used or produced in a farming operation; or products of crops or livestock in their unmanufactured states.”32 The FSA’s definition of a “farm product” aligns with both common sense and the UCC definition and includes “an agricultural commodity such as

distressed agricultural loans

wheat, corn, soybeans, or a species of livestock such as cattle, hogs, sheep, horses, or poultry used or produced in farming operations, or a product of such crop or livestock in its unmanufactured state (such as ginned cotton, wool-clip, maple syrup, milk, and eggs), that is in the possession of a person engaged in farming operations.”33 But aside from the similar definitions, the UCC and FSA’s treatment of farm products dramatically differs.

To better understand the conflict, it is best to begin with the UCC’s general rule that a buyer of goods in the ordinary course of business takes those goods free and clear of the lender’s security interest.34 But the UCC has a major exception to this rule for farm products.35 Specifically, a security interest in farm products survives their sale in the ordinary course of business by the farmer.36 Despite being a federal statute, the FSA does not wholly preempt the UCC. As a general rule, the “FSA is not meant to preempt or interfere with other provisions of the U.C.C. regarding the creation, perfection, and priority of security interests.”37 However, the “FSA preempt[s] state laws and rules governing farm products.”38 Specifically, it preempts the “farm products” exception found in the UCC.39 With respect to liens in farm products, the FSA’s general rule is that “a buyer who in the ordinary course of business buys a farm product from a seller engaged in farming operations shall take free of a security interest created by the seller, even though the security interest is perfected; and the buyer knows of the existence of such interest.”40 But there is a significant exception to the general rule. Specifically, a purchaser of farm products will take them subject to the security interest if, within one year “before the sale of the farm products, the buyer has received from the secured party or the seller written notice of the security interest organized according to farm products” which contains the name and address of the secured party, the name and address of the debtor, the debtor’s social security number or taxpayer identification number, and a “a description of the farm products subject to the security interest created by the debtor, including the amount of such products where applicable, crop year, and

the name of each county…in which the farm products are produced or located.”41 Lenders who negligently fail to reissue notices of security interests each year may find that their liens will not attach to the farm products that their borrowers sell.

However, a lender may pursue recovery of proceeds against buyers that fail to perform payment obligations.42 Kansas has not adopted a centralized filing system for purposes of the FSA. This creates an incentive for borrowers to abuse the system by searching for grain elevators or sale bars that have not received a notice of security interest from their lender such that the collateral may be liquidated and 100% of the proceeds remitted to the borrower.

Landlord Liens in Crops A common scenario in Kansas is that a lender will have a blanket lien in a farmer’s assets (including crops and crop proceeds) and that farmer, in turn, leases farmland from a third-party (the landowner) on which the crops are grown.

This scenario is compounded by the reality that, at times, the lease agreement is simply oral. But whether the lease is written or oral, will the landowner or the lender have priority in the crops produced on that property? This question is compounded by the fact that landlord’s liens are excluded from the scope of Article 9.43 The analysis begins with K.S.A. § 58-2524 which provides “Any rent due for farming land shall be a lien on the crop growing or made on the premises. Such lien may be enforced by action and attachment therein, as hereinafter provided.”

The landlord’s lien attaches at the beginning of the tenancy.44 The landlord’s lien extends to the whole crop and also has a corresponding right of possession.45 If the rent is payable as

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distressed agricultural loans t a share or percentage of the crop, then the landlord/lessor is deemed its owner and, if the farmer/tenant refuses to turn over the crop, the landlord/lessor can enter onto the premises and take it or seek turnover through replevin.46 Kansas law allows a property owner to recover unpaid rent from the person that purchases the crop if the purchaser has actual or constructive knowledge of the unpaid rent at the time of the purchase.47 However, it is questionable whether this statutory provision would survive in light of the preemptive effect of the Food Security Act discussed below. Older Kansas case law provides that landlord’s liens take priority over a lender’s security interest and more recent bankruptcy case law affirms that this priority remains the same even with the adoption of the UCC.48 Titled Motor Vehicles Titled vehicles are an essential component of every farming operation. As such, it is important that lenders know how to properly protect their interests. As a threshold matter, the lender must obtain a security interest in the motor vehicle.

While the best practice is to obtain a security agreement that specifically references the motor vehicles in questions, several courts from other jurisdictions have noted that a certificate of title which notes the lender as lienholder will also satisfy the requirement.49 Assuming that a lender obtains a signed security agreement, the filing of a standard UCC-1 financing statement will not perfect the lender’s security interest in the titled vehicle.50 Rather, a security interest must be perfected by mailing or delivery of the notice of security interest and tender of the required fee to the appropriate state agency as required by K.S.A. § 8-135 and K.S.A. § 58-4204.51 “The proper completion and timely mailing or delivery of a notice of security interest by a dealer or secured party shall perfect a security interest in the vehicle, as referenced in K.S.A. 849-311, and amendments thereto, on the date of such mailing or delivery.”52 It must be noted that “[a secured creditor] has no statutory or contractual duty to title the vehicle in Kansas.

In fact, [a secured creditor] ha[s] no authority to apply for a Kansas title. The only persons who can apply for a certificate of title in Kansas, are the owner of the vehicle and the owner’s authorized agent.”53 As such, a lender’s security interest in a vehicle will not be impaired by the borrower’s failure to comply with Kansas registration law.54 Liquidation of Personal Property Collateral The Kansas UCC allows pursuit of both nonjudicial and judicial remedies to enforce a security interest.55 A secured party may notify an account debtor to make payment to the secured party.56 A secured party may set off a deposit account and apply cash to debt. A secured party may repossess collateral or render it unusable.57 A secured party cannot “breach the peace.”58 “After default, a secured party may sell, lease, license, or otherwise dispose of any or all of the collateral in its present condition or following any 36 The Journal of the Kansas Bar Association

commercially reasonable preparation or processing.”59 However, every aspect of the disposition of the collateral must be “commercially reasonable.”60 Sales of collateral may be by private or public sale.61 Notice is required before disposing of collateral.62 K.S.A. § 84-9-617 protects the rights of transferees who obtain the collateral through the secured creditor’s disposition. The secured creditor may also do a strict foreclosure by accepting the collateral in full or partial satisfaction of the obligations owed.63 Kansas law allows a secured lender to replevin personal property collateral as part of a judicial proceeding.64 If a secured lender seeks a judicial foreclosure of personal property then it must comply with K.S.A. § 60-1006 which sets forth the procedure for doing so.

VI. Farm Foreclosures

Kansas is a judicial foreclosure state meaning a lawsuit must be filed to foreclose on real estate. Because Kansas law frowns upon claim splitting, the cause of action based on breach of the underlying promissory note should be brought simultaneously with the foreclosure action. While a detailed discussion of a typical Kansas real estate foreclosure is beyond the scope of this article, the general sequence of a farm foreclosure action includes a default and acceleration of the debt, the filing of a foreclosure petition (including separate counts for judgment on the promissory note and foreclosure of the mortgage), judgment of foreclosure, the sheriff ’s sale, court confirmation of the sale, expiration of the redemption period and conveyance of the Sheriff ’s deed to the successful property purchaser.

The right of redemption is a statutory right allowing landowners and lien creditors to redeem the property for a period of time following foreclosure of the property. “Except for mortgages covering agricultural lands…the mortgagor may agree in the mortgage instrument to a shorter period of redemption than 12 months or may wholly waive the period of redemption.”65 This exception is critical. The plain language of the statute suggests that the right of redemption in agricultural lands cannot be waived. Furthermore, lien creditors may redeem.66 A right of redemption may be transferred or assigned.67 If less than 1/3 of the debt securing the property has been paid then the redemption period will be three months.68 The court has the ability to shorten the redemption period in certain circumstances.69 The property owner remains in-possession of real estate during the redemption period and has a right to the rents and profits derived from it.70

VII. Farm Receiverships

Receivers may be appointed in both federal and state courts for agricultural debtors.71 There are two types of receivers.

A general receiver is one who controls all of the borrower’s assets. The court’s order of appointment typically gives a general receiver broad powers. The second type of a receiver

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is a limited or special receiver. This type of receiver just controls a particular asset or asset class and typically has limited powers. Typical grounds for appointing a receiver include contractual (i.e., a remedy upon default as provided in the loan documents); imminent danger of loss of assets; fraud; managing property pending foreclosure and redemption period.

There are several benefits to a receivership. Control of assets is taken away from the borrower and vested in the receiver. The receiver prevents wasting or mismanagement of assets by the borrower. The court order appointing a receiver can be very broad, and a receivership can allow for the orderly liquidation of assets. But there are also downsides to receiverships.

Typically, a bond must be posted which simply adds more costs to a loan. Courts sometimes refuse to appoint a receiver.

Receiverships can be expensive. Receivers are typically paid by the hour (with the rate being negotiated with the lender).

Receivers also typically engage their own counsel to advise them. Finally, borrowers may disrupt the receiver’s efforts.

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There is very little Kansas statutory law regarding receivers.72 Thus, one of the benefits to a receivership is that the party seeking the relief will typically draft the order and will have very wide latitude as to what the receiver is authorized to do.

In preparing a receivership order there are several key items that should be considered. These include the assets subject to the receivership; the receiver’s rights and duties; whether an automatic stay will be imposed; the receiver’s ability to borrower money; the receiver’s ability to lease and sell assets (including sales free and clear of any liens or encumbrances); compensation of the receiver; whether the receiver can engage other professionals such as attorneys or accountants; etc. Wise lenders will include a provision in the proposed receivership order that vests the receiver with full control of the company and bars any directors or officers from filing a bankruptcy petition without the express written consent of the receiver.73 Under Kansas law, receivers of limited-liability companies are given the same authority as receivers of corporate entities.74 This result is not surprising as both corporations and limitedliability companies are legal entities which, when occasion requires, must be managed by a receiver. Kansas law has specific statutory guidance for a receiver to sell property clear of all encumbrances.75 The plain statutory language requires that, for a court to order the sale of the property free of all encumbrances (1) the validity, extent or legality of the lien must be in dispute; and (2) the character of the property must be such that it will deteriorate in value during the pendency of the litigation.76 The Kansas Supreme Court has held that in the absence of a dispute regarding the validity of the underlying lien, a court order authorizing the sale of assets clear of all encumbrances pursuant to § 17-6907 was invalid.77 u

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www.ksbar.org | May/June 2021 37

distressed agricultural loans t In a federal court proceeding, the receiver is to manage the receivership estate in accordance with the law of the state where the property is located.78 Procedurally, the Federal Rules of Civil Procedure apply to a receivership case, but the administration of the estate “must accord with the historical practice in federal courts or with a local rule.”79 The corresponding District of Kansas Local Rule, in turn, requires that “the administration of estates by receivers… must follow the procedure in bankruptcy cases as nearly as possible.”80 Significantly, however, neither the Federal Rules nor the District of Kansas local rules authorize receivers to use procedural rules to override express statutory frameworks that have been enacted by Congress. The equitable power of federal courts “is subject to express and implied statutory limitations.”81 In this regard, the Supreme Court has repeatedly instructed that “‘[c]ourts of equity can no more disregard statutory and constitutional requirements and provisions than can courts of law.’”82 In short, equitable powers of a court cannot trump specific statutory provisions.83

VIII. Intercreditor Conflicts

It is extremely common for Kansas farmers to have multiple secured creditors – sometimes with liens in the same collateral – as well as multiple unsecured creditors. When the producer’s financial condition deteriorates the various creditors begin to pursue their various contractual and legal remedies to protect their own interest. But these actions are not done in a vacuum and the actions of one creditor will frequently impact other creditors. When these situations occur, does it a create a cause of action by one creditor against another? By way of example, if a secured lender has a lien in crops or livestock and exercises its remedies to recover the collateral does that action, in turn, create a claim by another creditor who is a party to a separate contract for the sale of the collateral which will now not be fulfilled because the farmer’s property was repossessed by the secured lender? Does such a situation give rise to a claim for tortious interference with contract by the aggrieved creditor against the secured lender?

To sustain a claim of tortious interference against a lender an aggrieved party must show “(1) the existence of a contract between it and [the borrower], (2) [the lender’s] knowledge of it, (3) the [lender’s] intentional procurement of its breach, (4) the absence of justification, and (5) resulting damages.”84 Critically, however, “[n]ot all interference with contractual relationships is tortious. A claim of tortious interference with a contract is predicated upon malicious conduct by the defendant.”85 In other words, the aggrieved party must show “that the [lender] acted in a state of mind characterized by an intent to do a harmful act without reasonable justification or excuse.”86 In considering this affirmative defense of justification87 courts will consider the following factors: 38 The Journal of the Kansas Bar Association

It is extremely common for Kansas farmers to have multiple secured creditors – sometimes with liens in the same collateral – as well as multiple unsecured creditors.

(1) the nature of the defendant’s conduct; (2) the defendant’s motive; (3) the interests of the other with which the defendant’s conduct interferes; (4) the interests sought to be advanced by the defendant; (5) the social interests in protecting the freedom of action of the defendant and the contractual interests of the other; (6) the proximity or remoteness of the defendant’s conduct to the interference; and (7) the relations between the parties.88 These factors must be viewed with the recognition that “the general rule is that the relationship between a bank and its depositor is a debtor-creditor relationship, not a fiduciary relationship.”89 Consequently, when a lender acts in furtherance of its contractual or other legal remedies it is not improperly or tortiously interfering with a contract.90 Stated more plainly, “[i]t is simply not tortious for a commercial lender to lend money, take collateral, or to foreclose on collateral when a debt is not paid.”91

IX. Family Farmer Bankruptcies under Chapter 12

Although it is commonly known that Chapter 12 of the Bankruptcy Code has been specifically dedicated for farm bankruptcies, family farmers and companies engaged in farming operations also have the option of filing for chapter 11 as well. If the entity’s aggregate debts exceed $10 million, they will be ineligible for chapter 12 and chapter 11 will be their only recourse.92 But if that debt limit is not reached, then chapter 11 is a possibility. In light of that, why do not more farmers pursue this much more known form of reorganization? The practical answer is that chapter 12 is more beneficial and less expensive than chapter 11. For example, chapter 11 debtors must pay U.S. Trustee fees while chapter 12 debtors have no such requirement.93 While there is a Chapter 12 Trustee appointed, he or she does not take possession of the debtor’s assets. The absolute priority rule of chapter 11 bars individuals and equity owners from obtaining estate assets unless all other creditors (including general unsecured creditors) are paid in full.94 No such rule exists under chapter 12. Finally, chapter 12 debtors may discharge

distressed agricultural loans

large government tax claims from the sale of farm property.95 While a full discussion of the similarities and differences of Chapters 11 and 12 are beyond the scope of this article, the general rule of thumb is that, when a person or entity is eligible for it, chapter 12 is a much more favorable avenue to pursue.

Before diving into the details of chapter 12 bankruptcies, it is important to first take a step back and consider some important academic findings regarding bankruptcy generally that can help better guide both lenders and debtors in the chapter 12 context. To begin, academic research has identified three key factors significantly impact if a bankruptcy will be filed: (1) debtor’s debt level, (2) available short-term cash and (3) the ability to coordinate with other creditors.96 The length of a particular bankruptcy or the amount that is ultimately distributed to creditors is generally not correlated with the debtor’s size.97 But that general rule of thumb also needs to be tempered by recent findings that the average time to complete a chapter 12 case has been increasing at a higher rate than cases under chapter 11 and 13.98 The reason for this might be due to the fact that the debt levels of farmers have been rising comparatively more than for other businesses.99 Given that “cash is king,” it should come as no surprise that an important factor as to whether or not a debtor will be able to successfully reorganize in bankruptcy depends upon whether the debtor has access to debtor-in-possession (“DIP”) financing.100 Academic research which looked at chapter 11 cases found that debtors with DIP financing have a better chance of successfully emerging from bankruptcy.101 Furthermore, the length of the bankruptcy tends to be shorter if debtor’s pre-petition lender provides the post-petition DIP financing.102 These findings are significant. Lenders tend to view bankruptcy as a bad, costly event. But ironically, if the debtor has the ability to cash-flow while in bankruptcy and if the pre-petition lender is willing to provide the DIP financing, then the likelihood of a successful reorganization increases while the anticipated length of the case decreases.

With these general academic findings in mind, we now turn to key issues associated with a chapter 12 proceeding.

Bankruptcy has both benefits and risks to borrowers/debtors.

The benefits are well-known and include imposition of the automatic stay which stops enforcement of creditor actions,103 the ability to restructure debt repayment terms,104 and the ability to sell real or personal property free and clear of liens.105 But bankruptcy is not a risk-free proposition for a borrower either. The downsides to a bankruptcy filing include an uncertain outcome. Bankruptcy can be expensive. The debtor must pay its attorney’s fees, and these fees can be more expensive if the bankruptcy is contested. If a lender is oversecured then the lender’s attorney’s fees will also be added to the debt owed.106

A debtor does not fully control what happens in a bankruptcy proceeding. Rather, it must seek court approval for various items. Bankruptcy also does not stop lease payment obligations.107 Also, the bankruptcy filing of a debtor typically will trigger liability on personal guaranties for non-debtors who guarantied commercial debt. However, chapter 12 imposes a stay of action by creditors against individual nondebtors who are liable on consumer debt.108 Congress has limited who may file for chapter 12 bankruptcy protection. Only “family farmers” or family fishermen with regular annual income may file for chapter 12. “The term ‘family farmer with regular annual income’ means family farmer whose annual income is sufficiently stable and regular to enable such family farmer to make payments under a plan under chapter 12 of this title.”109 The Bankruptcy Code imposes a $10 million debt limit for chapter 12 cases.110 “Family farmers” can be either individuals or companies.111 For individuals, this includes their spouse.112 But 50% or more of the debt relates to the farming operation and 50% or more of the income came from farming operations in the last taxable year or both the second and third preceding table years.113 For a corporate entity to be eligible for chapter 12 bankruptcy it must be 50% or more of owned by one family and relatives of the family where the family or the relatives conduct the farming operation.114 Furthermore, more than 80% of assets are related to the farming operation and 50% or more of its debts arise from the farming operation.115 A farming operation “includes farming, tillage of the soil, dairy farming, ranching, production or raising of crops, poultry, or livestock, and production of poultry or livestock products in an unmanufactured state.”116 A chapter 12 debtor retains all property (except that which is voluntarily surrendered to a creditor).117 A chapter 12 debtor can use the bankruptcy process to modify liens on real and personal property.118 Secured debts can be bifurcated into secured portions and non-secured portions (where the value of the collateral is less than the total debt owed at the time of the bankruptcy filing).119 A confirmed chapter 12 plan governs the debtor’s repayment of debts and binds all of the creditors regardless of whether their claims are treated in the plan or whether they objected to the plan or accepted or rejected it.120 Monies are paid to the chapter 12 Trustee who, in turn, disburses funds to the debtor’s creditors as specified by the plan. The length of a plan is between three and five years121 (although the plan can call for the payment of secured debt for a period of longer than five years).122 The debtor retains their property during the chapter 12 proceeding and following completion of the plan.123 In all of this it is critical to remember that if a farmer cannot cash-flow their farm within a chapter 12 bankruptcy proceeding then it is very u www.ksbar.org | May/June 2021 39

distressed agricultural loans t unlikely that a plan will be confirmed and/or that the plan will ultimately be successful.

If the debtor completes the required plan payments then he or she will obtain their bankruptcy discharge which discharges the debtor “from all debts provided for by the plan,” but is subject to the same exceptions as a chapter 7 discharge.124 Domestic support obligations cannot be discharged in bankruptcy.125 With respect to creditors of the debtors, there are three general classes of claims which may be excepted for discharge but, if the creditor wants to make those debts non-dischargeable it must timely file an adversary action (i.e., a lawsuit within a bankruptcy).126 The three classes are: (1) Money or property obtained by false pretenses where such valuable consideration was obtained by use of a writing that was materially false;127 (2) “[f]or fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny.”;128 or (3) “[f]or willful and malicious injury by the debtor to another entity or to the property of another entity.”129 This third item can include selling property “out-of-trust” if such action was done willfully and maliciously.130 If a § 523 discharge objection deadline is successful, only the specific non-discharged debt for the specific creditor will be excepted from the debtor’s overall discharge.

the debtor’s plan fully comply with the requirements of 11 U.S.C. § 1222 which dictates the required contents of a plan.

Furthermore, the second required element requires that a plan “provide for the full payment, in deferred cash payments, of all claims entitled to priority under section 507.”136 These obligations include both administrative expense claims plus priority tax claims.137 Thus, as a practical matter, if a debtor cannot cash-flow while in a chapter 12 proceeding then it should not have its plan confirmed.

The third element requires that the debtor propose its chapter 12 plan in good faith.138 The good faith determination is based on the facts of the case139 with the debtor bearing the burden of proof on this point.140 The issue of good faith “turns on an examination of the totality of the circumstances surrounding the plan and the bankruptcy filing.”141 “The court must focus on factors such as whether the debtor has stated debts and expenses accurately; whether the debtor has made any fraudulent misrepresentation to mislead the bankruptcy court; or whether the debtor has unfairly manipulated the Bankruptcy Code.”142 One court has noted that “[t]he filing of a bankruptcy petition without the intent or ability to properly organize is an abuse of the Bankruptcy Code” which means good faith is not present and the case may be subject to dismissal.143

One major issue that previously inhibited farmers for filing for chapter 12 was the fact that, if they sold property postpetition, they would not be able to discharge the taxes associated with the sale.131 This issue was particularly acute in situations where real estate had appreciated over many years or decades. However, Congress amended the Bankruptcy Code whereby debtors may discharge those tax related obligations if they are incurred prior to the debtor obtaining its discharge.132 The significance of this relatively new option cannot be overstated. First, this type of relief is not available in chapter 11. Second, many family farmers have held land for many years which has significantly appreciated. If they are required to file for bankruptcy, they now have the ability to liquidate collateral as a means of restructuring their overall debt load and avoid being saddled any impossibly high tax burden resulting from the sale. This makes chapter 12 a much more practical and effective means for enabling chapter 12 debtors to restructure.

The fifth required element deals with the treatment of secured claims.146 Secured claims can be treated in one of three ways.

First, a secured creditor may simply accept the plan and proposed treatment of the secured creditor’s lien.147 If this cannot be obtained then the second option is for the plan to provide for the retention of the secured creditor’s lien with the value being distributed to such creditor being equal to the value of the lien.148 If the second option is not viable then the debtor’s third option is to simply surrender the collateral securing the claim to the creditor.149

Plan Confirmation Plan confirmation begins (but does not end) with the requirement that a “[d]ebtor must establish all six elements contained in section 1225 of the Bankruptcy Code in order to have a plan confirmed.”133 “If the debtor fails to establish any one of the six elements in § 1225, then the court must deny confirmation of the plan.”134 While seemingly straightforward, the six elements can be challenging to meet. For example, § 1225(a)(1) requires that a proposed plan comply with all provisions of chapter 12.135 But this, in turn, necessitates that

The sixth element (also known as the feasibility test) requires the debtor to show that it “will be able to make all payments under the plan and to comply with the plan.”150 Feasibility is a question of fact.151 “The feasibility standard requires the Court to determine whether the plan offers a reasonable prospect of success and is workable.”152 The feasibility test “‘injects pragmatism into the confirmation process by prohibiting confirmation of overly optimistic reorganization plans clearly destined to fail and by not belaboring the inevitable demise of a hopelessly insolvent debtor.’”153

40 The Journal of the Kansas Bar Association

The fourth required element (also sometimes known as the best interests of creditors test) requires the debtor to show that the value to be distributed to unsecured claims under the plan is more than those unsecured creditors would receive in a hypothetical chapter 7 liquidation.144 The best interest test is considered as of the proposed effective date of the plan.145

distressed agricultural loans

One major issue that previously inhibited farmers for filing for chapter 12 was the fact that, if they sold property post-petition, they would not be able to discharge the taxes associated with the sale.

The debtor bears the burden of proving the feasibility of a plan.154 “Sincerity, honesty and willingness are not sufficient to make the plan feasible, and neither are any visionary promises.”155 Rather, “feasibility must be based on objective facts, not mere wishful thinking or pipe dreams.”156 For purposes of feasibility, the “debtor’s income and expense projections are considered in conjunction with their actual past performance….”157 “Debtors’ historical yields constitute the best evidence of reliability of their plans’ projection of production.”158 If a debtor’s cash flow projections are not supported by actual past performance then they will fail to establish the feasibility of a proposed plan.159 “In short, the court must be persuaded that it is probable that a plan will be able to cash-flow, not merely technically possible for it to do so.”160 Disposable Income Establishment of the six elements under § 1225(a) does not result in automatic plan confirmation. If unsecured creditors object to the plan then, in order for it to be confirmed, the debtor must “contribute for the benefit of unsecured creditors, at a minimum, all ‘disposable income.’”161 This “disposable income” refers to the debtor’s actual net disposable income that is received during the plan period.162 “[T]he disposable income requirement does not require that there be a specific sum for unsecured claims; rather, the debtor’s plan must commit disposable income to plan payments for the period of the plan, based on projections made at the time of confirmation.”163 “Thus, at the confirmation stage, the plan must promise payment of all projected disposable income, and in doing so, provide a projection of disposable income.”164 As defined by § 1225(b)(2), disposable income is “income which is received by the debtor and which is not reasonably

necessary to be expended for the maintenance or support of the debtor or a dependent of the debtor; or for the payment of expenditures necessary for the continuation, preservation, and operation of the debtor’s business.”165 “The determination of what constitutes disposable income is a fact-intensive inquiry into whether debtor has income which is in excess of that reasonably required for maintenance and continuation of [its] farming operation from one year to the next.”166 When making this calculation, “[u]ndocumented numbers or mere estimates of past years’ income and expenses will not be accepted. Projections of income and expenses offered to show the funds needed to continue the operation (such as seed and fertilizer for the coming crop year) must be grounded on historical figures.”167 Put simply, a debtor in a chapter 12 case receives a chance at a fresh start, while the unsecured creditors receive the promise of receiving disposable income actually received, based on reasonable, historically founded projections.

X. Conclusion

Despite the seemingly idyllic, low-stress nature of farming, the reality is that most of today’s farming operations are complicated multi-million-dollar business operations replete with major stress and uncertainty. Agricultural law is not simple. Rather, it is a patchwork of many different state statutes and caselaw which are preempted in part by differing federal statutes. Furthermore, most of today’s Kansas farmers have multiple secured and unsecured creditors whose interests frequently contradict one another. When seeking to resolve a distressed agricultural loan it is critical that an attorney have both a proper understanding of the multitude of applicable laws as well as the competing economic interests and priorities of the borrower and his or her differing creditors. u References 1. Michael D. Fielding is a partner in the Food & Agribusiness unit of Husch Blackwell LLP in Kansas City, Missouri who focuses his practice on helping lenders successfully resolve distressed agricultural and commercial loans. Listed in the 2021 edition of Best Lawyers in America, he has been named multiple times as a “Best of the Bar” honoree by the Kansas City Business Journal. He is licensed in Missouri, Kansas and Iowa and is board certified in Business Bankruptcy by the American Board of Certification.

2. See Kansas Department of Agriculture at https://agriculture. ks.gov/about-kda/kansas-agriculture#:~:text=The (last visited December 9, 2020).

3. Id. 4. Id. 5. Id. 6. Id. 7. See discussion, infra, regarding this point.

u

www.ksbar.org | May/June 2021 41

distressed agricultural loans t 8.

9.

10.

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.

21.

22.

23.

See discussion, infra, regarding this point.

31 U.S.C. § 3727 and 41 U.S.C. § 15.

7 U.S.C. §§ 1501 et seq.

In re Cook, 169 F.3d 271, 276 (5th Cir. 1999); see also In re Duckworth, 10-83603, 2012 WL 986766, at *8 (Bankr. C.D. Ill. Mar. 22, 2012).

In re Cook, 169 F.3d 271, 276 (5th Cir. 1999).

7 U.S.C. 499a et seq.

7 U.S.C. 181 et seq.

26 U.S.C. § 6323(d).

26 U.S.C. § 6323(c).

K.S.A. § 84-9-102(a)(5) provides: (5) “Agricultural lien” means an interest, other than a security interest, in farm products: (A) Which secures payment or performance of an obligation for: (i) Goods or services furnished in connection with a debtor’s farming operation; or (ii) rent on real property leased by a debtor in connection with its farming operation; (B) which is created by statute in favor of a person that: (i) In the ordinary course of its business furnished goods or services to a debtor in connection with a debtor’s farming operation; or (ii) leased real property to a debtor in connection with the debtor’s farming operation; and (C) whose effectiveness does not depend on the person’s possession of the personal property. Agricultural liens shall not include statutory liens. (Emphasis added) K.S.A. § 84-9-102(a)(77) identifies the full list of statutory liens.

That section provides: “‘Statutory lien’ means liens created by K.S.A. 2-1319, 2-2608, 2-3007, 34-239, 47-836, 58-201, 58-203, 58-204, 58-207, 58-218, 58-220, 58-221, 58-241, 58-242, 582524, 58-2525, 58-2526, 58-2527 and 58-2528, and K.S.A. 2019 Supp. 84-7-209, and amendments thereto.” Id. K.S.A. § 84-9-203.

Baldwin v. Hays Asphalt Const., Inc., 839 P.2d 275, 279 (Kan. App. 1995).

In re Brannan, 532 B.R. 834, 842 (Bankr. D. Kan. 2015) (“requiring formal words of grant ‘smack[s] of the antiquated formalism the drafters [of Article Nine] were trying to avoid.’”); In re Axvig, 68 B.R. 910, 3 U.C.C. Rep. Serv. 2d 312 (Bankr. D. N.D. 1987) (“no specific words or form are required to evidence a security agreement”); Simplot v. William C. Owens, M.D., P.A., 805 P.2d 449, 449 (Idaho 1990); Idaho Bank & Tr. Co. v.

Cargill, Inc., 665 P.2d 1093, 1097 (Idaho App. 1983) (“Courts have often repeated that no magic words are necessary to create a security interest…”); Evans v. Everett, 183 S.E.2d 109, 113 (N.C. 1971) (holding “no magic words” are required and looking to financing statement to find intent to create a security interest); In re Jacobs, 2006 WL 4451566, at *1 (Bankr. D. Idaho Feb. 10, 2006); See also In re Cantu, 238 B.R. 796, 800 (Bankr.

App. 8th Cir. 1999) (“where there is no question about the understanding of the parties, the court finds no reason to insist that the description of collateral must appear on the very same document which bears the debtor’s signature.”) aff ’d, 221 F.3d 1341 (8th Cir. 2000).

K.S.A. § 84-9-108(a) K.S.A. § 84-9-108(b).

42 The Journal of the Kansas Bar Association

24.

25.

26.

27.

28.

29.

30.

31.

32.

33.

34.

35.

36.

37.

38.

39.

40.

41.

42.

43.

44.

45.

46.

47.

48.

49.

50.

51.

52.

53.

54.

55.

56.

57.

58.

59.

60.

61.

62.

63.

64.

65.

66.

67.

See K.S.A. §§ 84-9-310, 84-9-312, 84-9-502 and 84-9-503.

K.S.A. § 84-9-311(a)(2); see also K.S.A. §§ 8-135 and 58-4204.

K.S.A. § 84-9-322 K.S.A. § 84-9-327 K.S.A. § 84-9-329 K.S.A. § 84-9-330) K.S.A. §§ 84-9-103 and 84-9-324.

7 U.S.C. § 1631 K.S.A. § 84-9-102(34).

7 U.S.C. § 1631(c)(5).

K.S.A. § 84-9-320.

See K.S.A. § 84-9-320(a) (“ a buyer in ordinary course of business, other than a person buying farm products from a person engaged in farming operations, takes free of a security interest created by the buyer’s seller, even if the security interest is perfected and the buyer knows of its existence”). Emphasis added.

Id. Battle Creek State Bank v. Preusker, 571 N.W.2d 294, 300 (Neb. 1997).

Battle Creek State Bank v. Preusker, 571 N.W.2d 294, 299 (Neb. 1997).

First Nat. Bank & Tr. v. Miami County Co-op Ass’n, 897 P.2d 144, 147 (Kan. 1995).

7 U.S.C. § 1631(d).

7 U.S.C. § 1631(e).

7 U.S.C. § 1631(e) and (g).

K.S.A. § 84-9-109(d).

Snodgrass v. Carlson, 230 P. 83 (Kan. 1924).

Dale, Nessley & Co. v. Taylor, 66 P. 993, 993 (Kan. 1901).

K.S.A. § 58-2525.

K.S.A. § 58-2526; see also Hayhurst v. Saile, 288 P. 539 (Kan. 1930).

In re Roberts, 38 B.R. 128, 134 (Bankr. D. Kan. 1984); see also Knapp v. Hipes, 152 P.2d 805 (Kan. 1944); Schmitz v. Stockman, 151 Kan. 891, 894, 101 P.2d 962 (Kan. 1940).

See In re Giaimo, 440 B.R. 761, 770 (B.A.P. 6th Cir. 2010) (citing several cases).

K.S.A. § 84-9-311(a)(2).

K.S.A. § 84-9-311(a)(2).

K.S.A. § 8-135(c)(5); see also Stanley Bank v. Parish, 317 P.3d 750, 754 (Kan. 2014) (“a secured party complies with K.S.A. [§] 8-135(c)(5) by filing a notice of security interest with the KDOR.”) In re Trotter, 264 B.R. 216, 219 (Bankr. D. Kan. 2001).

In re Crawford, 147 B.R. 571 (D. Kan. 1992); In re Trotter, 264 B.R. 216, (Bankr. D. Kan. 2001).

K.S.A. § 84-9-601.

K.S.A. § 84-9-607.

K.S.A. § 84-9-609.

K.S.A. § 84-9-609.

K.S.A. § 84-9-610(a).

K.S.A. § 84-9-610(b).

K.S.A. § 84-9-610(c).

K.S.A. § 84-9-611.

K.S.A. § 84-9-620.

K.S.A. § 60-1005.

K.S.A. § 60-2414(a) (emphasis added).

K.S.A. § 60-2414(b).

K.S.A. § 60-2414(h).

distressed agricultural loans

68.

69.

70.

71.

72.

73.

74.

75.

76.

77.

78.

79.

80.

81.

82.

83.

84.

85.

86.

87.

88.

89.

90.

91.

92.

93.

94.

K.S.A. § 60-2414(m).

K.S.A. § 60-2414(m).

Home State Bank v. Johnson, 729 P.2d 1225, 1233 (Kan. 1986).

See 28 U.S.C §§ 958–959; K.S.A. §§ 60-1301 to 60-1305.

See K.S.A. §§ 60-1301 to 60-1305.

It is critical to note, however, that a state court order divesting owners from filing for bankruptcy—especially if the owner is either an individual or a general partner of an entity—may be found to be invalid and/or preempted by the Bankruptcy Code and arguably a Constitutional right to seek bankruptcy protection.

See K.S.A. § 17-76,117(b); K.S.A. § 17-6808.

Kansas Stat. Ann. § 17-6907.

Id.; see also J.E. Akers Co., Inc. v. Advert. Unlimited, Inc., 49 P.3d 506, 509 (Kan. 2002).

Id. at 510.

28 U.S.C. § 959(b) (A “receiver…appointed in any cause pending in any court of the United States…shall manage and operate the property in his possession as such trustee, receiver or manager according to the requirements of the valid laws of the State in which such property is situated….”)

Fed. R. Civ. P. 66.

D. Kan. R. 66.1(d) Armstrong v. Exceptional Child Ctr., Inc., 135 S. Ct. 1378, 1385, 191 L. Ed. 2d 471 (2015).

Armstrong v. Exceptional Child Ctr., Inc., 135 S. Ct. 1378, 1385, 191 L. Ed. 2d 471 (2015) (quoting I.N.S. v. Pangilinan, 486 U.S. 875, 883, 108 S.Ct. 2210, 100 L.Ed.2d 882 (1988) (quoting Hedges v. Dixon County, 150 U.S. 182, 192, 14 S.Ct. 71, 37 L.Ed. 1044 (1893)).

Law v. Siegel, 571 U.S. 415, 421 (2014) (holding court could not use its equitable powers under 11 U.S.C. § 105(a) to contravene specific provisions of Bankruptcy Code); In re Lodge Am., Inc., 259 B.R. 728, 735 (D. Kan. 2001) (a court cannot use equitable powers to override an express statutory provision).

Linden Place, LLC v. Stanley Bank, 38 Kan. App. 2d 504, 513, 167 P.3d 374, 380 (2007); see also Burcham v. Unison Bancorp, Inc., 276 Kan. 393, 423, 77 P.3d 130, 150 (2003) (citations omitted) (the basic elements of a tortious interference claim: “(1) the contract; (2) the wrongdoer’s knowledge thereof; (3) his intentional procurement of its breach; (4) the absence of justification; and (5) damages resulting therefrom.”)

Burcham v. Unison Bancorp, Inc., 276 Kan. 393, 425, 77 P.3d 130, 151–52 (2003); see also Turner v. Halliburton Co., 240 Kan. 1, 12, 722 P.2d 1106, 1115 (1986).

Linden Place, LLC v. Stanley Bank, 38 Kan. App. 2d 504, 513, 167 P.3d 374, 380 (2007).

Turner v. Halliburton Co., 240 Kan. 1, 12, 722 P.2d 1106, 1116 (1986).

Reebles, Inc. v. Bank of Am., N.A., 29 Kan. App. 2d 205, 212, 25 P.3d 871, 876 (2001).

Linden Place, LLC v. Stanley Bank, 38 Kan. App. 2d 504, 511, 167 P.3d 374, 379 (2007).

Gillen Water v. Mid American Bank and Trust Co., 870 P.2d 700, 704 (Kan. App. 1994).

Sierra-Bay Fed. Land Bank Ass’n v. Superior Court, 227 Cal. App.3d 318, 334 (1991).

11 U.S.C. §§ 101(18) and 109(f).

28 U.S.C. § 1930 11 U.S.C. § 1129(b)(2)(B)(ii).

95. 11 U.S.C. § 1232.

96. Chatterjee, Sris, Upinder S. Dhillon and Gabriel G. Ramirez, 1995, “Coercive Tender and Exchange Offers in Distressed High-yield Debt Restructurings: An Empirical Analysis,” Journal of Financial Economics, 38, 333–360.

97. Bris, Arturo, Ivo Welch and Ning Zhu, 2006, “The Costs of Bankruptcy: Chapter 7 Liquidation versus chapter 11 Reorganization,” Journal of Finance, 61, 1253–1303.

98. Dinterman, Robert and Ani Katchova, “Survival Analysis of Farm Bankruptcy Filings,” Paper prepared for presentation at the 2018 Agricultural & Applied Economics Association Annual Meeting, Washington, D.C., August 5-7.

99. Dinterman, Robert and Ani Katchova, “Survival Analysis of Farm Bankruptcy Filings,” Paper prepared for presentation at the 2018 Agricultural & Applied Economics Association Annual Meeting, Washington, D.C., August 5-7.

100. Dahiya, Sandeep, Kose John, Manju Puri and Gabriel Ramirez, 2003, “Debtor-in-Possession Financing and Bankruptcy Resolution: Empirical Evidence,” Journal of Financial Economics, 69, 261; see also Carapeto, Maria, 1999, “Does Debtor-in-Possession Financing Add Value?” IFA Working Paper No. 294–1999, Cass Business School Research Paper, England.

101. Dahiya, Sandeep, Kose John, Manju Puri and Gabriel Ramirez, 2003, “Debtor-in-Possession Financing and Bankruptcy Resolution: Empirical Evidence,” Journal of Financial Economics, 69, 259–280.

102. Dahiya, Sandeep, Kose John, Manju Puri and Gabriel Ramirez, 2003, “Debtor-in-Possession Financing and Bankruptcy Resolution: Empirical Evidence,” Journal of Financial Economics, 69, 259–280.

103. 11 U.S.C. § 362.

104. 11 U.S.C. § 1222(b)(2).

105. 11 U.S.C. § 363.

106. 11 U.S.C. § 506(b).

107. 11 U.S.C. § 365(d)(3).

108. 11 U.S.C. § 1201(a).

109. 11 U.S.C. § 101(19).

110. 11 U.S.C. § 101(18).

111. 11 U.S.C. § 101(18).

112. 11 U.S.C. § 101(18)(A).

113. 11 U.S.C. § 101(18)(A). But note that debt calculation “exclude[es] a debt for the principal residence of such individual or such individual and spouse unless such debt arises out of a farming operation.” Id. 114. 11 U.S.C. § 101(18)(B).

115. 11 U.S.C. § 101(18)(B).

116. 11 U.S.C. § 101(21).

117. 11 U.S.C. §§ 1207(b) and 1227(b).

118. 11 U.S.C. § 1222(b)(2).

119. 11 U.S.C. §§ 506(a) and 1222(b)(2).

120. 11 U.S.C. § 1227.

121. 11 U.S.C. § 1222(c).

122. 11 U.S.C. § 1222(b)(9).

123. 11 U.S.C. § 1227(b).

124. 11 U.S.C. § 1228, § 1228(a)(2) incorporating the 11 U.S.C. § 523(a) discharge exceptions.

125. 11 U.S.C. § 523(a)(5).

126. 11 U.S.C. § 523(c). The deadline for filing a denial of discharge complaint for claims under 11 U.S.C § 523(c) is “60 days after

www.ksbar.org | May/June 2021 43

distressed agricultural loans t the first date set for the meeting of creditors under [11 U.S.C.] § 341(a).” Fed. R. Bankr. P. 4007(c).

127. 11 U.S.C. § 523(a)(2).

128. 11 U.S.C. § 523(a)(4).

129. 11 U.S.C. § 523(a)(6).

130. See generally In re Tinkler, 311 B.R. 869, 882 (Bankr. D. Colo.

2004) and cases discussed in footnote 1 of that opinion.

131. Hall v. United States, 566 U.S. 506 (2012).

132. 11 U.S.C. § 1232.

133. In re Michels, 305 B.R. 868, 872 (B.A.P. 8th Cir. 2004); see also In re Tofsrud, 230 B.R. 862, 871 (Bankr. D.N.D. 1999) (noting that the debtor bears the burden of proof in establishing the six elements of 11 U.S.C. § 1225.)

134. In re Rice, 357 B.R. 514, 518 (B.A.P. 8th Cir. 2006).

135. 11 U.S.C. § 1225(a)(1).

136. 11 U.S.C. § 1225(a)(2).

137. See 11 U.S.C. §§ 503 and 507.

138. 11 U.S.C. § 1225(a)(3).

139. In re Barger, 233 B.R. 80, 83 (B.A.P. 8th Cir. 1999).

140. In re Luchenbill, 112 B.R. 204, 208 (Bankr. E.D. Mich. 1990).

141. Barger, 233 B.R. at 83.

142. Id. 143. In re Eurele Farms, Inc., 861 F.2d 1089, 1092 (8th Cir. 1988).

144. 11 U.S.C. § 1225(a)(4).

145. In re Bremer, 104 B.R. 999, 1006 (Bankr. W.D. Mo. 1989).

146. 11 U.S.C. § 1225(a)(5).

147. 11 U.S.C. § 1225(a)(5)(A).

148. 11 U.S.C. § 1225(a)(5)(B) 149. 11 U.S.C. § 1225(a)(5)(C).

150. 11 U.S.C. § 1225(a)(6).

151. In re Lockard, 234 B.R. 484, 492 (Bankr. W.D. Mo. 1999); In re Foertsch, 167 B.R. 555, 566 (Bankr. D.N.D. 1994).

152. In re Honeyman, 201 B.R. 533, 539 (Bankr. D.N.D. 1996).

153. In re Foertsch, 167 B.R. 555, 565 (Bankr. D.N.D. 1994) (citation omitted).

154. In re Lockard, 234 B.R. 484, 492 (Bankr. W.D. Mo. 1999).

155. In re Lockard, 234 B.R. 484, 492 (Bankr. W.D. Mo. 1999) (quoting In re Clarkson, 767 F.2d 417, 420 (8th Cir. 1985)); see also In re Clark, 288 B.R. 237, 248 (Bankr. D. Kan. 2003) (“A plan’s ‘income projections must be based on concrete evidence and must not be speculative or conjectural’” (internal citations omitted)).

156. In re Lockard, 234 B.R. 484, 492 (Bankr. W.D. Mo. 1999); In re Tofsrud, 230 B.R. 862, 872 (Bankr. D.N.D. 1999).

157. In re Weber, 297 B.R. 567, 571 (Bankr. N.D. Iowa 2003); In re Lockard, 234 B.R. 484, 492 (Bankr. W.D. Mo. 1999); see also In re Foertsch, 167 B.R. 555, 565 (Bankr. D.N.D. 1994).

158. In re Stallings, 290 B.R. 777, 791 (Bankr. D. Idaho 2003).

159. In re Weber, 297 B.R. 567, 571 (Bankr. N.D. Iowa 2003).

160. Id. 161. Agribank, FCB v. Honey, 167 B.R. 540 (W.D. Mo. 1994) (citing 11 U.S.C. § 1225(b)(1)); see also Rowley v. Yarnall, 22 F.3d 190, 191 (8th Cir. 1994) (Debtors have a duty “to include a provision in their reorganization plan that promises payment of net disposable income received during the plan period to unsecured creditors in the event that the trustee or holder of an allowed unsecured claim objects to confirmation of the plan.”)

162. Rowley v. Yarnall, 22 F.3d 190, 191 (8th Cir. 1994).

163. Matter of Schwarz, 85 B.R. 829, 832 (Bankr.S.D.Iowa 1988); see also Rowley v. Yarnall, 22 F.3d 190, 193 (8th Cir. 1994) (“[Section] 1225(b)(1)(B) imposes a duty on debtors to include a provision in their reorganization plan that promises payment of net disposable income received during the plan period to unsecured creditor….”).

164. In re Meyer, 173 B.R. 419, 424 (Bankr. D. Kan. 1994).

165. 11 U.S.C. § 1225(b)(2).

166. In re Broken Bow Ranch, Inc., 33 F.3d 1005, 1008 (8th Cir. 1994).

167. In re Kuhlman, 118 B.R. 731, 739 (Bankr. D.S.D. 1990) (emphasis added).

Mark Gunnison

CIVIL MEDIATION SERVICES • 40 Years Litigation Experience • AV Rated • Serving as a Mediator in Tort, Employment, Real Estate, Contract and Business Disputes • In Person Mediation Center/ Remote Mediations Available

44 The Journal of the Kansas Bar Association

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SNT administration

My Client Is the Trustee of a Supplemental Needs Trust – Now What?

By Adam C. Dees

A

bout 24.7% of adults in Kansas, or 550,000 Kansas adults, have some type of disability.1 Kansas spends about $3.4 billion per year for healthcare to treat those with disabilities. This represents 26% of total healthcare expenditures in Kansas.2 While the number is unknown, many of these individuals will have a Supplemental Needs Trust (SNT) with a trustee charged with managing the SNT’s resources for the individual’s benefit. Anecdotally, our practice includes clients living in Olathe, Harper, and Sharon Springs that are, or have, SNTs. There are SNT trustees spread throughout the state. Some corporate trustees oversee SNT management, but many times this falls on a sibling, aunt, uncle, or another of the beneficiary’s family members.

SNTs are primarily created through a parent’s, caregiver’s, or loved one’s estate plan. Individuals, or their conservators, can also engage in disability-based public assistance planning that includes creating and SNT. SNTs are also created during divorce proceedings, guardianship and conservatorship proceedings,3 bankruptcies, personal injury cases,4 and other legal proceedings. SNT trustees can face unique legal and practical challenges working with SNTs and SNT beneficiaries. Without guidance, the trustees cannot give the beneficiaries the lifestyle hoped for by those creating the SNT. This article is an overview of considerations trustees and their counsel should take when an SNT is created, administered, and terminated.

u

www.ksbar.org | May/June 2021 45

SNT administration t 1. The Birth and Creation of Supplemental Needs Trusts The United States federal government created programs to provide impoverished individuals who are aged, blind, or disabled with medical benefits and a small amount of income for food and shelter. These programs include Supplemental Security Income, Medicare, Medicaid, and Section 8 Housing, among others. To qualify for these programs, individuals are limited in the amount of resources and income they may possess.

These programs recognize that once a person attains age 18, only a spouse has a legal obligation to provide for that person.5 The needs of many disabled persons may best be met with resources beyond those available from these programs.

Families want their disabled family members to have the opportunity to experience more than subsistence living—to have a higher quality of life—than the needs-based programs may allow.

Fortunately, the programs (specifically Medicaid) exempted SNTs’ income and resources from being counted towards determining a beneficiary’s eligibility. Without this exception, families would be left with the Hobbesian choice of: • giving their resources to the disabled person; interrupting sometimes difficult to obtain assistance; seeing the resources consumed by the medical, health, and care expenses of the disabled person; and then watching the disabled individual reapply and be reapproved for public assistance; or, • choosing not to transfer resources to the disabled person (in the estate planning context disinheriting the disabled person) and hoping the public assistance and moral compasses of other family members or caregivers will be sufficient to meet the disabled person’s needs and give that person opportunities.

It was with these issues in mind that the federal government gave disabled individuals and their families the ability to create SNT thereby avoiding the chilling choices above.

1.1. Creating a Supplemental Needs Trust6 Like all Kansas trusts, an SNT must meet the requirements of K.S.A. 58a-402(a). The settlor must have capacity to create a trust; indicate an intent to create the trust; must designate a definite beneficiary; allocate duties to the trustee; and differentiate between the trustee and beneficiary.7 The purposes of the SNT must also be lawful. However, SNTs also must meet additional requirements to allow the resources contained within that SNT to be left uncounted against determining if a person is eligible for public assistance.

Three SNTs are specifically described, and exempted, within the Medicaid statute that allow an individual 46 The Journal of the Kansas Bar Association

with a disability to transfer resources to those trusts to meet the income and resources limits. The first is a selfsettled or first party SNT also known as a d4A trust.8 The second is a d4B trust (also called a Miller trust, Medicaid Income-Only trust, or Irrevocable Qualified Income trust (QIT), which only applies in income cap states like Florida (and which Kansas does not have).9 The third is a pooled asset trust or d4C trust administered by a not for profit association.10 A self-settled, first party, or d4A, SNT (first-party SNT), is established by the disabled person, a parent, grandparent, legal conservator, or a court.11 The disabled person places his or her resources into the first-party SNT. After the transfer, the disabled person can access needs-based benefits. These transfers must happen before the disabled person reaches age 65.12 The amount remaining in the trust at the death of the individual must be paid to the state up to an amount equal to the total medical assistance paid on behalf of the beneficiary.13 The disabled individual cannot be the trustee of a d4A trust and cannot have power to make distributions from the trust.14 A pooled trust or d4C trust also contains the disabled individual’s resources.15 The difference between a firstparty SNT and a pooled trust is that a pooled trust must also be managed by a non-profit association.

The association maintains separate accounts for each beneficiary of the trust. For purposes of investing and managing the funds, the trust pools these accounts.

Each account is solely for the benefit of one disabled individual. Again, the amounts remaining in that account at the beneficiary’s death must be paid to the state.

A fourth type of SNT is described in K.S.A. 39-709(e) (3)(B). It is a third-party SNT, which is created by third parties that do not have a legal obligation to support the beneficiary. Third-party SNTs are specifically appropriate for parents of special needs persons. The third-party SNT must contain the third parties’ resources and not the beneficiary’s resources. The trustee must have full discretion to pay or withhold principal and income of the trust.16 In Kansas, the trust must specifically detail the settlor’s intent to “supplement but not supplant public assistance, including Medicaid, medical assistance, or Title XIX of the Social Security Act.”17 If a third-party SNT meets these requirements, then the SNT’s assets and income will not be counted when determining the disabled person’s public assistance eligibility.

Additionally, on the beneficiary’s death, there is no requirement of a third-party SNT to pay the state for expenses paid by the state during the beneficiary’s life.

SNT administration

1.2. What an SNT is not.

An SNT is not a spendthrift or support trust. A spendthrift or support trust allows a trustee to distribute income and principal for the benefit of the beneficiary.

These distributions can include payment for food, rent utilities, groceries, and other items that supplant the need for public-assistance programs. A spendthrift trust does not contain the clear guidance that the trustee not supplant public assistance, including Medicaid, medical assistance, or Title XIX of the Social Security Act.18 In Miller v. Kansas Dept. of S.R.S, 275 Kan. 349 (Kan. 2003), the Kansas Supreme Court determined that a trust distributing income to a beneficiary and allowing the trustee to distribute principal for the health, education, maintenance, and support of the beneficiary did not meet the federal and state statutory requirements of an SNT, because there was no limit on the extent to which the resources could be used. Only when a trust contains the statutory language limiting distributions so as not to supplant public-assistance programs will the trust qualify as an SNT. A support trust exists when the trustee is required to inquire into the basic support needs of the beneficiary and to provide for those needs.19 Eligibility for the programs depends on the assets “available” to the applicant, and the support trust is always considered such an available asset.20 A discretionary trust exists when the beneficiary has no right, as a matter of law, to require the trustee to turn over to him or her the principal of the estate or any part of it.21 Because the trustee has complete authority to withhold trust assets, a discretionary trust is often not considered an asset/resource available to the beneficiary for determining Medicaid eligibility.22 2. Administering the SNT During the Beneficiary’s Life SNTs are usually created to improve an individual’s quality of life without disqualifying him or her from receiving public assistance.23 In this respect, SNTs are like all trusts—they are for the benefit of the beneficiaries and the Kansas Uniform Trust Code applies.24 Because the individuals SNTs serve have extraordinary health, social, family, and financial concerns, courts can oversee SNT administration and agencies that administer the programs scrutinize SNTs and their administration. Therefore, the duties found in the Kansas Uniform Trust Code quickly expand to require SNT trustees be both more active and judicious during administration.

Trustees must balance using the SNT resources for the beneficiary’s current and future benefit.

2.1. General Trustee Duties25 Like all trusts, a trustees duties for an SNT are first governed by the Kansas Uniform Trust Code, directly by Article 8.26 These include exercising good faith, a duty of loyalty, being impartial, exercising prudent judgment,

Three SNTs are specifically described, and exempted, within the Medicaid statute that allow an individual with a disability to transfer resources to those trusts to meet the income and resources limits.

identifying and protecting trust property, enforcing claims of the trust, defending the trust, and maintaining adequate records.27 First, the trustee must administer the Trust resources in good faith. The trustee must administer the trust under the terms of the trust, the Kansas Uniform trust Code, and for the best interests of the beneficiaries.28 Second, the trustee must be loyal to the trust, the settlor’s intent, and the needs of the beneficiaries.29 The trustee does this by governing the trust solely in the interests of the beneficiaries.30 The trustee should not enter into transactions that would create a conflict of interest between the trustee’s fiduciary duties and the trustee’s personal interest, unless the trust authorized the transaction; a court approves the transaction; a beneficiary does not begin a judicial proceeding with the time allowed by K.S.A. 58a-1005; the beneficiary consents, ratifies, or releases the trustee, to the transaction; or, the transaction involves a contract entered into or claim acquired by the trustee before the person became or contemplated becoming trustee.31 Third, if the trust has more than one beneficiary, then the trustee must act impartially.32 SNTs will not have more than one beneficiary, because under the Internal Revenue Code an SNT that is a qualified beneficiary trust33 requires the trust to only have one beneficiary.

Fourthi, the trustee must administer the trust as a prudent person would. To accomplish this, the trustee must consider the purposes, terms, distributional requirements, and other circumstances of the trust.

While administering the trust the trustee must “exercise reasonable care, skill, and caution.”34 u www.ksbar.org | May/June 2021 47

SNT administration t Fifth, the trustee must take reasonable steps to control and protect the trust property.35 The trustee must see that resources are titled in the name of the trust. Any property may be acquired in the name of the trust or in the name of the trustee. Property titled in the trust name may be conveyed in the trust name or in the name of the trustee of that trust, provided that the trust name is clearly set forth in the conveyance.36 A trustee may delegate these duties and powers to others.37 In delegating these duties, the trustee must exercise reasonable care, skill, and caution in selecting an agent; establishing the scope and terms of the delegation; and periodically reviewing the agent’s actions to monitor the agent’s performance and compliance.38 An agent that performs services for the trust owes a duty to the trust (and by extension the beneficiaries) to exercise reasonable care to meet the terms of the delegation.39 In delegating duties, a trustee is not liable for an agent’s actions as long as the trustee exercised reasonable care, skill, and caution in selecting an agent; established the scope and terms of the delegation; periodically reviewed the agent’s actions; and addressed any insufficient performance or compliance by the agent.40 In addition to the Kansas Uniform Trust Code Requirements, the Kansas Uniform Prudent Investor Act applies to trustees, unless it is altered by the trust.41 This means the trustee must invest and manage the trust assets as a prudent investor would. The trustee must consider the purposes, terms, distribution requirements, and other circumstances of the trust.42 These investment decisions should not be made in a vacuum, but made in the context of the trust portfolio as a whole and as a part of an overall investment strategy having risk and return objectives reasonable suited to the trust.43 The trustee must consider general economic conditions; the possible effect of inflation or deflation; the expected tax consequences of investment decisions or strategies; the role that each investment plays within the overall trust portfolio, the expected total return from income and the appreciation of capital; other resources of the beneficiaries who are eligible to receive discretionary payments of trust income or principal assets; needs for liquidity, regularity of income and preservation or appreciation of capital; and an asset’s special relationship or special value, if any, to the purposes of the trust or to one or more of the beneficiaries.44 2.2. Trustee Duties Applied to SNTs and Serving SNT Beneficiaries During the Beneficiary’s Life AN SNT’s trustee’s duties can quickly expand because of the beneficiary’s extraordinary health, social, family, and financial concerns. Additionally, courts can oversee 48 The Journal of the Kansas Bar Association

SNT administration to see that trustee’s fulfill their obligations. The agencies that administer the public assistance programs also scrutinize SNTs and their administration. But even though potentially expanded, a trustee’s duties are still grounded in the Kansas Uniform Trust Code and the duties to exercise good faith; be loyal; be impartial; exercise prudent judgment; identify and protect trust property; enforce trust claim; defend the trust; and maintain adequate records.45 2.2.1. Exercising Good Faith in Determining and Filing for Public Assistance A trustee may claim that filing for public assistance is beyond her duties. In a Massachusetts case, the trustee of a court ordered first-party SNT (d4A trust) asserted that it had no fiduciary duty to know whether the beneficiary was receiving public assistance. It argued that it had no duty to know if public assistance was being provided to, or available for, the beneficiary.46 Contrary to the trustee’s arguments, the court held that the trustee owes a duty to inquire into the needs of the beneficiary and know how those needs are being met. This included knowing what assistance was being paid and what assistance was available. All SNTs in Kansas must contain a provision stating that the SNT is used to supplement, but not supplant public assistance.47 Therefore, to fulfill the duties imbedded in the SNT, the trustee must know the assistance for which the beneficiary qualifies or might qualify, so that distributions do not interfere with that assistance. In that case, the beneficiary was receiving SSI, Medicaid, SSDI, and Medicare; the trustee was overseeing a multi-million-dollar trust, and the trust received $5,000 per month from an annuity.

In Kansas, the Court of Appeals concluded that a conservator could establish a first-party SNT on behalf of a ward. In doing so, the ward would become eligible for Medicaid benefits. Although the Court did not take the next step of requiring the conservator to establish the trust, this is the next logical step.48 2.2.2. The Extremes of Distributions to Benefit the Beneficiary While all distributions to benefit beneficiaries must be reasonable, the trustee should know the distribution limits. Trustees can fall into the trap of making distributions that are too large or too small.

In Liranzo v. LI Jewish Education/Research,49 the trustee distributions that were too large. The trustee oversaw SNT resources of about $400,000 and exhausted those resources within six years. During that time, the trustee spent $118,064 on home health care without

SNT administration

determining if the beneficiary qualify for Medicaid payments for this care. The trustee also paid $56,320 for cab fares for the beneficiary’s family. The trustee made four security deposits under various rental agreements and did not recover those deposits when the beneficiary changed living locations. The trustee distributed $400 per month to the beneficiary’s mother, which caused the beneficiary to lose SSI and Medicaid.

Ultimately, the Court surcharged the trustee $176,905 and removed it as trustee. The trustee commented, “It was easier to accede to [the beneficiary’s mother’s] monetary requests, than to deny them.”

On the flip side, in The Matter of the Accounting by J.P. Morgan Chase Bank, N.A.,50 the settlor established an SNT for a beneficiary who was 16 years old. Before the settlor’s death, she found a residential setting for the beneficiary and placed him there. The beneficiary remained in that institutional setting. After the settlor’s death, the trustee filed an accounting covering about 15 years of trust administration. The principal held in the trust totaled about $2,733,094. From that, over the 15 years, the trustee paid co-trustee commissions of $17,622 and paid the trustee $34,914—a total of $52,536. The trustees expended $3,525 to benefit the beneficiary. A representative of the trustee stated that the trustee did not have the institutional capacity to ascertain or meet the needs of the beneficiary.

a determination as to whether additional public assistance may be obtained; educational status and needs; and social and recreational needs.

One evaluation is not sufficient, because a beneficiary’s situation and needs change. At least annually, the trustee should review the beneficiary’s status, which includes determining that the beneficiary is safe and secure, lives in a clean environment, and is enjoying the best standard of living that the trust can provide. For example, the institution housing the beneficiary in Liranzo, was appropriate at one time, because the settlor assisted the beneficiary to transition to that housing. After a number of years, that setting did not meet the beneficiary’s needs. As the trustee confessed in that case, the trustee was not equipped to determine whether an institution was appropriate placement.

Like the trustee in Liranzo, if a trustee cannot evaluate the beneficiary and her living conditions, then the trustee can and should employ a care coordinator or care manager. If the trustee employs a care coordinator, then the trustee must require

u

Education Law

After employing a care coordinator, the same trustee learned that the beneficiary had not had a visitor for five years—at that point about one-sixth of the beneficiary’s life. The care coordinator arranged to move the beneficiary to a different institutional setting, which dramatically improved his life.

The Court found that the trustee leaving the beneficiary to languish with inadequate care breached the trustees’ duty to perform a reasonable degree of diligence towards the beneficiary. In this respect, Courts will intervene both when a trustee acts recklessly, and when a trustee fails to act in a meaningful way.

1. The Process of Determining Appropriate Distributions Each beneficiary will have specific needs, abilities, and programs for which he or she is eligible.

The first step is evaluating the beneficiary. The evaluation can include the beneficiary’s51 physical and mental condition; contact, or lack of contact, with family members; living conditions; medical care, including rehabilitation and training; financial condition; access to public assistance and

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www.ksbar.org | May/June 2021 49

SNT administration t written reports and carefully review of those reports. Initially, the care coordinator will prepare an assessment of the beneficiary, including his or her disabilities and care needs. Then, the care coordinator will develop a plan for the beneficiary.

Next, the care coordinator will provide ongoing supervision of the implementation of the care plan. The care coordinator should help the trustee arrange for the hiring of caregivers and assists the trustee in supervising those caregivers. This ensures that the caregivers are following the care plan and are delivering quality care. As the beneficiary’s situation changes, the care coordinator will monitor the care provided by the caregivers and adjust the care plan from time to time as necessary.

The trustee should probably retain an attorney to respond to questions and assist the trustee with issues that arise from time to time during SNT administration. The attorney may file for benefits that the beneficiary is eligible for and is not receiving. The attorney may also file renewal applications to continue the benefits being received. The attorney would also assist in answering questions about what and how a trustee should respond to requests for information from governmental entities.

2.2.3. Allowable Distributions Beneficiaries of SNTs are eligible for a wide variety of public assistance. Many programs have similar, and even overlapping, eligibility requirements. SSI, Medicaid, and Section 8 Housing programs are a few of the main programs. Below is an overview of these public assistance programs that contain an application of the eligibility rules to distributions.

1. Overview of Public Assistance Programs Most programs will have some, if not all, of these eligibility requirements. First, the program may have a functionality requirement. Then, the program may have special criteria, like being a veteran. Third, the program may have a means test. A means test can include a resources limit, an income limit, or both. SNTs allow beneficiaries to benefit from the resources within the trust without causing the beneficiary to lose their qualification for a program based on their resources or income.

1.1. Supplemental Security Income In Kansas, the Social Security Administration (SSA) operates the Supplemental Security Income (SSI) program. SSI is intended to pay for the beneficiary’s support, which 50 The Journal of the Kansas Bar Association

If the trustee’s actions reduce the beneficiary’s SSI benefits to zero, then both the beneficiary’s SSI and Medicaid benefits will be jeopardized." includes food, shelter, utilities, and gas for transportation. A person is eligible for SSI, or meets the functionality test, because he is aged, blind, or disabled.52 SSI uses the Social Security definition of disability. An individual meets the means-based test when his income is less than $783 per month (adjusted for inflation)53 and his resources are below $2,000 in any given month.

The SSA Program Circular tells SSA employees that “trusts are often used to set aside and protect property and funds for the security and maintenance of a person.” However, trust principal is not considered a resource to an individual that has no power to revoke the trust and if the principal of the trust cannot be used for his or her own support or maintenance.54 Under the SSA’s Program Operations Manual Systems (POMS), the revocability of a trust depends on the trust’s terms and state law.

If state law determines a trust is irrevocable, then the POMS trust principal is not anyone’s resource.55 Even if a trust is irrevocable and not considered a resource, disbursements from the trust can be considered income. Those disbursements are considered income if they are distributed directly to the beneficiary or are distributed for the beneficiary to receive food, shelter, some utilities, and transportation.

1.1.1. SSI Income Test Any funds, cash, or money a beneficiary receives, including direct distributions from the SNT, will be considered direct income to the beneficiary and reduce her benefits dollarfor-dollar.56 If the trustee’s actions reduce the beneficiary’s SSI benefits to zero, then both the

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beneficiary’s SSI and Medicaid benefits will be jeopardized. When an individual receives one dollar of SSI in a month, then that individual is eligible for Medicaid (there are other ways to qualify for Medicaid). Income also includes anything that can be converted to cash, like a postage stamp, winning lottery ticket, prepaid debit card that can be cashed.

Some payments made to the beneficiary are specifically excluded from determining income for SSI purposes. Trustees can make these distributions without fear of the beneficiary losing SSI benefits. Those excluded distributions include: medical care, services, and medical insurance paid by a parent or other third party; some social services; insurance payments for lost or damaged property will not count as income or a resource for nine months;57 loan proceeds; or bills paid for the beneficiary other than food and shelter.58 The trustee can also make distributions to a third party that results in the beneficiary receiving items as long as those items are not food or shelter. These items will not be counted as income if the item becomes an exempt asset when it is retained in the following month. Examples include: clothing; phone, cable, newspapers, magazine, or internet services; vehicle insurance; pre-paid burial & funeral arrangements; tuition, books, and tutoring; travel and entertainment; household furnishing and furniture; television, computers, and electronics; durable medical equipment; care management; therapy, medications, and alternative treatments (acupuncture, massage, and chiropractor); taxes; and, legal, conservatorship, and trustee fees.

There are three ways to distribute in-kind income without running afoul of the SSA. The trustee can distribute the goods directly, like purchasing a television for the beneficiary The trustee can purchase services directly from a provider, like having the television delivered and installed in the beneficiary’s home. Or, the trustee can make a direct payment to a provider, like paying the internet or cable bill.

Cash income changes to a resource if it remains in the beneficiary’s account in

the month following the distribution or disbursement of that income. The income or resource changes from a countable resource to a non-countable resource when it is converted.

1.1.2.

In-Kind Support or Maintenance (ISM) In-kind support or maintenance includes food or shelter the beneficiary receives as a result of payments by the trustee to other persons. If the beneficiary receives in-kind support or maintenance, then the beneficiary’s SSI is reduced. Again, if the beneficiary’s SSI is reduced to $0 per month, then the beneficiary will also lose Medicaid.

Items the trustee purchases that are in-kind support or maintenance and will be included as food and shelter are: food (although if a physician prescribes a special diet, SSA may not consider the distribution to be ISM); mortgage payment (including property insurance required by the mortgage holder); real property taxes (less any tax rebate/credit); rent; heating fuel; gas; electricity; water; sewer; and garbage removal.

1.1.3. SSI Resources Resources include cash, liquid assets, or any real or personal property a person or his spouse owns and can convert to cash for support and maintenance.59 An individuals’ countable resources cannot exceed $2,000.60 A couple’s countable resources cannot exceed $3,000. A resource is countable, unless it is specifically non-countable or exempt.

Non-countable or exempt resources include a home (whether in a revocable trust or titled in the recipient’s name) as long as the recipient lives within the home.61 It also includes household goods (furniture, furnishings, household equipment, household supplies, etc.) and personal effects (toiletries, items of personal care and education, clothing, jewelry, etc.). It includes recreational equipment, games, and crafts; books and magazines; telephone, answering machine; television, radio, and cable service; musical instruments and stereo; travel and education; recreation and entertainment; some home maintenance, such as gardening; one motor vehicle; funds set aside under of a plan to achieve self-support PASS);ii life insurance u www.ksbar.org | May/June 2021 51

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with a cash surrender value (if its death value is less than $1,500) and all term life insurance; a burial plot or other burial space; and a revocable burial fund (worth up to $1,500).62 1.2.

Social Security Disability Insurance Social Security Disability Insurance (SSDI) is a public assistance program that individuals can access if they have worked and paid into Social Security retirement benefits. SSDI is funded through payroll taxes. The individual must be disabled for a five-month waiting period before receiving benefits. And, the individual must be younger than 65.

The SSA administers the SSDI program. The SSA determines a person’s eligible for SSDI based on his or her income, work history, age, and disability. In 2020, a person cannot be considered disabled if that person earned an average of more than $1,260 in a month as calculated on a yearly basis. For example, if a person earned $15,120 in the first six months of 2020, then the person cannot be considered disabled for the remainder of 2020. If an individual meets this income test, then the SSA moves to the credits test.

Under the credits test, the SSA determines if the person has enough credits based on their work history and age. For each $1,410 of earnings, a person receives one credit towards SSDI eligibility.63 When a person becomes disabled, then the SSA determines the number of credits that person has compared to that person’s age.

For example, if a person becomes disabled before age 25, then that person needs six credits or 1 1/2 years of work in the three years before becoming disabled.64 The number of credits needed to qualify for SSDI gradually increases by age until reaching the current retirement age of 62. At age 62, a person needs 40 credits or 10 years of work history to qualify for SSDI.65 iii Once the SSA determines a person’s earnings and work credits, then the SSA determines if the person is disabled. First, the SSA compares 52 The Journal of the Kansas Bar Association

the person’s diagnosis with the list of medical conditions it considers so severe that the person is automatically eligible.66 If that test is met, then the SSA determines if the person meets the following definition of disability: “inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months; or In the case of an individual who has attained the age of 55 and is blind, inability by reason of such blindness to engage in substantial gainful activity requiring skills or abilities comparable to those of any gainful activity in which he as previously engaged with some regularity and over a substantial period of time.”67 This means that an individual is disabled when he or she cannot perform the work he or she was previously performing and cannot perform any other activity of gainful employment. If a person meets these tests, the work credit test, the severe medical condition test, and the “disability” or gainful employment test, then that person is eligible for SSDI.

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1.3.

Medicaid In Kansas, KanCare and the Kansas Department of Children and Family Services (DCF), administer the federally guided Medicaid program. In Kansas, a person that is eligible for one dollar of SSI benefits is automatically eligible for Medicaid benefits.68 Therefore, it is imperative to keep the recipient eligible for SSI, because that directly impacts Medicaid eligibility. If the recipient stops receiving SSI, then the recipient must separately apply for Medicaid.

To separately be eligible for Medicaid, a single or married person must have less than $2,000 of countable resources. Countable resources include land, buildings, homes, life estates, cash assets, vehicles, and household goods.69 Generally, the maximum allowable non-exempt resources cannot exceed $2,000 for one person.70 However, other assistance programs have higher allowable limits for non-exempt resources.71 To be a countable resource and included in the $2,000 limit, the applicant must have a legal interest in the resource and the legal ability to make that resource available. A resource is unavailable if there is a legal impediment that precludes the disposal of the resource such that the applicant does not have the legal right to access the property and the property cannot be converted to cash.72 Some property is exempt or non-countable. This exempt property includes a house of a value up to $585,000, one vehicle, $1,500 of life insurance, burial funds, ABLE Act Accounts, funeral arrangements, personal property, a vehicle that is specially equipped for use by a handicapped person, a vehicle that is needed for medical treatment of a specific medical problem, and income producing property.73 Additionally, the medical expenses paid by Medicaid must exceed the available income of the applicant.74 SSI income and VA payments are both exempt as income if the recipient is not in a Medicaid-approved institution.75 The SNT is put in place to have resources within the SNT supplement, but not supplant Medicaid benefits. Therefore, the SNT Trustee should understand that distributions that interrupt SSI benefits may also interrupt Medicaid benefits.

This would occur when an SNT distributes

countable resources or countable income from the SNT to the beneficiary.

1.4.

Subsidized Housing HUD provides opportunities for low-income individuals and families to rent property at a cost that is lower than the open market. This is commonly called Section 8 because it is found in Section 8 of the Housing Act of 1937 and is also called the Housing Choice Voucher.76 This is important to those people who are expected to pay for their shelter costs with their insufficient SSI income. Therefore, a person receiving SSI, whom is the beneficiary of an SNT, may also qualify for Section 8 Housing such that an SNT trustee should be familiar with Section 8 Housing eligibility requirements.

The Housing Choice Voucher program is administered by HUD but managed by local public housing authorities or metropolitan housing authorities.77 The tenant pays 30% of net adjusted income to the landlord. The PHA pays the remaining balance to the landlord.

Rent is based on market value for the area and established by the PHA according to payment standards issued by HUD. To qualify, the family living in the housing must all be eligible. They must meet the income limit.

They must all be citizens, or non-citizens with eligible immigration status. And, everyone over the age of six must provide his or her social security number.

The family’s eligibility is determined based on the family’s annual income. Annual income includes SSI, earned income, SSDI, pension, unemployment compensation, alimony, and child support, among other items. Annual income also includes unearned income, which is comprised, in part of interest generated by assets.78 Non-countable income includes temporary, one-time, or infrequent income including gifts, reimbursements for medical expenses, and lump-sum acquisitions, such as inheritances, insurance payments, capital gains; temporary nonrecurring or sporadic income; and income from a settlement or judgment.79 If the family has net family assets in excess of $5,000, the annual income includes the greater of the actual income derived from all net family assets or a percentage of the value of such assets

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based on the current passbook savings rate as determined by Housing and Urban Development (HUD). Additionally, under the Housing Opportunity Through Modernization Act of 2016, public housing assistance is prohibited for families having net family assets exceeding $100,000 annual (adjusted for inflation) or an ownership interest in property that is suitable for occupancy.80 To be considered “low income” the individuals’ countable income may not exceed 80% of the median income in the area; and the individual’s income may not exceed 50% of the median income to be considered “very low income.”81 If a family meets these requirements, then rent will be 30% of a family’s adjusted gross income.

2.2.4. Other Accounts In addition to public assistance, there several types of accounts that can provide benefits to a disabled person without interrupting public assistance. The two most prevalent are Achieving a Better Life Experience (ABLE) accounts and, when managed through an SNT, inherited IRAs as described under the Setting Every Community Up for Retirement (SECURE) Act. 1. ABLE Accounts Anyone can create an ABLE account on behalf of someone with a qualifying disability.82 The disability must have manifested before the person turns age 26. These are tax-advantaged savings accounts administered by the states.83 The person with the disability owns the account and can only have one ABLE account.84 There is a $15,000 annual contribution limit for all contributions to the account.85 There is also an $80,000 total limit of contributed funds—the account can only hold $80,000 of funds that have been contributed. If the ABLE account produces income, like interest or dividend payments, then the ABLE account can have up to $100,000 combined funds from contributions and funds from income. The income accumulated in the ABLE account is not taxable.

Anyone, including a beneficiary, a parent, an organization, or an SNT, can make a contribution to an ABLE account.86 Therefore, an SNT trustee can distribute up to $15,000 to an ABLE account, which can then be spent for food, utilities, rent, and housing per year, without disqualifying the individual from any programs.

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Distributions can also be made for any reason (as opposed to the more limited distributions from an SNT). Distributions to the eligible individual are not taxed, even if made from income to the ABLE account. About any expense is a qualified expense, including health care costs, education, housing, transportation, training, personal support, and related services. As long as a distribution is made by or for the benefit of the owner, the distribution qualifies and does not result in a loss of benefits.

On the death of the beneficiary, an amount up to the amount the state paid to or for the disabled individual in the ABLE account will be paid to the state administering the ABLE account.87 Any remaining amounts may be paid to the deceased’s estate or to a designated beneficiary.

2. SNTs, IRAs (and other qualified funds), and the SECURE Act Under the SECURE Act of 2019, the funds held in IRAs and other qualified tax accounts must be paid out within 10 years of the account owner’s death. But, the SECURE Act exempted several types of beneficiaries from the 10-year rule. Those exempted beneficiaries can take required minimum distributions from the qualified tax accounts based on their individual life expectancies.

Four requirements must be met for an SNT to qualify to allow the beneficiary’s life expectancy to be used when determining required minimum distributions. First, the trust must be valid under state law. Second, the trust must be irrevocable or become irrevocable upon the death of the Plan participant, Third, certain documentation must be provided to the Plan administrator by October 31 of the year after the year of the Plan participant’s death. And fourth, the Beneficiaries of the trust must be “identifiable from the trust instrument.” If a trust is divided into subtrusts and the beneficiary designation names a subtrust, then only the beneficiaries of that subtrust are taken into account. When these requirements are met, then the beneficiary’s life expectancy can be used to determine required minimum distributions from the qualified accounts.

AN SNT can be either a conduit trust or an accumulation trust. A conduit trust requires the required minimum distributions to be paid to the trust’s beneficiary each year. The conduit trust distributions would be income to the beneficiary such that it would potentially limit or interrupt

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public assistance a beneficiary is receiving. An accumulation trust accumulates the required minimum distributions within the trust’s account.

Then, the SNT allows the trustee to distribute funds for the beneficiary’s benefit and not interrupt public assistance. Therefore, it behooves settlors, trustees, families, and disabled beneficiaries to funnel taxqualified funds to SNTs. 2.2.5. Taxation of Special Needs Trusts Generally, a trust reports income on a federal income tax return, unless an exception applies. If an exception applies, then the income will be reported on the grantor’s personal income tax return; may be reported on the beneficiary’s personal income tax return; or, may be reported on the trust income tax return.88 To avoid higher trust tax rates, the goal becomes to push income from an SNT to the beneficiary or to the grantor.

A trust that qualifies as a qualified disability trust requires all of the beneficiaries to be disabled as defined in 26 U.S.C. 642, but the remainder beneficiaries need not be disabled. To qualify, the trust must be irrevocable and a taxable entity. The trust must be established before the beneficiary turns 65. The trust cannot be a grantor trust (so, in the SNT context, it must be a third party SNT). This allows more favorable tax treatment by having a higher deduction.

For example, if the trust is a first-party SNT, then the SNT can be funded as an incomplete gift. This allows all of then income to taxed to the grantor and the individual with a disability. Then, the income would be taxed at the individual income tax rates.89 Also, if a residence is placed within the SNT, then the sale of the house may not be taxed as allowed by 26 U.S.C. § 121.90 For those funds remaining that are not paid to the State upon the disabled person’s death, there would also be a step-up in basis for resources held in this type of trust.91 If the trust is third-party SNT, then the trust is a “complex trust.” If the trust holds income, then the income will be taxed at trust levels. However, by being a “qualified disability trust,” the trust has a higher personal exemption of $4,300 (instead of $100 for a non-qualified disability trust) for 2020.92 This exemption has no phase-out and is adjusted for inflation using chained CPI. This means that the first $4,300 of income to the SNT will not be taxed.

Last, if the trust pays out the income to the beneficiary or on behalf of a beneficiary, then that part of the

income is taxable to the beneficiary. This can cause confusion if the beneficiary does not understand that they need to make tax payments. Also, the trustee must carefully monitor the trust towards the calendar year-end to see that sufficient distributions are made to minimize the taxation of trust income.

2.2.6. Record Keeping and Reporting Requirements The trustee should keep a copy of the trust, all court documents, all accounting, all tax returns, and any reports made to Medicaid, SSA, or CMS. The trustee must maintain accurate records and keep those records for several reasons. Additionally, the trustee should be the individual receiving all information and notice of adverse actions taken by a state or federal entity.

Generally, the trustee should prepare an annual accounting and an accounting upon terminating the trust.93 The annual accounting may need to be provided to the trust beneficiary, a conservator, or a court. If a conservatorship for the beneficiary is ongoing, then the trustee will likely account to the court or at least the conservator. Additionally, the SNT will potentially file a tax return.

In addition, a court, the IRS, KanCare in Kansas, the SSA, or the Kansas Department of Children and Family Services may all have a right to monitor distributions from the trusts to be sure the funds are used for the benefit of the disabled person. If the trust is a first-party SNT, then the trustee must account to the beneficiary (directly and to a conservator on the beneficiary’s behalf) and the State.94 If the trust is a third-party SNT, then the trustee must account to the beneficiary and to the conservator.95 1. SSA In addition to being trustee of the SNT, the trustee may also be the representative payee for SSA. SSA allows people receiving Social Security, SSI, or SSDI to appoint a representative payee to receive benefits on behalf of the recipient.96 SSA will appoint a representative payee if the SSI recipient is under 18, unable to manage his or her finances, is incompetent, or is disabled because of a substance abuse impairment.97 A representative payee can be paid the lesser of 10% of the monthly benefit amount or $40 per month.98 Much like a trustee, the representative payee must use the SSI payment for the benefit of the recipient. This includes maintaining the recipient, u www.ksbar.org | May/June 2021 55

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and purchasing food, closing, shelter, and other personal comforts.99 A basic report to SSA must include the beneficiary’s name, beneficiary’s social security number, a description of the event triggering the report, and the date of the event. The report is due within 10 days after the end of the month when the event happened. The Representative Payee must report include changes in the recipient’s life. Those changes include the existence of the SNT and a copy of the SNT if requested; a change in the recipient’s address; a change in employment status; a change in living arrangements (for example, relocating, adding or losing a roommate); a change in income (including the receipt of any direct or ISM from you); a change in any (countable) resources; new eligibility for other public assistance; a change in health insurance coverage; medical improvements (if, for example, the recipient improves so much that he or she no longer is considered disabled); a change in marital status; admission to or discharge from any health facility or public facility (a hospital or nursing home); or any trip outside the U.S. Failing to report can disqualify individual from SSI. And, filing a report late can result in a penalty of $100 depending on the lateness of the report.

guardian’s powers and duties.100 Similarly, a parent may represent and bind the parent’s minor or unborn child if a conservator or guardian has not been appointed.101 The goal for guardianships, conservatorships, and SNTs are similar – see that the beneficiary is provided with adequate care. However, an SNT can go further than a guardianship or conservatorship in that it can also provide opportunities for a growth and a quality of life beyond the minimums mandated by a guardianship or conservatorship.

If during the trust administration, guardianship, or conservatorship process the special needs person is not adequately represented, then “the court may appoint or the trustee may retain a representative to receive notice, give consent, and otherwise represent, bind, and act on behalf of the … incapacitated … individual.”102 Under the court’s supervision, the SNT trustee may be required to work with the guardian, conservator, and legal representative.

2.2.7. Appealing Adverse Agency Actioniv If SSI or Medicaid notifies the trustee or beneficiary that it intends to reduce or eliminate the beneficiary’s benefits, then the trustee should appeal in writing, within 10 days. Filing an appeal would fall meet the trustee’s duty to act diligently. If an appeal is filed within 10 days of the notice to reduce or eliminate the benefits, then SSI and Medicaid benefits will continue during the appeal. The trustee can still appeal within 60 days after an adverse SSI decision or 90 days after an adverse Medicaid decision. However, appealing after 10 days may result in a loss of SSI and Medicaid benefits while waiting on the appeal results.

If the appeal is successful, then the benefits may be retroactively awarded. It is better to file an appeal within 10 days to continue receiving SSI and Medicaid pending the determination.

3. On the Beneficiary’s Death Like all other trusts, the trustee must first collect, inventory, and account for the trust’s resources. Then, the trustee of a first-party SNT or D4A trust must ascertain payments made by the State. Next, the trustee must pay appropriate amounts to the State. Last, the trustee must distribute the remaining resources to remainder beneficiaries. In Austin v. Capital City Bank103 the trust’s beneficiary suffered from severe trauma during the birthing process. A medical malpractice action was filed and settled. Part of the settlement included creating an SNT funded by the settlement proceeds to allow the beneficiary to remain on Medicaid and also benefit from the settlement proceeds. The beneficiary received $541,754 of Medicaid assistance during her lifetime. After the beneficiary’s death, the express terms of the trust require reimbursing the State up to an amount equal to the total medical assistance it paid. The Court found the terms of the trust were clear that the settler intended the trust to qualify as an SNT under 42 U.S.C. § 1396p(d)(4)(A). The Court held that the State was entitled to Medicaid reimbursement up to the amount equal to the total medical assistance paid. In this case, the reimbursement of those expenses exhausted the trust’s resources and left nothing for the remainder beneficiary.

2.3. SNT Interplay with Guardianships and Conservatorships AN SNT beneficiary’s care may also be overseen by a court through a guardianship or conservatorship. To the extent there is no conflict, a conservator may represent and bind the estate the conservator controls; and, a guardian may represent and bind the ward within the

4. The Process With these overlapping responsibilities, issues, concerns, and complexities, where does the beneficiary, family, trustee, and attorney start the process? In the best-case scenario, have a consultation with the beneficiary, family, trustee, care manager, and other persons that are a part of the beneficiary’s support system.104 During that meeting, ask the beneficiary

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to talk about her hopes for the future, her goals, and her concerns; have the family also talk about their goals and concerns. From that meeting, write down that vision. Visions are like slippery fish, if they are not nailed down then they will slip away. Use this as a guide for the trustee and for you as you work through administering the SNT.

take advantage of the opportunities Kansas offers them and their families.

During this meeting, and subsequent discussions, it can be important to try to determine how long the beneficiary will live and how many years the trust should or could last. This can be used to create a budget. That budget can be based on the size of the trust, anticipated income, the beneficiary’s current and future needs, the beneficiary’s age and health, any extraordinary expenses, a plan to meet infrequent needs, a determination of the amount of income needing to be reinvested for future expenses, the beneficiary’s public benefits, and the beneficiary’s potential future public benefits.

Complex trust – A trust that gives the trustee discretion to distribute or hold the trust income.106

Many times, a third-party SNT is created after the death of a parent for the benefit of the parent’s child that has a disability.

In this case, the parent will not be available to participate in that meeting. So, have that parent prepare a letter of intention for the SNT. This is not a legally binding document but can act as a guide. The letter can also be changed each year. The parent may share it with potential trustees.

Some topics the letter can cover include a family history, a general overview of the beneficiary’s life, employment of the beneficiary, details about where the beneficiary lives, with whom the beneficiary socializes, what activities the beneficiary enjoys, if the beneficiary is religious or spiritual, current medical care, any behavior management programs, and final arrangements for the beneficiary.

The trustee can take the letter from the first consultation or the letter of intent from the family and review it with the family at a yearly meeting. During that yearly meeting, the trustee can receive input and make decisions about distributions. The trustee can also adjust expectations based on changes in circumstances. The trustee and the family can review the balance of the long-term and short-term trust goals. The trustee and the family can remind the beneficiary about how long they decided the trust should last, review financial reports, and re-project how long the trust will actually last.

5. Conclusion Administering an SNT is not an easy or simple undertaking.

It requires time, willingness, acumen, and a desire to improve the beneficiary’s life. However, a process to manage the complexities and concerns can provide the quality of life the settlor’s of the trust envisioned when the trust was created.

A process can ease the concerns of the trustee and the beneficiaries. In this way, those with disabilities in Kansas can

6. Definitions Beneficiary – A person or entity that has a present or future vested or contingent interest in a trust.105

Disabled minor or child – An individual under the age of 18 is disabled if the individual has a medically determinable physical or mental impairment that results in marked and severe functional limitations, and that can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months; but an individual that is under 18 that engages in substantial gainful activity may not be considered to be disabled.107 Disabled adult – An individual over the age of 18 is disabled when he or she is: 1) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve months; and 2) The individual’s physical or mental impairment or impairments are of such severity that he is not only unable to do his previous work but cannot, considering his age, education, and work experience, engage in any other kind of substantial gainful work that exists in the national economy, regardless of whether such work exists in the immediate area in which he lives, or whether a specific job vacancy exists for him, or whether he would be hired if he applied for work.108 Settlor or grantor – An individual, including a testator, who creates, or contributes property to, a trust. If more than one person creates or contributes property to a trust, each person is a settlor of the portion of the trust property attributable to that person’s contribution except to the extent another person has the power to revoke or withdraw that portion.109 Interest of the beneficiaries – the beneficial interest provided in the terms of the trust.110 Qualified beneficiary – a person or entity that, as of the date in question, either is eligible to receive mandatory or discretionary distributions of trust income or principal, or would be so eligible if the trust terminated on that date.111 Work which exists in the national economy – work that exists in significant numbers either in the region where such individual lives or in several regions of the country.112 u u www.ksbar.org | May/June 2021 57

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Adam Dees is an elder care attorney practicing in Hays, Kansas. He is a 2008 graduate of Southwestern College, Winfield, Kansas and a 2011 graduate of the University of Kansas, School of Law. Adam joined the team of Clinkscales Elder Law Practice, P.A., in 2017.

Adam’s practice focuses on preserving families’ resources and efficiently transferring those resources from one generation to the next. He is a member of the National Academy of Elder Law Attorneys and the Elder Law Section of the Kansas Bar Association. He is also a VA Accredited Attorney. Adam presents seminars to the public about estate planning for families in all situations. He enjoys spending time with his spouse, Alyssa; their children, Rachel and Kay; and their dogs, Simon and Bridgette. He also enjoys camping, sailing, and reading as much as possible.

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References i. Any pooled trusts are specifically administered by a non-profit organization will have multiple beneficiaries with specific accounts and many attorneys, financial advisors, accountants, and bookkeepers to administer those trusts. ii. A Plan to Achieve Self Support (PASS) is a plan to allow the recipient to cease receiving SSI benefits. The plan must be designed for the recipient, in writing, approved by SSA, have one, specific employment goal that is feasible for the recipient, set for steps to reach the goal, show that the recipient will have enough money to meet the living expenses while setting aside income or resources; and show how the employment goal will generate earning to substantially reduce the dependence on SSI or eliminate the need for SSI. 20 CFR 416.1226. iii. A chart showing the ages and number of credits is: Age of Disability

Credits Needed

Years of Work

31 through 42

20

5

44

22

5 1/2

46

24

6

48

26

6 1/2

50

28

7

52

30

7 1/2

54

32

8

56

34

8 1/2

58

36

9

60

38

9 1/2

62 or older

40

10

iv. During the Coronavirus pandemic, no one’s Medicaid benefits are being discontinued. If a person is approved for Medicaid, then those benefits will continue through the end of the Coronavirus pandemic. Kansas Department of Health and Environment, Kansas Policy Directive 2020-03-01: Delayed Discontinuance - COVID-19.

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20.

21.

Center for Disease Control’s National Center on Birth Defects and Developmental Disabilities, 2017 Behavioral Risk Factor Surveillance System (BRFSS); https://www.cdc.gov/ncbddd/ disabilityandhealth/impacts/kansas.html, last accessed September 2, 2020; page last reviewed September 12, 2019.

Disability-associated healthcare expenditures are presented in 2006 dollars as reported in Anderson et al, 2010; United States Census Bureau, https://www.census.gov/quickfacts/fact/ dashboard/KS/PST045219, last accessed September 27, 2020.

Id. See In Re Guardianship and Conservatorship Watkins, 24 Kan. App. 2d 469 (1997).

See Austin v. Capital City Bank, 353 P.3d 469 (Kan. Ct. App. 2015); See also Shamberg, Johnson, and Bergman, Chtd. v.

Oliver, 289 Kan. 891 (2009).

See K.S.A. 59-2006; Arche v. U.S., 247 Kan. 276, 291 (199); See Brady v. Brady, 225 Kan. 485, 491 (1979) followed in In re Marriage of Burton, 29 Kan. App. 2d 449, 452-53 (2001).

Supplemental Needs Trusts have also been called Special Needs Trusts. When special needs planning began, the term “Special Needs Trust” was used to describe trusts designed to care for the beneficiary’s special needs. While the term “Supplemental Needs Trust” was used to address the shortfall of public benefits programs. At this time, there is no relevant legal difference between Special Needs Trust and Supplemental Needs Trust. “Is there a Difference Between Supplemental” and “Special Needs trusts?”. https://specialneedsanswers. com/is-there-a-difference-between-supplemental-and-specialneeds-trusts-16243#:~:text=has%20fallen%20away.,The%20 term%20%22special%20needs%20trust%22%20refers%20to%20 the%20purpose%20of,of%20our%20public%20benefits%20 programs. Last modified 27 July 2017; accessed 21 August 2020, ElderLawNet, Inc. Having said this, the Social Security Program Operations Manual Service or POMS refer to a thirdparty trust as a supplemental trust. POMS SI 01120.200 B.12.

Therefore, all Supplemental Needs Trusts and Special Needs Trusts are referred to as Supplemental Needs trust (SNTs) within this article.

K.S.A. 58a-4042(a)(1)-(5).

42 U.S.C. 1396p(d)(4)(A).

42 U.S.C. 1396p(d)(4)(B).

42 U.S.C. 1396p(d)(4)(C).

42 U.S.C. 1396p(d)(4)(A).

Hutson v. Mosier, 54 Kan. App. 2d 679, 680 (Kan. Ct. App. 2017).

42 U.S.C. 1396p(d)(4)(A).

Id. 42 U.S.C. 1396p(d)(4)(C).

K.S.A. 39-709(e)(3)(B).

K.S.A. 39-709(e)(3)(B)(i); K.S.A. 39-709(e)(3)(C).

See discussion of settlor’s intent and modification of a trust in White v. Kan. Health Policy Auth., 198 P.3d 172, 177-80 (Kan. Ct. App. 2008).

Myers v. Kan. Dept. of S.R.S., 254 Kan. 467, 471 (1994).

Williams ex Rel. Squier v. Kan. Dept. of S.R.S., 258 Kan. 161, 165 (1995) citing 42 U.S.C. § 1396a(a)(17); Myers, 254 Kan. at 471.

Miller v. Kansas Dept. of S.R.S, 275 Kan. 349, 354 (2003).

State of Kan. v. Jackson, 249 Kan. 635, 639-41 (1991) citing Watts v. McKay, 160 Kan. 377 (1945).

SNT administration

22. See Myers, 254 Kan. at 471; Jackson, 249 Kan. at 639; Miller, 275 Kan. at 354-55.

23. Administering a Special Needs Trust, a Handbook for Trustees (2011 Ed.), Special Needs Alliance.

24. K.S.A. 58a-101 et seq.

25. For an in-depth review of the Kansas Uniform Trust Code, see Cheryl C. Boushka & Mark W. Knackendoffel, 71 J. Kan. Bar Ass’n 10, Navigating the New Kansas Uniform Trust Code: Familiar and Unfamiliar Waters 34-42 (November/December 2002).

26. K.S.A. 58a-101 et. seq.

27. See Boushka & Knackendoffel, 71 J. Kan. Bar Ass’n 10 at 34-42.

28. K.S.A. 58a-801.

29. Id. 30. K.S.A. 58a-802(a).

31. K.S.A. 58a-802(b)(1)-(5).

32. K.S.A. 58a-803.

33. See Supra 2.2.5 Taxation of Special Needs trusts.

34. K.S.A. 58a-804.

35. K.S.A. 58a-809.

36. K.S.A. 58a-819(e).

37. K.S.A. 58a-807.

38. K.S.A. 58a-807(a)(1)-(3).

39. K.S.A. 58a-807(a)(c).

40. K.S.A. 58a-807(d).

41. K.S.A. 58a-901; KSA 58-24a01 et seq.

42. K.S.A. 58-24a02(a).

43. K.S.A. 58-24a02(b).

44. K.S.A. 58-24a02(c)(1)-(8).

45. See Boushka & Knackendoffel, 71 J. Kan. Bar Ass’n at 34-42.

46. See Marsman v. NESCA, 30 Mass. App. 789, 573 N.E.2d 1025 (1991).

47. K.S.A. 39-709(e)(3)(B).

48. In re Guardianship and Conservatorship Watkins, 947 P.2d at 48.

49. Liranzo v. LI Jewish Education/Research, 28863/1996 (Sup. Ct. NY) (June 25, 2013).

50. Matter of the Accounting by J.P. Morgan Chase Bank, N.A. (Marie H.), 2012 N.Y. Slip Opinion 22387, (Dec. 31, 2012 Surr.

Ct., New York County Glen).

51. Administration of an SNT § 9.01[A][1].

52. See 42 U.S.C. § 1382c(a)(1)(A).

53. See 42 U.S.C. 415.

54. See SI 01120.200.D.1.a. & D.2.

55. See SI 01120.200.D.2.

56. 42 C.F.R. 416.1102.

57. 20 C.F.R. 416.1232.

58. 20 C.F.R. 416.1232.

59. 20 C.F.R. 416.1201(a).

60. 20 C.F.R. 416.1205(c).

61. 42 U.S.C. 1382b(a); 20 C.F.R. 416.1210 & 416.1212; POMS SI 01130.100; SI 011110.515C; SI 01120.200.

62. 20 C.F.R. 416.1210; Social Security Handbook § 2156 https://www.ssa.gov/OP_Home/handbook/handbook.21/ handbook-2156.html, last updated August 1, 2011, last accessed December 31, 2020.

63. 42 U.S.C. 413.

64. Id. 65. Id.

66. Disability Evaluation Under Social Security, Part III – Listing of Impairments www.ssa.gov/disability/professionals/bluebook/ listing-impairments.htm, last accessed December 31, 2020.

67. 42 U.S.C. 423 (d)(1)(A)-(B).

68. KEESM 2630.

69. KEESM 5000.

70. KEESM 5130.

71. KEESM 5130.

72. KEESM 2500.3.a.

73. KEESM 5331, 5332, 5430.1-.26, 5520.

74. KEESM 6000.

75. KEESM 6410.62 & .69.

76. 42 U.S.C. 1437f.

77. 64 Fed. Reg. 43613.01 (Aug. 11, 1999).

78. 24 C.F.R. 5.609(b).

79. 24 C.F.R. 5.609(c).

80. Housing Opportunity Through Modernization Act of 2016 § 104(e)(1)(A).

81. Housing Choice Vouchers Fact Sheet, https://www.hud.gov/ topics/housing_choice_voucher_program_section_8, last accessed September 12, 2020.

82. IRC 529A. 83. IRC 529A(b)(1).

84. IRC 529A(b)(1)(B).

85. IRC 529A(b)(2)(B)(i); IRC 2503(b).

86. SI 01120.201I.1.c. and h.

87. IRC 529A(f).

88. An individual pays a 37% rate of tax on income exceeding $500,000, but a trust pays a 35% rate of tax on income exceeding $12,500. See Rev. Proc. 2018-10, March 5, 2018.

89. 26 U.S.C. 673, 677(a)(1), 677(a)(3), 2511; 26 C.F.R. 25.25112(2).

90. 26 U.S.C. 121.

91. 25 U.S.C. 2036.

92. 2020 IRS Form 1041-ES; 26 U.S.C. 642 (b)(3)(C)(iii)(I) & (II); 26 U.S.C. 6334(d)(4)(C); 26 U.S.C. 1(f)(3).

93. Administration of an SNT § 9.02[C][1].

94. Id. 95. Id. 96. 42 U.S.C. 1311, 1382(A)(2), 1382(d)(1).

97. 20 C.F.R. 416.615.

98. POMS GN 00506.200.

99. 20 C.F.R. 416.640.

100. K.S.A. 58a-303(1)-(2).

101. K.S.A. 58a-303(6).

102. K.S.A. 58a-305(a).

103. Austin v. Capital City Bank, 353 P.3d 469 (Kan. Ct. App. 2015).

104. See Administration of an SNT 9.01[A]; 9-10 to -14.

105. K.S.A. 58a-103(2)(A).

106. See 26 U.S.C. 651.

107. 42 U.S.C. 1382c(a)(3)(C)(ii).

108. 42 U.S.C. 1382c(a)(3)(A)&(B).

109. K.S.A. 58a-103.

110. K.S.A. 28a-103(7).

111. K.S.A. 58a-103(12)(A).

112. 42 U.S.C. 1382c(a)(3)(B).

www.ksbar.org | May/June 2021 59

2021 scholarship recipients

A Perfect Ten

Ten law students receive recognition for their high academic achievement through KBF scholarships

S

ome readers may have benefitted from the generosity of KBF donors who established a scholarship. Since the inception of the scholarship program in 2007, 86 scholarships have been awarded to deserving law students.

The KBF Scholarship Committee, chaired by KBF Past President, Hon. Amy Fellows Cline, oversees the award process with final approval given by the Board of Trustees.

“KBF Scholarships enhance our profession by making law school more accessible to a diverse group of students, and by motivating and rewarding the achievements of the scholarship recipients. We all benefit from the legacy created by the Kansas lawyers who generously donate to these scholarships and the future success of these law students”.

Lynch and her daughter immediately fell in love with Lawrence, and they plan on making it their forever home.

Following graduation, Lynch will be an associate at Barber Emerson, L.C. in Lawrence. In her spare time, Lynch enjoys spending time with her daughter, JoAnna, and their dog, Cherry.

It is with pleasure that the Board of Trustees presents the 2021 scholarship award recipients.

Daniel Sloan, Washburn University School of Law Daniel Sloan, a 3L at Washburn University School of Law, grew up in Cameron, Missouri. Before law school, he attended Missouri University of Science and Technology, Rolla, and earned a B.S. in Biological Sciences with a pre-med emphasis. In Spring 2020, Sloan externed for Tim O’Brien, the Clerk of the U.S. District Court for the District of Kansas. During summer 2020, Sloan clerked for Fleeson, Gooing, Coulson & Kitch, L.L.C. in Wichita. Currently, he has returned to the U.S. Court for the District of Kansas through the judicial externship program under the Hon. Julie A. Robinson. He serves as an Articles Editor for the Washburn Law Journal, President of Washburn’s Moot Court Council, and Washburn Business Law Society’s President. Sloan also works as a teaching assistant for first-year legal writing under Professor Jeffrey D. Jackson, a research assistant for Professor Marsha Griggs, and an academic fellow with Washburn’s Academic Support department. This summer, he will be clerking at Jones Day in New York, New York and following his December graduation, he has accepted a clerkship with the Kansas Supreme Court under the Honorable Melissa T. Standridge.

When not in school or related activities, Sloan enjoys cooking with his wife, Jessica, and writing sci-fi/fantasy.

The Frank M. Rice Scholarship • $5,000

Erin Lynch, University of Kansas School of Law Erin Lynch is a 3L at the University of Kansas School of Law, graduating in May 2021.

Although Lynch enjoys the intellectual challenge of law school, what she enjoys most are the lifelong friendships made in Green Hall.

Lynch grew up in Pratt. After school, she would walk to her dad’s law office. Being an avid reader, the law library fascinated her and sparked a desire to learn more about the law. Lynch graduated from Pratt High School in 2005 and completed her undergraduate degree at Wichita State University in 2018.

While finishing her undergraduate degree, Lynch was a fulltime legal secretary at Johnston, Eisenhauer, Eisenhauer & Lynch, LLC in Pratt. The attorneys mentored Lynch and helped her realize that she was meant for bigger things. With the support of her daughter, family, friends, and coworkers, Lynch felt she could succeed at law school. And she has never looked back.

60 The Journal of the Kansas Bar Association

“I am honored to receive the Frank M. Rice Scholarship.

My sincerest gratitude to the Kansas Bar Foundation as this Scholarship impacts two lives during extremely difficult times. I will remember the generosity bestowed upon me, and I will pass it forward throughout my legal career.”

Hinkle Law Firm Student Scholarship • $3,000

2021 scholarship recipients

“I am absolutely thrilled and honored to be the 2021 recipient of the Hinkle Law Firm Student Scholarship. Kansas has given me opportunities that I never dreamed of. I look forward to continued involvement with the KBF and one day helping future law students in their endeavors. A special thanks to the Kansas Bar Foundation, my wife, and the attorneys/professors who have invested in me along the way.”

The John E. Shamberg Memorial Law Student Scholarship • $3,000

Lizzy McEntire, Washburn University School of Law Born and raised in Lawrence, Lizzy McEntire is very proud of her Kansas roots. After graduating from Lawrence High School in 2015, McEntire attended Kansas State University where she graduated summa cum laude with a B.S. in political science and history.

During her first summer of law school, she was a legal intern at Koch Industries in Wichita.

This school year, she is a law clerk at Sloan Law Firm LLC in Topeka, and this summer, she will be clerking at Husch Blackwell LLP in Kansas City.

Attending Washburn Law is particularly meaningful for McEntire, as she is the third generation of McEntires to receive their law degrees from Washburn Law. Her favorite part of law school has been getting to know her classmates and professors. McEntire is a proud member of the Topeka Bar Association and Washburn Law Journal.

“I am so honored to have been selected as the recipient of the John E. Shamberg Memorial Law Student Scholarship.

My sincere thanks and appreciation to the Kansas Bar Foundation, Mr. Shamberg, and all the donors who support the law student scholarships. Mr. Shamberg was a tremendous advocate for Kansans, and I hope to make even a margin of the impact on my fellow Kansans as Mr. Shamberg did during his career.”

Frank C. and Jeanne M. Norton Scholarship • $2,000

Jessica Timm, Washburn University School of Law Jessica Timm, a 3L at Washburn University School of Law, grew up in Kansas City, Kansas. While in school, she participated in debate and forensics and played softball.

She attended Pittsburg State

University, earning a bachelor’s degree in political science and Spanish with a minor in international studies. In the summer of 2019, Timm interned with Topeka Metropolitan Transit Authority and currently works as a law clerk for Henson, Hutton, Mudrick, Gragson & Vogelsberg, LLP. She is also a member of Washburn’s AAJ Trial Team. After graduation, Timm plans to work for Patterson Legal Group in their Wichita office.

“I am grateful to have been chosen as the recipient of the Frank Norton Scholarship. The financial support in my last year of law school means a lot. I look forward to being a practicing member of the Kansas Bar Association and hope to contribute to the success of future law students. Thank you, Kansas Bar Foundation for your generosity and support.”

Lathrop GPM Student Scholarship • $2,000

Douglas Bartel, University of Kansas School of Law Doug Bartel, originally from Olathe, is in his first year at KU Law. Before law school, Bartel attended the University of Kansas where he earned a B.A. and an M.A. in French.

Bartel spent more than a year living, working, and studying in Lyon, France, during his time as an undergraduate. After completing his M.A., Bartel worked in Kansas City for two years as an ESOL teacher with Teach for America and then continued working at the same high school as an ESOL Program Administrator for another two years before returning to KU for law school. At KU Law, Doug serves as a Student Ambassador, a 1L Representative for OUTLaws, a student attorney for KU Traffic Court, and is currently working on a pro bono research project for Legal Aid of Western Missouri. He also received the Payne & Jones Lawyering Award for his excellence in legal writing during the fall 2020 semester. Bartel has a passion for advocating for the rights of immigrants and children, and he looks forward to interning at the Mdivani Corporate Immigration Law Firm this summer.

“I am humbled and honored to be the 2021 recipient of the Lathrop GPM Scholarship, and I thank the Kansas Bar Association for its generosity and support of my legal education. I look forward to joining a legal community that cares so deeply about student success, and I hope to return the generosity in the years to come.”

u www.ksbar.org | May/June 2021 61

2021 scholarship recipients t

Case, Moses, & Zimmerman P.A. Law Student Scholarship • $1,000

methods, Markey felt like her own education was not complete. She made the difficult decision to leave the Quinter community and attend Washburn University School of Law. It has been a tremendously challenging and rewarding experience. Throughout her law degree, Markey strengthened her writing skills, explored legal material she was always curious about, and ultimately discerned the areas of law that might be best for her. She accepted an Associate Attorney position at Sloan, Eisenbarth, Glassman, McEntire & Jarboe, L.L.C. for next fall. Now, she is mentally preparing for the stress of the bar examination and looking forward to what life as an attorney holds.

Cerretti says her passion for the law largely stems from her role as parent of four children, particularly from her experience as a parent trying to navigate the world of special education. She intends to pursue education law, specifically representing parents to ensure their children receive the Free and Appropriate Public Education (FAPE) they are entitled to under the Individuals with Disabilities Education Act. Additionally, Cerretti says she would like to become a certified guardian ad litem serving in both domestic and child-in-need-of-care cases.

“I cannot adequately express how grateful I am for being chosen as 2021 Maxine S. Thompson Memorial Law Student Scholarship recipient. Every bit of assistance I’ve been fortunate enough to encounter during my law degree demonstrates how much the Kansas legal community cares about law students’ success. I look forward to providing legal counsel to Kansans across the state, especially those in western Kansas.”

Leah Cerretti, Washburn University School of Law Leah Cerretti’s decision to pursue law school was born out of a desire to demonstrate to her children that she could effect change in communities.

She intends to use her interests and talents to help other people and hopes to inspire her children to do the same.

Ceretti lives in Emporia with her husband, who co-owns a construction business, and their four children who attend the Emporia public schools. She’s looking forward to developing her practice in the state, and she says this award will help alleviate the financial burden of attending law school.

“I am grateful and humbled to be named the Case, Moses, & Zimmerman, P.A. Law Student Scholarship recipient. This award will help alleviate the financial burden of attending law school and I look forward to the connections I continue to make through the Kansas Bar Foundation.”

Maxine S. Thompson Memorial Law Student Scholarship • $1,000

Brigid Markey, Washburn University School of Law Brigid Markey was born and raised in Olathe. She attended high school at St. James Academy and moved to Hays to pursue degrees in English and Education. Upon graduation from Fort Hays State University, Markey taught high school English in Quinter, Kansas, for three years. She is forever grateful for those first years of professionalism and career-building. While she loved instructing students about literature and writing 62 The Journal of the Kansas Bar Association

The Justice Alex M. Fromme Memorial Scholarship Award • $1,000

Peter Qiu, University of Kansas School of Law Peter Qiu is a 3L at the University of Kansas School of Law. As a proud Kansan, Qiu grew up in Hutchinson and attended Buhler High School where he participated in debate and forensics, and was a tennis player. After high school, Qiu attended Washburn University to major in political science and minor in communication, where he graduated summa cum laude. At KU Law, Qiu has been a Traffic Court judge, member of the Mock Trial team, staff editor on the Law Journal, and officer of the Asian Law Students Association, American Constitution Society, and First Generation Professionals. Qiu split his first summer studying abroad in China and working as a law clerk for the League of Kansas Municipalities. During his second summer, Qiu interned at the U.S. District Court for the District of Kansas and worked as a research assistant for Virginia Harper Ho. Qiu currently works as a law clerk for Grover Law Firm in Overland Park. After graduation, Qiu plans to practice civil litigation.

“It is truly an honor to receive the Justice Alex M. Fromme Memorial Scholarship. I am grateful to the Kansas Bar Foundation and its donors for helping me pursue my diverse education at KU Law. I look forward to becoming a member

2021 scholarship recipients

of this prestigious profession and giving back to the legal community.”

Family and Immigration Law Clinic. Throughout his time in law school, he has interned at the Western Missouri Legal Aid Office, the Ford County Attorney’s Office, and the Douglas District Attorney’s Office. Moya’s favorite part of law school has been participating as a Teaching Assistant for the first-year legal writing courses.

Capitol Federal Foundation Diversity Scholarships • $500 (awarded to each recipient)

Leah Lewsader, University of Kansas School of Law Leah Lewsader is a 3L at the University of Kansas School of Law. She lives in Lawrence with her wife and two dogs.

Originally from Illinois, she earned a degree in elementary education from Loyola University Chicago in 2012.

Shortly after graduation, she moved to Santiago, Chile where she spent six years teaching elementary school.

As a teacher, Lewsader learned the power of community and working in service of it. She returned to the U.S. knowing that the next step on this path was law school. As a law student, she has spent her time engaging with diverse communities through immigration work, advocating for regional farmworkers, interning at legal aid clinics, and acting as a legal observer and protestor in marches for racial justice.

“I am honored to have been selected as the recipient of the Capital Federal Foundation Diversity Scholarship. I would also like to extend my appreciation to the Kansas Bar Foundation. The Foundation’s generous support will help me continue my educational endeavors. I look forward to deepening my involvement with the Foundation.”

Learn more about the scholarship program at ksbar.org/ mpage/scholarships.

Congratulations! u

In the summer of 2020, Lewsader worked with a Missouri state senator and a local nonprofit advocating for access to quality affordable housing and police reform, tying legislative priorities to community needs.

For her final semester, Lewsader is focusing on immigration law, specifically asylum and representing unaccompanied children coming to the United States. She is invested in and committed to pursuing a career in public interest law, particularly where it intersects with racial justice and LGBTQ equality.

“I am humbled to be recognized with the Capitol Federal Diversity Scholarship and I am grateful to the Kansas Bar Foundation for its commitment to supporting law students.

I am eager to use my position of privilege in the legal community, focusing on equitable access to justice for all.”

Ivan Moya, Washburn University School of Law Originally from Garden City, Kansas, Ivan Moya is a 3L at Washburn University School of Law. Before attending law school, he attended Washburn University and earned a B.A. in political science and mass media. Moya was selected to join Washburn Law’s Moot Court Council after being named Top Oralist in Washburn’s interschool competition. Moya’s lawyering skills were further refined during his time at the www.ksbar.org | May/June 2021 63

MEMBERS

in the news

NEW POSITIONS Larry D. Fields has been elected as managing partner of the Kansas City Regional Office of Kutak Rock LLP. He will oversee the firm's offices in Kansas City and Wichita, Kansas and Springfield, Missouri. His primary area of practice is litigating insurance coverage disputes and bad faith claims.

Lee W. Hendricks has filled the position as Jackson County Counselor. He is also city attorney for six Jefferson County towns, as well as city attorney for Hoyt, Belvue, Easton and Edgerton.

Jonah W. Lock has become a new member of the Kansas City office of Lewis Rice LLC. As a member of the firm’s litigation department, his practice is focused on protecting the rights of creditors nationwide, where he successfully represents automobile and commercial lenders, mortgage servicing companies, businesses and related organizations.

Have you considered becoming a Kansas Bar Foundation Fellow?

The Kansas Bar Foundation

• increases access to legal services for underserved communities • helps promote access to justice for all Kansans • funds scholarships that benefit Kansas law students • administers the IOLTA grant process benefitting organizations that provide civil legal services and the administration of justice to Kansans • supports efforts to educate the public regarding the law We encourage all Kansas lawyers to become Fellows—it’s an excellent way to give back to your profession, to fund key law and justice programs and to provide volunteer opportunities for you and your colleagues.

Your $1,000 pledge may be made online or through the mail.

You may pay in annual installments of $100.

Online: www.ksbar.org/pledge By mail: Kansas Bar Association • PO Box 751080 • Topeka, KS 66675-1080 Already a Fellow? Wonderful! Please consider increasing your pledge and move to a higher level of giving!

If you have questions, please contact Lisa Leroux-Smith: llerouxsmith@ksbar.org

64 The Journal of the Kansas Bar Association

Gregory T. Wolf has become General Counsel of Maxus Properties in North Kansas City. Previously, he was partner at Dentons.

NOTABLES Baty Otto Coronado PC is celebrating its 100-year history and has further expanded its litigation practice to include the attorneys and staff of Schlee & McCarthy, P.C. These highly experienced attorneys expand the firm’s national reach and enhance the firm’s litigation practice in the area of propane and natural gas. Baty Otto Coronado relocated its Kansas City office in late December to new offices in One Main Plaza at 4435 Main Street.

Goodell, Stratton, Edmonds and Palmer LLP is celebrating the firm’s 140th year in business. The firm has a distinguished history and integral ties to the Topeka community and the state of Kansas. The firm released a storytelling video highlighting the history, reputation and community roots at gseplaw.com that has characterized GSEP since its founding by newly minted Boston University graduate Bennett Wheeler.

Daniel E. Monnat, Wichita, of Monnat & Spurrier, Chartered, has been named as one of the world’s leading practitioners in the Investigations sector by Who’s Who Legal and Global Investigations Review for the fifth straight year. Who’s Who Legal collaborates annually with Global Investigations Review to identify the world’s leading lawyers, forensic accountants and digital forensics experts who assist companies and individuals under investigation by regulatory or law enforcement agencies. Monnat has practiced in Wichita nearly 45 years, handling criminal cases that have attracted international attention.

Nicholas Ruble joins the Kansas City office of Baker Sterchi Cowden & Rice, LLC as an associate. Ruble's practice is focused on employment and labor, personal injury, creditor’s rights, and commercial disputes. u

NOTE: Members in the News items are largely gleaned from newspaper articles from across the state, provided by our clipping service.

If there are questions or concerns regarding information printed here, please feel free to inquire through the following email: editor@ksbar.org

classified advertisements

POSITIONS AVAILABLE Attorney Position Available. Galloway, Wiegers & Brinegar, PA (GWB) is seeking to hire an attorney. GWB has served northeast Kansas for seventy-five years and currently has offices in both Marysville and Seneca, Kansas. The firm engages in civil litigation, estate planning and administration, business planning, real estate services, family law, and governmental law. This is an excellent opportunity to work in thriving small-town communities with a need for additional attorneys. Any and all levels of experience are encouraged to apply. Please send your resume to Jason Brinegar at jason@ gwblaw.net, or call (785) 562-2375 for more information.

Lawyers Needed. The practicing Bar of Harper County, Kansas seeks new attorneys for the area to include someone to serve as county attorney in the near future.

Anthony, Kansas, is the county seat and is located on the Oklahoma border in south-central Kansas. Opportunities for general practice, criminal defense and prosecution exist.

Current and former law office spaces are available.

Enjoy small community life (county population 5,500) and make a life, not just a living.

Contact: Richard Raleigh, (620) 842-6070, rraleigh@harpercountyks.gov David M. Hall, (620) 842-5525, dmhallatty@gmail.com Jim Forsyth, (620) 842-5101, newtonandforsyth@att.net Lawrence, Kansas law firm seeks associate with 1-5 years’ experience for general practice including civil litigation, estate planning, and other areas. Compensation depending on qualifications. Submit letter of interest and resume to Petefish, Immel, Hird, Johnson, Leibold & Sloan, LLP at mdonnelly@petefishlaw.com. u

Interested in placing a Classified Ad in the KBA Journal?

COST: FREE for KBA Members $25/publication for non-members Word count: 75-100 words (Editor reserves the right to edit for space.)

Simply email your preferred copy to: Editor@ksbar.org

www.ksbar.org | May/June 2021 65

obituaries

Mail - Alana Seelbach - Outlook

Philip Rhodes Dupont (7/16/1962 – 3/8/2021)

Philip Rhodes Dupont of Kansas City, Missouri, passed away on March 8, 2021, with his loving family by his side, following a short and sudden illness.

He was 58 years old. Philip was born in Houston, Texas, on July 16, 1962, and was raised in Sikeston, Missouri. He obtained his undergraduate degree from Rhodes College, and his Juris Doctorate from the University of Missouri (Columbia). He began his legal career in 1988 as a law clerk for the Honorable Timothy Dean O’Leary in the Jackson County Sixteenth Circuit Court.

Philip became a litigation partner with Blackwell Sanders Peper Martin, transitioning later to Husch & Eppenberger, which became Husch Blackwell. From 2014, until the time of his passing, he was Counsel with the Kansas City office of Sandberg Phoenix von Gontard. Philip practiced law for over 30 years and was a prominent attorney in the Kansas City area. His practice concentrated on complex commercial civil litigation and medical malpractice defense. Philip was recognized as a top trial attorney on numerous occasions throughout his career including being honored as “Best of the Bar” in Kansas City and being named a “Missouri & Kansas Super Lawyer”. Philip was also an accomplished appellate advocate, recently arguing successfully before the Idaho Supreme Court. He was admitted to and practiced in the Eighth and Tenth Circuit Court of Appeals, the District Courts of Missouri, Kansas, and Colorado, and was admitted to practice in the United States Supreme Court. In addition to Philip’s thriving law practice, he was an avid woodworker and wine collector. Philip is survived by his partner and fianceé Amber Steinbeck and his stepdaughter Caden; his children Nicholas, Elisabeth and Caroline Dupont, and their mother Mary Nan Dupont Thiessen; his siblings Dr. Elisabeth Dupont (Scott Pryor), Stephen Dupont (Kaaren), Vincent Dupont (Cecil), and Carolyn Dupont (Gregory Partain); his mother Dr. Lynnell Dupont (age 90); and many beloved nieces

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and nephews. He is predeceased by his father Dr. Jean Rene Dupont who passed in 1996. In lieu of flowers, memorial contributions may be given to the Kansas Coalition Against Sexual and Domestic Violence (kcsdv.org).

Jack Glaves (6/17/1927 – 3/2/2021)

Jack Glaves, 93, attorney, passed away on Tuesday, March 2, 2021. Preceded in death by his parents, Sterling and Frankie Glaves; and son, Craig Glaves.

Survived by his wife, Connie; son, Chris; daughter, Cathleen (Joe) Tinker, and their mother Corinne; 7 grandchildren; 6 great-grandchildren; 2 stepdaughters, Devon (Mike) Packard and Jennifer Graf Smith; 9 step grandchildren; and 3 step great-grandchildren.

Jack grew up riding horses, raising cattle and working in the oil fields in Butler county near Latham. He joined the Navy and went to law school to follow his dream. He loved what he did and wouldn’t retire for 70 years. After law school, he became the Sedgwick County Deputy Attorney and quickly fell in love with politics. He served in the Kansas Legislature as the 66th District Representative from 1956 – 1960 during which time Bobby and Jack Kennedy talked him into being the 4th District Campaign Chair for JFK during his successful 1960 presidential race. Jack had many stories during this time, including having dinner with JFK at the Fairland Café where they played pinball until 2 a.m. Jack always loved a bargain and remembered fondly how they dined on chow mein and a bowl of ice cream for 45 cents. One of the most interesting times in his career was being the Kansas Democratic State Chair from 1962-64 when he met Harry and Bess Truman, Adlai Stephenson, Eleanor Roosevelt, Lyndon B. Johnson and the Kennedy clan. He loved boasting about his beloved native state of Kansas. A pivotal change in his career was serving as General Counsel for the Kansas Corporation Commission starting in 1968. He spent the next 50 years representing and

lobbying for natural gas companies. To everyone who knew Jack, he was humble, easy-going, hard-working, and fair. His optimism saw no limits. His career and family were his passion and rewarded him greatly with what he called a wonderful, exciting life where events just unfolded in a magical fashion.

Behind it all was help from lifelong friendships from law school, law practice, business and politics. We will all miss him deeply. As he would say, cheers. A memorial service was held on Monday, March 8, 2021, at Downing & Lahey East Mortuary, Wichita, Kansas. The service was live streamed and available to view at: dlwichita.com. In lieu of flowers, a Memorial has been established with Washburn University Foundation – Class of 1950 Law School, 1729 SW MacVicar Avenue, Topeka, Kansas 66604. To Plant Memorial Trees in memory, please visit our Sympathy Store.

Audrey (Audie) B. Magaña (11/7/1956 – 3/16/2021)

Audrey “Audie” B. Magaña, 64, of Junction City, Kansas, passed away on March 16, 2021. Audie was born in Ellsworth, Kansas, to Jesús “Jesse” and Diana Magaña. He grew up in rural Ellsworth County and helped with the family farm and ranching operations.

From his early education, beginning in a one-room country schoolhouse, he proceeded to graduate from the University of Kansas School of Law and began his professional career with the State of Kansas.

As the Court Trustee for the 8th Judicial District, he was instrumental in expanding that office, ensuring its success. He founded his own successful Law Office which he operated for many years with office locations across Kansas. Most recently, he served as project manager of child support enforcement for the national law firm, Young Williams. Audie called Junction City home since 1984. He had many interests and hobbies, which included music, in particular blues and rock. He was a devoted fan of KU and KSU sports, as well as an avid fan of the Chiefs and Royals. He also enjoyed working outdoors and taking care of his cars. Audie loved spending time with family and friends and enthusiastically attended the school or sporting activities of his children and later grandchildren whenever possible. He had a great sense of humor that he shared with friends and family. He enjoyed being well dressed and had a fondness for wearing hats. Above all, Audie was a devoted husband, caring father, loving grandfather, cherished brother and son, and loyal friend. Audie was a member of the Geary County Bar Association, Saline County Bar Association, Kansas Bar Association, Kansas Child Support Enforcement Association, and past member of the University of Kansas Law School Alumni Association Board of Governors. As a young man, he met the love of his life, Sue Anne “Susie”. They married in Ellsworth, Kansas, in 1978. Audie is survived by his loving family: wife, Susie of Junction City, Kansas; his

three daughters, Maia (Vaughn) DeGuzman of Junction City, Kansas, Siena (Ryan) McCue of Manchester, United Kingdom, and Alivia Magaña of Taos, New Mexico; three grandchildren, Xavier, Alex, and Ava; mother Diana, and four siblings: Famia Magaña (John Quattlebaum), Clay (Terry) Magaña, Velinda Magaña, and Jesse (Lori) Magaña, many nieces and nephews, in addition to a host of beloved family and friends. He was preceded in death by his father, Jesús “Jesse” Magaña.

William Robert McQuillan (7/15/1957 – 3/25/2021)

William Robert McQuillan, 63, St. Joseph, Missouri, passed away Thursday, March 25, 2021. McQuillan had practiced law as McQuillan Law Office in Troy. He joined the Euler law firm in 1983 and, following J. D. Euler’s appointment as District Judge, Jack R. Euler and Bill continued practicing law under the firm name of Euler and McQuillan until McQuillan left the firm in 1999. He was born July15, 1957, in Winchester, Kansas, to William Patrick and Helen (Terry) McQuillan. On November 17, 2010, Bill married Nancy Lee. They resided in rural Wathena until moving to St. Joseph in recent years. He was preceded in death by his father, William Patrick McQuillan; and brother, Michael McQuillan.

Survivors include his mother, Helen (Terry) McQuillan; wife, Nancy Lee-McQuillan; children, Colin (Kayla) and Shelby (Mitchell Schnitker) McQuillan and Sasha Hoover (Shaun); granddaughter, Myer Donn McQuillan; sister, Patty Pietras; and numerous nieces and nephews. Bill was a member of the Wathena Knights of Columbus and the Kansas Bar Association. Farewell Services and public livestream were held on Wednesday, March 31, 2021, at Meierhoffer Funeral Home & Crematory. Memorials: American Lung Association.

Lebert (Lee) D. Shultz (3/17/1942 – 2/6/2021)

Lebert (Lee) D. Shultz was born March 17, 1942, in Cobleskill, New York, to Lebert and Ruth Shultz. He died peacefully on February 6, 2021, at St. Luke’s South following a heart attack. Lee spent part of his childhood in Wamego, Kansas where he was immersed in the family’s long agricultural history. He moved to Arlington Heights, Illinois, in 1952, graduating from high school there in 1960. After he decided to study at the University of Kansas, he was surprised to learn that his parents planned to move to nearby Kansas City. He earned his B.A. in Business in 1964 and then earned his J.D. from KU Law School in 1967. Lee’s first job as an attorney was with the Knipmeyer, McCann & Millet law firm.

Later he worked for DST and as associate general counsel at

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obituaries t Commerce Bank until about 1976. During this time, driven by a shared passion for environmental issues, Lee and Bill Haman formed the Kansas City chapter of the Sierra Club.

In 1979 the family moved to Wichita, Kansas, where Lee worked for Koch Industries focusing on international and maritime law, holding the title of associate general counsel.

In that capacity he worked all around the globe – developing an abiding love for travel. Lee “semi-retired” in 1999 and moved back to Prairie Village, Kansas. He worked “of counsel” at Miller & Co and Husch Blackwell until about 2009. He retained key clients in Turkey and Egypt and remained active in his work for them. While on an assignment for Koch during the Mandela era, Lee had gained an interest and respect for South Africa. Upon retirement, the Republic of South Africa appointed him Honorary Consul for South Africa in Kansas and Missouri. He worked tirelessly to support the local South African community, and to encourage trade between the two countries. At the first “Freedom Day” event Lee organized, he was looking for a group to sing the South African National Anthem – which is in five languages. The Kansas City Boys Choir/Kansas City Girls Choir agreed to do it. That started a long relationship with that fine organization. Lee has been a member of various professional associations including the Kansas and Missouri Bar Associations, the International Bar Association, the Maritime Law Association (Proctor Status) and the Consular Corps of Kansas City. As an adjunct faculty member, Lee taught classes at Washburn Law School, Wichita State University, and the University of Kansas. Additionally, he has taught seminars and workshops on international business and law issues for both the Kansas Bar Association and the Missouri Bar Association. He is survived by his wife of 56 years, son David (wife Annabelle), daughter Pamela (husband Christopher); and two grandchildren: Evan and Samantha Coleman. Also, a brother, John Shultz, of Lawrence, Kansas.

In lieu of flowers, memorials to the Boys and Girls choirs of Kansas City (kcboychoir.org/ and kcgirlschoir.org/) or The Kansas City chapter of the Sierra Club (sierraclub.org/missouri/ thomas-hart-benton) are encouraged.

John Graves Kite (3/26/1929 - 2/25/2021)

John Graves Kite, age 91, passed away at his home in Overland Park, Kansas, on February 25, 2021. John was born March 6, 1929, to Judge E. E. and Ruby C. (Henry) Kite of St. Francis, Kansas. He was the youngest child with older siblings Doris and Wendell. Their home was located on a large corner lot affectionately referred to as Kites’ Korner by the kids in town. John attended the local schools. He lettered in football, basketball, played the trombone in band and took piano lessons. John reluctantly sang in several music groups. He never forgot being marched out on stage with the 68 The Journal of the Kansas Bar Association

boys trio. They attempted singing the same song three times, never finishing the entire song because each time the boys erupted in convulsions of laughter. The trio was finally deleted from the program. John attended Methodist Church Sunday School and was active in youth fellowship. His summer jobs were “pumping” rationed gas at Carmichael’s Skelly on the hill, “jerking” sodas at Thompson’s Drug and making John’s guaranteed fresh peach ice cream “fresh” (from the can) at Rexall Drug. After high school graduation in 1947, John and Wendell shared income from the farming of eight quarter sections of land owned by their parents. John used this money to attend the University of Kansas to become an attorney like his father. As an undergraduate at the University of Kansas, John was called to serve in the Korean conflict. He completed basic training at Fort Ord, California, then carried out his duty as an investigative agent in the Counterintelligence Corp. He returned to the university, earning a Bachelor of Arts (1954) and a Juris Doctorate (1957). He began his law practice in St. Francis in 1957. In 1974, the firm became Kite and Day when Michael J. Day (wife Brenda), an ambitious and promising graduate of the University of Kansas School of Law, joined the practice. His professional achievements included: being admitted to practice before the Supreme Court; U.S. Court of Appeals, Tenth Circuit; U.S. District Court, District of Kansas; elected Cheyenne County Attorney (12 years); City Attorney for Bird City (20 years) and the St. Francis Board of Education for many years. He served on many boards: Citizens State Bank, hospital, church, library, chamber and ABC Preschool.

He was a scout master and a member of the Shrine Club.

John had a deep appreciation for the arts. He was president of the Western Plains Arts Association and a member of the Metropolitan Opera Guild. Governor John Carlin appointed him to a 4-year term on the Kansas Arts Commission in 1981.

John was faithful to his profession and treasured his network of friends and clients. His father’s law career from 1907 to 1956 and John’s law career from 1957 to 2007 marked 100 years in the practice of law by a father and a son. John was married to Helen M. Whitehead from 1950 to 1969. Their son, J. Greg Kite, was born September 29, 1953. They divorced in 1969. Elaine came home from Long Beach, California for her parents’ (Michael and Bertha Raile) 50th wedding anniversary in December 1969. Marvin Miller (brother-in law) arranged a blind date for her and John to attend the high school basketball game. They married on April 24, 1970, at the Wayfarer’s Chapel, Portuguese Bend, California. After their honeymoon in Mexico, Elaine made her home with John in St. Francis. Their daughter, Mindy Elaine, was born on August 12, 1971. John and Elaine retired to Overland Park in 2010 to be near their three grandsons. Together they enjoyed their favorite spots: Starlight Children’s Theater, Kauffman Center concerts and the Overland Park Arboretum. They shared a strong love, affection and camaraderie for almost 52 years.

John leaves his wife Elaine, their daughter Mindy Bradbury, son-in-law, Hadley, and grandsons Collin, Chase and Connor

who will always miss him. His memory will be etched in their hearts.

Ronald D. Innes (11/14/1935 - 4/12/2021)

The Honorable Ronald D. Innes, age 85, of Wichita, passed peacefully on April 12, 2021. Born in Phillipsburg, Kansas, to Dr. Guy Innes and Carolyn (Unland) Innes, he was the third of five children.

He served in the United States Army from 1954 to 1956, followed by the Army Reserves. After graduating from Kansas State University and Washburn Law School with a Juris Doctorate, he served as an FBI Agent from 1963 to 1967. In 1968 and again in 1970, he won election as Riley County Attorney. In 1971, Governor Robert Docking appointed him to serve as a District Court Judge of the 21st judicial district, where he later became the Administrative Judge, a position he held until he retired in 1982. During his tenure on the bench he also served on many distinguished judicial committees. Ron also enjoyed his 14 years of teaching business law at Kansas State University. It was not uncommon for a former student to approach him and remind him, “Judge, I took your class and it has really helped with...” He would later

return to the bench as a Senior District Court Judge of Kansas for 12 years, traveling to various regions of the state to hear cases. In 1980, he met Debbie (Turkington), the woman who would become his best friend, constant companion, and fellow adventurer. On November 19, 1988, he married the love of his life, and he and Debbie enjoyed over 32 years of marriage with their joined families. After stepping down from the bench, Ron worked on his ranch, joined private legal practice, participated in s rodeos, fly fished with his sons, remodeled homes, and enjoyed time with his grandchildren and great grandchildren. When asked which of his “nine lives” he enjoyed most, he said, “remodeling houses.” He worked with his hands; he often worked with his kids; he created spaces filled with beauty and legacy. No one that worked with him can look around their home and not see him, whether it is in the color of a wall, the construction of a bannister, or the placement of a wall hanging. Ron was a true “renaissance man” – a man with many talents and areas of knowledge.

Shall we live a life so well-lived. He is preceded in death by his parents, Guy and Carolyn. He leaves behind his beloved wife, Debbie; his children Kip, Meg (Scott), Kelly, Kim (Shelly), and Kerry (Ronnie); his nine grandchildren, Shailey; Reegan, Connor, Andrew, Ashley, Abby, J.R., Noelle and Hayley as well as four great grandchildren and many nieces and nephews; siblings Doug (Betty), Von (Lois), Sue, and Rod (Mary). u

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appellate decisions

Kansas State Supreme Court All opinion digests are available on the KBA website at www.ksbar.org/digests. We also send out a weekly newsletter informing KBA members of the latest decisions. If you do not have access to the KBA members-only site, or if your email address or other contact information has changed, please contact member and communication services at info@ksbar.org or at (785) 234-5696. For the full text of opinions, access the courts’ website at www.kscourts.org

ATTORNEY DISCIPLINE ORDER OF REINSTATEMENT IN RE KEVIN P. SHEPHERD NO. 120,875–MARCH 4, 2021 FACTS: In September 2019, the court suspended Shepherd’s license to practice law for two years but gave him permission to apply for reinstatement after one year. Shepherd filed his petition for reinstatement after one year and went through a reinstatement hearing before a panel of the Kansas Board for Discipline of Attorneys. After the hearing, the panel recommended that Shepherd’s petition for reinstatement be granted, subject to three years’ supervised probation.

HELD: After carefully considering the record, the court accepts the panel’s findings and recommendation and grants Shepherd’s petition for reinstatement, subject to three years’ supervised probation. The probation will continue until it is specifically discharged by the court.

ORDER OF DISBARMENT IN RE LAWRENCE W. WILLIAMSON, JR. NO. 21,282–APRIL 19, 2021 FACTS: In a letter received by the Clerk of the Appellate Courts on March 9, 2021, Lawrence W. Williamson, Jr. surrendered his license to practice law in Kansas. At the time of surrender, Williamson’s license was suspended for failure to pay attorney registration fees and there were 13 complaints pending with the Disciplinary Administrator.

HELD: The Court accepts Williamson’s surrender, and he is disbarred.

JUDICIAL DISCIPLINE ONE-YEAR SUSPENSION IN RE F. WILLIAM CULLINS NO. 122,565–FEBRUARY 26, 2021 FACTS: Judge Cullins is a district judge in the Fourteenth Judicial District. A panel of the Commission on Judicial Qualifications found that Judge Cullins violated Canon 1, Rule 1.2 (Promoting Confidence in the Judiciary) and Canon 2, Rules 2.3 (Bias, Prejudice, and Harassment) and 2.8. (Decorum, Demeanor, and Communication with Jurors). The behavior which triggered the complaints included the frequent use of profanity, often targeted towards courthouse staff in a way that seemed aggressive and frightening. Judge Cullins also 70 The Journal of the Kansas Bar Association

used gendered language in derogatory ways. There were also allegations that Judge Cullins made statements that showed racial bias.

DISCIPLINE PANEL: After hearing testimony, the Panel concluded that an admonishment or cease and desist disposition was insufficient discipline for Judge Cullins’s actions. But the Panel also decided that removal from the bench inappropriate; there was testimony that Judge Cullins ran efficient dockets and was a good judge who made fair determinations. The Panel concluded that the appropriate discipline was public censure, with an additional proviso that the Supreme Court refrain from ever appointing Judge Cullins as chief judge of his district. It was also recommended that Judge Cullins receive two years of professional coaching to improve his interpersonal interactions.

Judge Cullins filed exceptions to the panel’s final report and suggested that admonishment or a cease- and-desist order were appropriate discipline.

HELD: After an exhaustive review of the record and the parties’ briefs, the Hearing Panel’s findings were affirmed or conclusively established. Of note were the findings regarding gender bias. A majority of the Court concluded that any gendered language used by Judge Cullins while he was in the courthouse was done in his official capacity as a district judge. The language did not need to be used in his chambers or on the bench to constitute a violation of Canon 2. A minority of the court would find that gendered language towards certain women was not indicative of bias towards all women. The court also found that Judge Cullins’s comments to two Black criminal defendants created a reasonable perception of racial bias, in violation of Canon 2, Rule 2.3. The court concluded that the appropriate discipline was suspension from sitting as a judge for one year. If Judge Cullins wants a shorter suspension, he must formulate a plan of appropriate counseling and training. The training must include instruction on supervising employees and how to avoid harassment. If the plan is approved, all or part of the suspension beyond 60 days will be stayed.

CIVIL APPELLATE PROCEDURE; HABEAS CORPUS JOHNSON DISTRICT COURT – COURT OF APPEALS IS AFFIRMED IN PART AND REVERSED IN PART; DISTRICT COURT IS AFFIRMED ELLIE V. STATE NO. 120,030–MARCH 5, 2021

FACTS: Ellie was convicted of three high-level person felonies.

After his conviction was affirmed on direct appeal, he filed a K.S.A. 60-1507 motion for relief from conviction. Ellie’s primary argument was that his trial counsel had both personal and financial conflicts of interest that adversely affected his performance at trial. At a hearing, trial counsel – who entered the case to serve as local counsel for the pro hac vice Missouri attorney who Ellie retained – testified that he stayed on and represented Ellie for free in order to protect the Missouri attorney who left the case after his pro hac certification was withdrawn. Trial counsel acknowledged that Ellie needed more help than he could provide and knew that he should have withdrawn. The district court found both an actual conflict of interest and prejudicially ineffective assistance and set aside Ellie’s convictions. The State appealed and the Court of Appeals affirmed the district court’s reversal of two of Ellie’s convictions but reversed on the third, finding that overwhelming evidence against Ellie precluded reversal. Ellie petitioned for review and the State cross-petitioned.

ISSUES: (1) Whether the State properly preserved any appellate issue HELD: Ellie correctly noted in his petition for review that the Court of Appeals failed to address – and thus did not overturn – the district court’s decision that trial counsel’s financial conflict of interest was presumed prejudicial and required reversal of all three of Ellie’s convictions. The State failed to preserve for appeal any discussion of whether the district court could assume prejudice from trial counsel’s conflicts of interest. The district court correctly ruled that all three of Ellie’s convictions must be reversed.

STATUTES: K.S.A. 60-1507 DUE PROCESS; SEX PREDATORS JOHNSON DISTRICT COURT – COURT OF APPEALS IS AFFIRMED IN PART AND REVERSED IN PART; DISTRICT COURT IS AFFIRMED IN RE QUILLEN NO. 120,184–MARCH 5, 2021 FACTS: After he served his prison term for various sex offenses involving children, Quillen stipulated that he was a sexually violent predator. He was civilly committed to the Larned State Security Hospital Sexual Predator Treatment Program. Quillen is entitled to an annual review of his mental condition to see if he qualifies for transitional release to a less-restrictive placement.

In 2013, Quillen contested his annual report and requested a hearing to see if he qualified for conditional release. Ultimately, the district court held a bench trial and, after hearing testimony, determined that Quillen’s mental state remained such that it would not be safe to place him in transitional release.

Quillen again moved for conditional release in 2017, after he suffered a stroke and was left with physiological changes

including partial paralysis. The issue was heard by a jury, who found that Quillen was not safe to be placed in transitional release and should remain at Larned. Quillen appealed, claiming that some of the jury instructions violated his due process rights. The Court of Appeals agreed, holding that the jury should have been instructed that the State had the burden to prove beyond a reasonable doubt that Quillen had serious difficulty controlling his behavior. The panel vacated the verdict and remanded for a new trial. The State’s petition for review was granted.

ISSUES: (1) Due process sufficiency of the jury instructions HELD: Substantive due process requires the State to show at a transitional release hearing that Quillen suffers a mental abnormality which makes it difficult for him to control his behavior, such that he poses a danger to the community. After the initial sexually violent predator determination, the statute requires the State to prove that Quillen continues to have a mental abnormality which renders him dangerous to the community, but it need not meet the same standard of proof that is required for the initial commitment. Given this finding, the jury instructions at Quillen’s trial were proper. The jury was instructed that it must find that Quillen has serious difficulty controlling his behavior.

STATUTES: K.S.A. 2019 Supp. 59-29a02(b), -29a02(c), -29a07(a), -29a08(a), -29a08(d), -29a08(g); K.S.A. 2017 Supp.

59-29a02(a), -29a07(a) DUE PROCESS; JUVENILE ADJUDICATIONS CLAY DISTRICT COURT – AFFIRMED IN RE WRONGFUL CONVICTION OF M.M. NO. 121,936–MARCH 12, 2021 FACTS: As a juvenile, M.M. was wrongly found guilty of aggravated indecent liberties. He sought compensation under K.S.A. 2019 Supp. 60-5004 for his wrongful 226-day confinement. But the district court denied his claim, holding that there is no statutory mechanism to provide compensation for juveniles wrongfully found guilty in a juvenile adjudication.

M.M. appeals.

ISSUES: (1) Whether K.S.A. 2019 Supp. 60-5004 allows compensation for individuals wrongly found guilty in a juvenile adjudication HELD: There is no reason to depart from general rules of statutory construction. K.S.A. 2019 Supp. 60-5004 unambiguously applies only to cases where there has been a wrongful felony conviction. A juvenile adjudication is not a conviction and does not fall within the statute’s scope. The district court correctly denied M.M.’s claim for relief.

STATUTES: K.S.A. 2019 Supp. 60-5004, -5004(c)(1), -5004(l)

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appellate decisions t SUBROGATION; WORKERS COMPENSATION WORKERS COMPENSATION BOARD – COURT OF APPEALS IS AFFIRMED IN PART AND REVERSED IN PART, BOARD IS AFFIRMED HAWKINS V. SOUTHWEST KANSAS CO-OP SERVICE NO. 118,379–APRIL 2, 2021 FACTS: Hawkins suffered catastrophic injuries while employed

by Southwest Kansas Co-Op Service. Southwest and its insurance carrier agreed to pay permanent total disability benefits plus a continuing award for future care. Hawkins also pursued civil litigation against JLG Industries, Inc., Western Steel and Automation, Inc., and United Rentals Northwest.

Hawkins settled with Western Steel for $925,000; the damages related to spousal services and it is undisputed that Southwest is not entitled to subrogate any of these funds. JLG agreed to pay a total of $1.5 million, paid in 20 annual installments of $75,000. The claim against United Rentals went to a jury, which found that Hawkins suffered just over $4 million in damages with Western Steel 75% at fault, with the remaining fault attributable to Southwest. Because Western Steel had already settled, this verdict did not result in additional recovery for Hawkins. Southwest sought a determination on its statutory subrogation rights against the JLG settlement. After a hearing, an ALJ concluded that Southwest had a $477,460.34 lien and $272,539.66 future credit against the JLG installment payments – these amounts represented the total amount paid offset by the jury’s 25% finding of fault. A majority of the Board agreed, ruling that the lien and future reduction should be calculated by taking the $1.5 million settlement and the jury’s 25% fault determination. The Court of Appeals reversed and remanded, finding that the subrogation should be calculated by using Southwest’s 25% of fault measured against the jury’s $4 million damage award. Southwest’s petition for review was granted.

ISSUES: (1) Reducing subrogation interest by the employer’s percentage of negligence; (2) determining the correct recovery amount; (3) appropriate allocation HELD: The plain statutory language requires that an employer’s fault be applied to the subrogation amount where the employer’s fault is found to contribute to the injury. There need not be a contemporaneous fault determination with a settlement. The jury’s later fault attribution is substantial competent evidence to allow for a reduction in subrogation. The jury’s $4 million award was not a “recovery” within the meaning of K.S.A. 44504(d) because Hawkins gained nothing from it. This case need not be remanded for further calculations. The Board correctly determined how JLG’s installment payments should be allocated in subrogation.

STATUTES: K.S.A. 44-504, -504(b), -504(d)

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MUNICIPAL ORDINANCE SHAWNEE DISTRICT COURT – COURT OF APPEALS IS REVERSED, DISTRICT COURT IS AFFIRMED JAYHAWK RACING PROPERTIES, LLC V. CITY OF TOPEKA, KANSAS NO. 118,035–APRIL 9, 2021 FACTS: Heartland Park Raceway, LLC is a motorsports racing facility located in Topeka. After encountering financial difficulty, Heartland declared bankruptcy in 2002. Jayhawk Racing Properties purchased the property in 2003, but the state of disrepair at the facility necessitated public funding for capital improvements. The City of Topeka responded by creating the Heartland Park Redevelopment District and issuing more than $10 million in Sales Tax and Revenue bonds for funding. The City took ownership of Heartland for a term of years while Jayhawk held the reversionary interest. Due to insufficient sales tax returns, the City attempted to expand the STAR bond district. In 2014, the City Council approved a memorandum of understanding and workout agreement with Jayhawk which contemplated that the City would purchase Jayhawk’s reversionary interest in Heartland for $2.4 million while making a good-faith effort to carry out the terms of the MOU. The City Council adopted Ordinance 19915, which provided for expansion of the STAR bond district subject to Shawnee County approval. In 2015, though, four new members were elected to the City Council. These new members decided not to pursue the sale of bonds as envisioned by the MOU and Ordinance 19915. Jayhawk and Heartland sued for breach of contract and the City responded with a motion to dismiss.

The district court granted the City’s motion, finding that the City’s action in negotiating and purchasing was an exercise of governmental or legislative function which could not bind a subsequent city council. The Court of Appeals disagreed, finding that the action was proprietary. The City’s petition for review was granted.

ISSUES: (1) Governmental or proprietary function HELD: City revenue projects are either governmental or legislative OR proprietary or administrative. Here, the City’s decisions to invest in a racetrack, expand the area around the track, encourage commercial development, and improve facilities are clearly governmental policy making. The MOU represented responsibility outside of the general administrative functions of a municipality. As a governmental policy, the Council could not use the MOU to bind a subsequent city council to this decision.

CONCURRENCE: (Stegall, J., joined by Commer, D.J., assigned) The distinction between governmental and proprietary municipal functions is unworkable and incoherent.

The question is not important to the outcome here but would be nice to address in the future.

STATUTES: K.S.A. 2020 Supp. 10-106, 12-17,169, -17,169(b), -17,179(b, -17,179(c)

CRIMINAL CRIMINAL: CONSTITUTIONAL LAW – CRIMINAL PROCEDURE – MOTIONS – SENTENCING ATCHISON DISTRICT COURT – AFFIRMED STATE V. HAYES NO. 121,881–MARCH 5, 2021 FACTS: Hayes convicted of first-degree murder, aggravated robbery, and conspiracy to commit robbery. A January 1996 mandate confirmed the convictions and sentence, which included consecutive upward departure sentences for the robbery and conspiracy convictions. Thereafter Hayes was denied sentencing relief on motions filed under K.S.A. 601507 and K.S.A. 22-3504. He then filed motion to correct an illegal sentence claiming district court’s upward departure sentence violated Apprendi. District court summarily denied the motion. Hayes appealed.

ISSUES: Motion to Correct an Illegal Sentence – Apprendi HELD: State’s res judicata argument that Hayes waived his Apprendi claim by not raising it in his previous motion to correct an illegal sentence is rejected. District court’s ruling is affirmed because Hayes cannot raise a constitutional claim in a motion to correct an illegal sentence, and Apprendi does not apply retroactively to cases which became final prior to the 2020 Apprendi decision.

STATUTES: K.S.A. 2018 Supp. 22-3504(3); K.S.A. 22-3504, 601507 CRIMINAL: APPELLATE PROCEDURE – CONSTITUTIONAL LAW – EVIDENCE – FOURTH AMENDMENT DOUGLAS DISTRICT COURT – AFFIRMED; COURT OF APPEALS – AFFIRMED STATE V. THORNTON NO. 120,028–MARCH 5, 2021 FACTS: Police stopped Thornton and arrested him on drug charges after finding glass pipe he admitted having on him, a syringe in search of backpack which had been removed in the pat down search, and a dry bag of drugs on wet ground that Thornton had traveled on his bicycle prior to being stopped. Thornton convicted of possessing marijuana, methamphetamine, and drug paraphernalia. He appealed, seeking in part reversal of the possession convictions because search of the backpack was illegal. Court of Appeals affirmed in unpublished opinion, finding discovery of the syringe was illegal because the search incident to arrest exception for the warrantless search of the backpack did not apply, but discovery of the glass pipe was not tainted by the illegal search. Thornton’s petition for review granted to consider whether panel erred

by affirming the convictions without determining if syringe evidence was harmless beyond a reasonable doubt.

ISSUES: Appellate Review of Fourth Amendment Claim HELD: Panel erred in affirming Thornton’s convictions without assessing, as required by Chapman v. California, 386 U.S. 18 (1967), the prejudicial impact of the illegally admitted syringe evidence. Applying the appropriate constitutional harmless error test, Thornton’s convictions are affirmed because the remaining evidence was strong enough that there was no reasonable possibility the syringe evidence affected the jury’s decisions to convict.

STATUTES: K.S.A. 2019 Supp. 21-5709(b)(2) CRIMINAL: APPEALS – APPELLATE PROCEDURE – CRIMINAL PROCEDURE – MOTIONS SEDGWICK DISTRICT COURT – AFFIRMED STATE V. SMITH NO. 121,949–MARCH 12, 2021 FACTS: Smith convicted in 1993 with consecutive life sentences.

District court, in “motion minute sheet” directing State to prepare journal entry, denied Smith’s motion for sentence modification but no journal entry was ever filed. Twenty years later Smith filed motion to appeal out of time. District court held hearing under State v. Ortiz, 230 Kan. 733 (1982). Making no findings it denied relief based on Smith waiting too long to attempt an appeal. Smith appealed arguing he satisfied the third Ortiz exception – that his attorney failed to perfect the appeal.

Kansas Supreme Court reversed and remanded for district court to determine Smith’s credibility regarding the third Ortiz exception claim. State v. Smith, 304 Kan. 916 (2016)(Smith I).

After second Ortiz hearing district court concluded Smith’s testimony was not credible. Smith appealed. Kansas Supreme Court again reversed based on district court’s appearance of bias or prejudice. State v. Smith, 308 Kan. 778 (2018)(Smith II). In third Ortiz hearing Smith also raised two new claims – that time to file appeal never began to run because no journal entry memorialized decision on the motion for sentence modification, and that Smith satisfied the first Ortiz exception of not being adequately advised of his appellate rights. District court concluded the newly raised issues exceeded the specific scope of the remand, highlighted facts underlying its conclusion that Smith’s testimony was not credible, and denied the motion for leave to appeal out of time. Smith appealed, claiming district court erred in concluding the newly raised claims were outside the scope of the Smith II mandate, and claiming he was entitled to relief under the first and third Ortiz exceptions.

ISSUES: (1) Scope of Appellate Mandate, (2) Third Ortiz Exception for Out of Time Appeal HELD: District court correctly refused to consider Smith’s first Ortiz exception and missing journal entry claims. The Smith II

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appellate decisions t mandate did not permit Smith to raise new issues or to resurrect an argument alluded to in his initial motion but ignored by him until now. State v. Soto, 310 Kan. 242 (2019), and State v.

DuMars, 37 Kan.App.2d 600 (2007), are distinguished.

District court’s denial of Smith’s motion to appeal out of time is affirmed. District court’s credibility determination with respect to Smith’s third Ortiz exception claim was supported by substantial competent evidence, did not disregard undisputed evidence, did not rely on unreasonable inferences, and did not otherwise evince bias, passion, or prejudice.

STATUTES: K.S.A. 1993 Supp. 21-4701 et seq.

CRIMINAL: APPEALS – APPELLATE PROCEDURE – CRIMINAL PROCEDURE – SENTENCING POTTAWATOMIE DISTRICT COURT – REVERSED AND REMANDED COURT OF APPEALS – AFFIRMED STATE V. TONGE NO. 119,543–MARCH 19, 2021 FACTS: Consistent with plea agreement, Tonge entered no contest plea to aggravated robbery. He appealed his sentence, claiming for first time that district court erred by scoring two pre-1993 burglary convictions as person felonies for purposes of calculating Tonge’s criminal history score. In unpublished opinion, Court of Appeals found the sentencing court improperly classified the pre-1993 burglary convictions which resulted in an illegal sentence requiring remand for resentencing. Panel further found the plea agreement was negotiated on mutual mistake, and reformed the plea agreement on remand to eliminate the parties’ agreed-upon recommendations. Tonge’s petition for review granted.

ISSUES: Appellate Review of an Illegal Sentence HELD: Once an appellate court finds the district court imposed an illegal sentence, the court is limited to remanding on that issue with directions for district court to impose a legal sentence.

Panel’s decision to the extent it ordered remand to district court for resentencing to impose a legal sentence is affirmed. Panel exceeded scope of its authority when it reformed the parties’ plea agreement as part of its remand order. That portion of panel’s decision is reversed.

CRIMINAL: APPEALS – APPELLATE PROCEDURE – CRIMINAL PROCEDURE – SENTENCING – STATUTES MONTGOMERY DISTRICT COURT – VACATED AND REMANDED COURT OF APPEALS – AFFIRMED IN PART, VACATED IN PART STATE V. DUNN NO. 119,866–MARCH 19, 2021 FACTS: Dunn convicted of rape. Departing to the grid and reducing the presumptive grid range, sentencing court imposed 78-month sentence with lifetime postrelease supervision and 74 The Journal of the Kansas Bar Association

electronic monitoring. Dunn appealed claiming district court erred in imposing lifetime postrelease supervision and lifetime electronic monitoring, and in failing to grant him good time credit. State argued for first time on appeal that district court imposed an illegal sentence by departing more than the 50 percent allowed under K.S.A. 2018 Supp. 21-6818(a) from a standard guideline sentence. Panel found district court imposed an illegal sentence as conceded by Dunn, and then addressed the remaining issues. Review granted on issues of lifetime postrelease supervision and lifetime electronic monitoring.

ISSUES: Appellate Review of Sentencing HELD: Panel’s decision that the 78-month sentence was illegal is affirmed and case is remanded to district court for imposition of a legal sentence. Panel’s holdings on issues of lifetime postrelease supervision and lifetime electronic monitoring are vacated with no opinion offered or implied on their merits.

STATUTES: K.S.A. 2020 Supp. 22-3717(b)(6); K.S.A. 2018 Supp. 21-5503(a)(3), -5503(b)(1), -6627, -6627(d)(1), -6804(a), -6818(a), -6818(b)(1) CRIMINAL: CRIMINAL PROCEDURE – MOTIONS – STATUTES DOUGLAS DISTRICT COURT – REVERSED AND REMANDED; COURT OF APPEALS – AFFIRMED STATE V. QUEEN NO. 120,643–MARCH 19, 2021 FACTS: State charged Queen with murder and attempted murder. Trial date set for April 2 under mistaken belief the statutory deadline was April 30. Because Queen had remained in custody, however, the 150-day deadline of March 30 applied.

On day of trial Queen filed motion to dismiss the charges with prejudice based on State’s failure to comply with Kansas speedy trial statute. District court denied the motion finding two statutory exceptions: crowded docket required the delay, and Queen caused the delay by acquiescing in the trial date. District court also cited defense counsel’s failure to correct the district court’s mistaken deadline date Following jury conviction and sentencing Queen appealed on issues including the violation of his statutory speedy trial rights. Court of Appeals reversed in unpublished opinion, holding no statutory exceptions applied to extend the speedy trial deadline. State’s petition for review granted. State also raised new argument that period set aside to file and decide defense motions should not count in the speedy trial computation.

ISSUES: (1) Speedy Trial Statute – Crowded Docket Exception, (2) Speedy Trial Statute – Acquiescence, (3) Time Attributable to Defense Motions HELD: Panel’s holding is affirmed. Queen’s convictions are reversed, sentences are vacated, and case is remanded to district court with directions to dismiss charges with prejudice.

Crowded docket exception does not apply under facts in this case. District court set April 2 trial date beyond the speedy trial time set in K.S.A. 2020 Supp. 22-3402 without citing need to do so because of a crowded docket, and no party requested a continuance and none was ordered. State v. Dean, 42 Kan. App.2d 32 (2009), and State v. Rodriquez-Garcia, 27 Kan. App.2d 439 (1999), are distinguished.

Acquiescence within context of waiver of statutory speedy trial rights requires more than passive acceptance of date offered by the court. Defense counsel’s mere acknowledgment of availability on district court’s proposed April 2 trial date did not waive Queen’s speedy trial rights or cause a delay that tolled the running of the speedy trial deadline. State’s cites defense counsel’s duty of candor toward the court under Kansas Rule of Profession Conduct (KRPC) 3.3, but nothing in KRPC alters longstanding Kansas caselaw that a criminal defendant has no obligation to take affirmative action to protect right to speedy trial.

Issue of whether delay due to defense motions kept the State from bringing Queen to trial within state statutory time limit was not preserved for appellate review. State failed to raise this issue in district court and questions of fact remain unresolved.

State’s cited cases do not support a blanket proposition that courts should automatically charge time required by all pretrial motions hearings to the defense.

STATUTES: K.S.A. 2020 Supp. 22-3402, -3402(a), -3402(b), -3402(c), -3402(e)(4) ATTORNEY AND CLIENT; GUILTY PLEA SEDGWICK DISTRICT COURT – AFFIRMED STATE V. BARBER NO. 121,720–MARCH 19, 2021 FACTS: Barber was charged with first-degree murder for killing his ex-girlfriend. Prior to trial, the State offered a hard 25 sentence in exchange for a guilty plea. In the absence of a plea deal, Barber faced a 50 year to life sentence. Barber initially rejected the plea and the defense team prepared for trial. Barber expressed dissatisfaction with trial counsel. But days before trial was supposed to begin, Barber changed his mind and pled guilty. Before sentencing could occur, Barber filed a motion to withdraw plea claiming mental duress and continuing dissatisfaction with counsel. New counsel was appointed, and that attorney filed an amended motion complaining of a lack of discovery and a lack of investigation into the effects of Barber’s antidepressant medication. After a hearing, the district court determined that Barber failed to establish good cause to withdraw his plea. Barber appeals.

ISSUES: (1) Whether good cause existed to allow a plea withdrawal

HELD: Barber fails to establish any abuse of discretion by the district court. Evidence showed that Barber’s first attorney conducted adequate discovery and gained enough evidence to rule out Barber’s desired voluntary intoxication defense. Given counsel’s adequate performance, Barber failed to establish good cause to withdraw his plea.

STATUTES: K.S.A. 2020 Supp. 22-3210(d)(1) LAW OF THE CASE DOCTRINE; MANDATE RULE WYANDOTTE DISTRICT COURT – AFFIRMED STATE V. CHEEKS NO. 122,621–MARCH 19, 2021 FACTS: In 1993, Cheeks was convicted of the second-degree murder of his wife. His conviction and sentence were affirmed on direct appeal. In March 2009, Cheeks filed a pro se petition for DNA testing under K.S.A. 21-2512. The district court denied the motion and Cheeks appealed, where he successfully argued that equal protection required that he be given access to DNA testing. While the case was on remand, the Supreme Court decided State v. LaPointe which overturned the decision in Cheeks’ first appeal. Under LaPointe, individuals convicted of second-degree murder are not eligible for DNA testing. The district court held the remand hearing and denied Cheeks’ motion, citing LaPointe. Cheeks appealed.

ISSUES: (1) Whether the mandate or law of the case rules require that Cheeks be allowed DNA testing HELD: There are recognized exceptions to the law of the case doctrine, and two exceptions apply here. LaPointe overruled the decision in Cheeks’ first appeal, meaning the law of the case doctrine no longer binds the district court to that conflicting decision. Unlike the common-law law of the case doctrine, the mandate rule is statutory. And the district court technically violated the mandate rule by denying Cheeks’ motion for DNA testing, given the outcome of his prior appeals. But the district court took the correct action by following intervening case law rather than the mandate, and any error stemming from that decision is harmless. Cheeks’ motion for DNA testing was correctly denied.

DISSENT: (Luckert, C.J. joined by Wilson, J.) The majority reads LaPointe too broadly. Given the precise facts of his case, Cheeks should be allowed access to DNA testing.

STATUTES: K.S.A. 20-108, 21-2512, -2512(a), 60-2106(c) CRIMINAL: CONSTITUTIONAL LAW – CRIMINAL PROCEDURE – EVIDENCE – MOTIONS – STATUTES SEDGWICK DISTRICT COURT – AFFIRMED STATE V. BREITENBACH NO. 120,503–MARCH 26, 2021 FACTS: Breitenbach convicted of attempted capital murder, aggravated criminal sodomy, and aggravated burglary. On u www.ksbar.org | May/June 2021 75

appellate decisions t appeal he alleged district court’ erred in denying Breitenbach’s: (1) pro se request for additional DNA testing, finding the request was nothing more than a fishing expedition; (2) request for new appointed counsel notwithstanding Breitenbach’s claims centering on defense counsel’s failure to request additional DNA testing, defense counsel’s limited representation because he believed Breitenbach was guilty, and defense counsel’s conflict of interest in wanting to preserve indigent defense budget; and (3) request for appointment of standby counsel. He also claimed (4) the State violated Brady v. Maryland, 373 U.S. 83 (1963), by failing to disclose exculpatory fingerprint testing, and (5) cumulative error denied him a fair trial.

ISSUES: (1) Request for Expert Services, (2) Motion to Appoint New Counsel, (3) Motion to Appoint Standby Counsel, (4) Disclosure of Exculpatory Evidence, (5) Cumulative Error HELD: District court correctly concluded that Breitenbach did not wave an absolute right to independent testing on mere request. Two-part test showing both indigency and necessity applies, but scarcity of Kansas law noted on establishing whether a DNA expert was necessary for an adequate defense.

Fundamental fairness does not require the court to furnish Breitenbach with equal funds and services as within reach of the State. And Breitenbach’s argument for expanding Ake v.

Oklahoma, 470 U.S. 68 (1985), to include a constitutional right to non-psychiatric DNA expert evaluation, is denied. District court addressed Breitenbach’s specific complaints and concerns and made no mistakes of law or fact or otherwise abuse its discretion in denying the request for additional DNA testing.

No showing that district court erred in denying Breitenbach’s request for new counsel. The decision to forgo additional DNA testing was reasonable; having a public defender does not entitle Breitenbach to an open checkbook; and a defense attorney’s personal belief in Breitenbach’s guilt does not immediately necessitate newly appointed counsel when that defense attorney continues to competently conduct a constitutionally adequate defense.

Appointment of standby counsel for a pro se litigant rests within the sound discretion of the trial court. Here, no error shown in district court’s reasoning that Breitenbach was looking more for co-counsel, and that standby counsel would not be especially helpful.

While there was some modicum of favorable value to the missing evidence, no Brady violation resulted from the State’s delayed disclosure of evidence that Brietenbach did not use, and Brietenbach failed to show prejudice.

Cumulative error doctrine not applicable where no errors found on appeal.

STATUTES: K.S.A. 22-4508, 60-259, -1507; 18 U.S.C. § 3006A(e) CRIMINAL: CONSTITUTIONAL LAW – CRIMINAL PROCEDURE – FOURTH AMENDMENT – EVIDENCE – MOTIONS JOHNSON DISTRICT COURT – AFFIRMED; COURT OF APPEALS – AFFIRMED STATE V. CASH NO. 121,467–APRIL 2, 2021 FACTS: Cash drove van that officer stopped for a registration tag violation. While Cash searched for documents, officer observed a plastic baggie and a Crown Royal bag hanging out of a partially open safe on rear floorboard. Cash arrested on outstanding warrant. Drug charges filed based on drugs and paraphernalia uncovered in search of the van. Cash filed motion to suppress, arguing the officer unlawfully extended the duration and scope of the initial stop when she questioned Cash about the safe without having any reasonable suspicion of a crime. District court denied the motion, finding the officer had reasonable suspicion to extend the traffic stop. Cash convicted in bench trial on stipulated facts. He appealed the denial of his motion to suppress. Court of Appeals affirmed in unpublished opinion, citing in part the officer’s training and experience that a “Crown Royal bag ‘more often than not’ contains drug paraphernalia.” Cash’s petition for review granted on claim that substantial competent evidence did not support the district court’s finding of reasonable suspicion because the officer failed to provide similar examples to explain her belief the baggie and safe were suspicious, never testified she found the baggie or safe to be suspicious, and the Crown Royal bag alone did not support a finding of reasonable suspicion. He alternatively claimed that even if the plastic baggie and safe are considered, they were insufficient to provide an objective basis for suspecting criminal activity.

ISSUES: Motion to Suppress Evidence HELD: District court properly denied Cash’s motion to suppress.

Relevant question at the suppression hearing was whether facts presented to the officer gave rise to an objective basis for suspecting criminal activity. Officer’s failure to expressly testify that she subjectively considered all facts collectively to be suspicious did not prevent district court from considering the baggie and safe in its reasonable suspicion calculus, and panel did not improperly make factual findings about the baggie and the safe in affirming the district court’s decision.

Totality of the circumstances in this case, including evidence available to officer when she asked Cash about the safe, gave rise to a particularized and objective basis for suspecting Cash was engaged in criminal activity. Panel properly examined and concluded the officer’s subjective suspicious was objectively reasonable.

STATUTES: K.S.A. 2018 Supp. 8-142; K.S.A. 22-3216(2)

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JUVENILE OFFENDERS CLAY DISTRICT COURT – REVERSED AND REMANDED IN RE A.B. NO. 122,785–APRIL 2, 2021 FACTS: This case arose after a 14-year-old girl, A.B., had sex with a 14-year-old boy, T.C. The State initially charged A.B. with unlawful voluntary sexual relations. But the district court dismissed that charge, relying on the Court of Appeals’ decision in In re E.R., which held that for such a conviction to occur the offender must be older than the victim, and A.B. is eight months older than T.C. The State then chose to charge A.B. with aggravated indecent liberties with a child. A.B. challenged the charge on constitutional grounds, claiming that K.S.A. 2020 Supp. 21-5506(b)(1) was both vague and overbroad. She also claimed an equal protection issue stemming from the district court’s interpretation of E.R. The district court agreed with A.B. and dismissed the charges. The State appealed.

ISSUES: (1) Is K.S.A. 2020 Supp. 21-5506(b)(1) overly vague; (2) overbreadth claim; (3) as-applied equal protection claim HELD: K.S.A. 2020 Supp. 21-5506(b)(1) is not vague because it gives adequate warning of the proscribed conduct. Discerning whether the Legislature intended not to prosecute a younger child for engaging in voluntary sexual conduct with an older child requires impermissible speculation. The conduct A.B. was charged with committing is not constitutionally protected, which means K.S.A. 2020 Supp. 21-5506(b)(1) cannot be overbroad. The Court of Appeals wrongly decided E.R. when it held that an adjudication for a Romeo and Juliet violation can only occur if the offender is older than the victim. The plain language of the statute does not require this outcome and E.R. is overruled. The case is remanded to district court.

CONCURRENCE: (Stegall, J. joined by Wall, J.) The outcome is correct but there should not be different standards of review depending on which part of the Constitution is being interpreted or enforced. The presumption of constitutionality should never be applied.

STATUTES: K.S.A. 2020 Supp. 21-5506, -5506(b)(1), -5507 CRIMINAL: CRIMINAL LAW – EVIDENCE – PROSECUTORS – STATUTES WYANDOTTE DISTRICT COURT – REVERSED AND REMANDED STATE V. WATSON NO. 118,710–APRIL 23, 2021 FACTS: Watson worked at a home health-care agency (Best Choice) enrolled in Medicaid, and at QuickTrip. Based on overlapping time sheets for his two jobs State charged him with Medicaid fraud and felony theft. Jury convicted him of Medicaid fraud, but unable to reach verdict on theft charge.

District court ordered Watson to pay $13,077.22 in restitution.

Watson appealed. In unpublished opinion Court of Appeals affirmed, finding one harmless prosecutorial error during

closing argument in stating Watson had not provided any proof he worked all hours reported or delivered all services billed to Medicaid, and one harmless instructional error. Panel also vacated restitution order, finding insufficient evidence supported it. Review granted on Watson’s petition alleging error in panel affirming his conviction. Review denied on State’s cross-petition of panel’s decision to vacate the restitution order.

ISSUES: (1) Prosecutorial Error – Shifting Burden of Proof, (2) Prosecutorial Error – Misstating Evidence and the Law, (3) Cumulative Error HELD: Prosecutor’s comments on lack of evidence to support Watson’s defense were within wide latitude afforded prosecutors in discussing weaknesses of the defense and did not shift burden of proof onto Watson.

Prosecutor misstated the evidence with argument that disregarded Watson’s own testimony. Prosecutor misstated the law by indicating Watson was guilty of Medicaid fraud based solely on his submission of inaccurate time sheets to Best Choice. An intent to defraud is an essential element of Medicaid fraud under K.S.A. 2019 Supp. 21-5927(a). Prosecutor’s errors effectively eliminated that essential element and undermined Watson’s central defense that he acted without an intent to defraud. These errors prejudiced Watson’s right to a fair trial and entitled him to a new trial.

Panel’s finding of instructional error is not challenged. Even if harmless in isolation, it added to the prejudice arising from prosecutorial error. Cumulative effect of these trial errors deprived Watson of a fair trial. Court of Appeals judgment is reversed. District court judgment based on the jury verdict is reversed and case is remanded for new trial.

STATUTES: K.S.A. 2019 Supp. 21-5111(e), -5111(o), -5801(a) (2), -5927, -5927(a), -5927(a)(1)(B) CRIMINAL: CRIMINAL LAW – EVIDENCE – JURY INSTRUCTIONS – STATUTES SEDGWICK DISTRICT COURT – AFFIRMED STATE V. LEVY NO. 119,908–APRIL 23, 2021 FACTS: Victim sitting in his truck was killed in cross-fire between two rival gangs. State charged Levy and a rival gang member in separate criminal cases. Jury convicted Levy as charged of first-degree felony murder. He appealed claiming: (1) insufficient evidence supported the underlying crime of criminal discharge of a firearm at an occupied vehicle because no evidence that Levy intended to fire at an occupied vehicle; (2) error to admit a detective’s testimony concerning Levy’s gang affiliation, and failure to provide a sufficient limiting instruction; (3) jury instruction – that Levy or another killed the victim - impermissibly expanded the charge in the complaint – that Levy unlawfully killed a human being – and allowed jury u www.ksbar.org | May/June 2021 77

appellate decisions t to convict him of something he was never charged with; and (4) cumulative error denied him a fair trial.

ISSUES: (1) Sufficiency of the Evidence, (2) Gang Testimony, (3) Jury Instruction HELD: Sufficient evidence supported jury’s determination that Levy committed the underlying felony of criminal discharge.

Levy’s claim is defeated by State v. Farmer, 285 Kan. 541 (2008) (criminal discharge statute is not a specific intent crime).

District court did not err in holding the detective’s gang testimony was relevant and did not abuse its discretion in finding the detective’s testimony was not unduly prejudicial.

District court’s limiting instruction was nearly identical to one approved in State v. Dean, 310 Kan. 848 (2019).

Levy’s instructional claim is defeated by State v. Robinson, 308 Kan. 402 (2018). State presented evidence the victim was shot as Levy committed the underlying felony of criminal discharge at an occupied vehicle, so the instruction was legally appropriate.

Cumulative error doctrine not applicable where no error is found.

STATUTES: K.S.A. 2020 Supp. 21-6308(a)(1)(B), 22-3414(3); K.S.A. 2006 Supp. 21-4219(b); K.S.A. 60-401(b), – 407(f), -455 CRIMINAL: APPEALS – CRIMINAL LAW – CRIMINAL PROCEDURE – EVIDENCE – EXPERT WITNESSES – JURY INSTRUCTIONS – PROSECUTORS – TRIALS RILEY DISTRICT COURT – AFFIRMED STATE V. AGUIRRE NO. 119,529–APRIL 23, 2021 FACTS: Aguirre convicted of capital murder in deaths of exgirlfriend (T.M.) and their one-year-old son (J.M.). Kansas Supreme Court reversed based on district court’s failure to suppress the confession obtained in violation of Miranda. State v. Aguirre, 301 Kan. 950 (2015). Before retrial, parties sought ruling on the voluntariness of statements Aguirre made to police after he had invoked his rights. District court found them to be voluntary and admissible for impeachment purposes. On remand, jury convicted Aguirre of voluntary manslaughter in death of T.M., and first-degree premeditated murder of J.M. Aguirre appealed claiming: (1) statements made after invoking Miranda rights were involuntary; (2) district court failed its gatekeeping function for admitting expert testimony of Dr. Tomb and erred in allowing Tomb’s “open grave” testimony; (3) insufficient evidence, through impermissible inference stacking, supported the premeditated murder conviction; (4) district court erred in finding parties’ stipulation at first trial to emails’ authenticity was enforceable at second trial; (5) district court erred in refusing to give Aguirre’s requested cautionary jury instruction against inference stacking; (6) prosecutor misstated 78 The Journal of the Kansas Bar Association

the requirement of jury unanimity and diluted the burden of proof; (7) district court lacked jurisdiction to convict Aguirre of two lesser included offenses when he was only charged with a single count of capital murder; and (8) cumulative error denied him a fair trial.

ISSUES: (1) Voluntariness of Statements, (2) Admission of Expert Testimony, (3) Sufficiency of the Evidence, (4) Stipulation to Authenticity of Emails, (5) Cautionary Jury Instruction, (6) Prosecutorial Error, (7) District Court’s Jurisdiction, (8) Cumulative Err HELD: State’s argument that Aguirre failed to preserve his involuntariness claim by failing to make proffer is rejected.

K.S.A. 60-405 applies to scenarios involving exclusion of evidence, not a ruling that evidence may be admissible for impeachment. State v. Swindler, 296 Kan. 670 is distinguished.

Under facts in case, Aguirre’s statements, though obtained in violation of Miranda, were voluntary and could be used for purposes of impeachment. Aguirre’s statements in his second interview four days later also were voluntary.

Standard of appellate review of district court’s performance of its gatekeeping function is articulated for the first time. When district court’s decision to admit or exclude expert testimony is challenged, appellate court must evaluate for abuse of discretion whether district used the correct legal standard governing admissibility of expert testimony, and how it applied that legal standard in evaluating whether an expert is qualified to render an opinion and whether the opinion is sufficiently relevant and reliable. Here, district court used the correct legal standard to establish Tomb qualified as an expert, but it abused its discretion by allowing unreliable expert testimony about how long a grave lay open to the sky. On facts of the case, however, this error was harmless.

Sufficient evidence supported Aguirre’s conviction for the premeditated killing of J.M. without the need for jury to stack inferences. Nor did district court’s error in allowing unreliable expert testimony about how long a grave lay open affect sufficiency of the evidence supporting jury’s finding that J.M. was killed with premeditation.

Evidentiary stipulations are generally binding during subsequent trials (or retrial) unless expressly limited by their own terms. Federal guidance in analyzing this unusual issue is persuasive. Here the stipulation appears ambiguous as to whether it applies for only the first trial or also for any trial in this case, and under facts in case the ends of justice require the stipulation to be binding at the second trial.

Under facts in case, a jury instruction on inference stacking was not factually appropriate. Under facts in case, no error found in prosecutor’s closing argument.

District court had jurisdiction to convict Aguirre of two lesser included offenses despite only being charged with one count of capital murder based on two killings. Interpretation of relevant statutes in State v. Martis, 277 Kan. 267 (2004), is approved.

The single error found in district court’s decision to admit Tomb’s “open grave” testimony cannot support a finding of cumulative error. Aguirre’s convictions for premeditated firstdegree murder and voluntary manslaughter are affirmed.

CONCURRENCE AND DISSENT: (Luckert, C.J.): Disagrees with majority’s holding that Aguirre’s statement to law enforcement in his first interrogation was voluntary, citing fairness-of-police factor. Not persuaded by majority’s distinguishing of Swindler. Concurs that statement in A STATUTES: K.S.A. 2020 Supp. 21-5109(b), 60-456(b); K.S.A. 2002 Supp. 21-3107(2); K.S.A. 21-3439(a)(6), 60-245a -405, -456, -456(b) GUILTY PLEA; MANIFEST INJUSTICE BROWN DISTRICT COURT – COURT OF APPEALS IS AFFIRMED, DISTRICT COURT IS AFFIRMED STATE V. DAVIS NO. 121,054–APRIL 23, 2021 FACTS: David pled no contest to one count of second-degree murder and one count of child abuse. It was anticipated that Davis would be sentenced with a criminal history score of D. At his plea hearing, Davis pled no contest to an unrelated misdemeanor battery charge. During the hearing, Davis claimed that his plea was knowing and voluntary – including the hand-written amendment which acknowledged the waiver of his right to appeal his convictions and sentences. Four years later, Davis sought to withdraw his plea. He claimed excusable neglect for the out-of-time request, saying that he believed his waiver of appellate rights extended to any collateral attack. The district court denied the motion and Davis appealed. The Court of Appeals affirmed and Davis’ petition for review was granted.

ISSUES: (1) Excusable neglect requirements and timelines HELD: The Court of Appeals erred when it found that a showing of manifest injustice is a condition precedent to a finding of excusable neglect sufficient to justify a late motion to withdraw plea. If proven, excusable neglect permits a litigant to seek to withdraw a plea out of time. Manifest injustice is the substantive standard which is used to determine whether a motion to withdraw plea should be granted or denied. If a motion to withdraw plea is filed after more than one year, the court must determine whether excusable neglect exists which justifies the late filing and *then* determine whether manifest injustice requires withdrawal of the plea. But any error here is harmless since the district court did not abuse its discretion by denying Davis’ motion on the merits.

STATUTES: K.S.A. 2019 Supp. 22-3210(e)(1), -3210(e)(2) JURY INSTRUCTIONS; SELF-DEFENSE SEDGWICK DISTRICT COURT – AFFIRMED IN PART, REVERSED IN PART, SENTENCE VACATED, CASE REMANDED STATE V. HOLLEY NO. 121,181–APRIL 23, 2021 FACTS: Holley agreed to sell his cell phone to a man. But when they met at Holley’s home the man wanted to back out of the transaction. Holley pulled a gun on him and demanded his wallet, phone, and money. The man’s children were in the back seat, so he complied and then drove away to call the police from a nearby gas station. A month later, Holley met up with a different man to buy marijuana from him. Holley told the man to arrive unarmed because they were planning to meet at Holley’s mother’s daycare facility. The transaction occurred in the man’s car. Holley pulled a gun and fatally shot the man. The man’s girlfriend, who was the car’s driver, was uninjured. Holley admitted to the shooting but claimed he shot in self-defense because the man pulled a gun on him and would have fired first but the gun jammed. Holley was convicted of first-degree felony murder, two counts of aggravated robbery, two counts of child endangerment, theft, and possession of marijuana in conjunction with these events. He appeals.

ISSUES: (1) Necessity of a self-defense instruction; (2) sufficiency of evidence for child endangerment convictions STATUTES: K.S.A. 2020 Supp. 21-5226(a), -5402(c)(1)(C), -5402(c)(1)(D), -5601(a) VOLUNTARY INTOXICATION; VOLUNTARY MANSLAUGHTER WYANDOTTE DISTRICT COURT – AFFIRMED STATE V. GALLEGOS NO. 121,685–APRIL 23, 2021 FACTS: Gallegos was charged with first-degree premeditated murder. The victim was a woman Gallegos accused of robbing him during a sexual encounter. Gallegos did not deny that he strangled the woman but claimed that he was intoxicated at the time of the crime and that it was a crime of passion during a sudden quarrel. The district court denied Gallegos’ request for a voluntary intoxication jury instruction. Gallegos was convicted as charged and he appeals.

ISSUES: (1) Voluntary manslaughter instruction as a lesser included offense; (2) voluntary intoxication jury instruction; (3) prosecutorial error; (4) cumulative error HELD: There was no evidence to reasonably justify the giving of a voluntary manslaughter jury instruction. The facts of the crime show that the lesser included instruction was not factually appropriate because there was no legally sufficient provocation. And Gallegos’ testimony in support of a voluntary u www.ksbar.org | May/June 2021 79

appellate decisions t manslaughter instruction was inconsistent with the rest of the evidence. Gallegos testified that he consumed alcohol before the crime, but he did not testify that he was impaired. In the absence of that evidence, there was no need to instruct the jury on voluntary intoxication. The prosecutor’s comments during closing argument were meant to ameliorate any prejudice against the victim, who was engaged in prostitution. They were

not meant to tell the jury not to consider the evidence. Since there was no error, Gallegos is not entitled to a new trial based on cumulative error.

STATUTES: K.S.A. 2020 Supp. 21-5404(a)

Kansas Court of Appeals CIVIL JUDICIAL REVIEW; STATUTORY INTERPRETATION JOHNSON DISTRICT COURT – AFFIRMED FROST V. KANSAS DEPARTMENT FOR CHILDREN AND FAMILIES NO. 122,737–MARCH 5, 2021 FACTS: Eugene and Vicki Frost are the maternal grandparents of four grandchildren. The three oldest grandchildren came into the custody of the Department for Children and Families in August 2019. The Frosts were interested parties in that child in need of care action. As the CINC case progressed, concerns arose from multiple areas that the Frosts were hindering the children’s reintegration with their mother. As a result, the district court stopped their visitation with the children and entered a no contact order. Seeking a workaround, the Frosts filed a separate civil action against DCF seeking visitation with all four children. The district court dismissed the action for lack of jurisdiction, citing K.S.A. 2019 Supp. 23-3301. The Frosts appealed.

ISSUES: (1) Does K.S.A. 2019 Supp. 23-3301(a) allow grandparents to seek visitation independently from a divorce or paternity action; (2) if visitation is limited to divorce or paternity actions, does that implicate due process concerns HELD: The plain statutory language of K.S.A. 23-3301(a) and related statutes shows that it applies beyond divorce cases. Because the precedent of T.N.Y., which held otherwise, was issued by another Court of Appeals panel, this panel is not bound by its holding. A grandparent seeking visitation can file an independent action in the county where the child resides. When that action is filed, the district court may grant reasonable visitation upon a finding that visitation is in the child’s best interests and there is a substantial relationship between the child and grandparent. However, the district court was correct to dismiss the Frosts’ petition even if for the wrong reason. As DCF argued below, the Frosts’ petition was not ripe for decision. The CINC order takes precedence and there is nothing a district court can do until that process concludes, at 80 The Journal of the Kansas Bar Association

which point DCF will have lost custody of the children. The Frosts failed to preserve their constitutional issue for review and it is not discussed. But the statutory interpretation applied here does not implicate due process.

STATUTES: K.S.A. 2019 Supp. 23-3301, -3301(a), -3302, -3303, -3304 TAXATION CRAWFORD DISTRICT COURT – AFFIRMED IN PART, REVERSED IN PART, REMANDED WITH DIRECTIONS BICKNELL V. KANSAS DEPARTMENT OF REVENUE NO. 120,935–MARCH 12, 2021 FACTS: In 2007, Kansas Department of Revenue initiated a review of Gene Bicknell’s 2005 and 2006 income tax returns, which were filed as nonresident returns. After researching the matter and interviewing Gene and his wife, Rita, KDOR determined that Gene should have filed as a Kansas resident.

The consequence was a bill – for income tax, interest, and penalties – exceeding $40 million. The Bicknells appealed, arguing that Gene was a Florida resident during the assessment period. KDOR denied the appeal, as did the Court of Tax Appeals. The Bicknells appealed and a prior panel of the Court of Appeals agreed with the Bicknells that COTA erred by relying on a common-law approach to defining domicile versus using KDOR’s published regulations on the matter. The panel vacated COTA’s decision and sent the matter back for reconsideration.

While the appeal was pending, the legislature abolished COTA and established the Board of Tax Appeals. On remand, BOTA determined that the Bicknells failed to satisfy their burden of proving that Gene was a Florida resident for 2005 and 2006.

Gene filed a petition for review in Crawford County and, after an eight-day trial, the district court ruled that Gene had a Florida domicile during the assessment period. KDOR appeals.

ISSUES: (1) Whether the district court properly applied the burden of proof; (2) error to conduct trial de novo; (3) whether venue was proper in Crawford County HELD: As the petitioner, Gene had the burden to prove by a

preponderance of the evidence that he was domiciled in Florida for tax years 2005 and 2006. The record on appeal shows that, at times, the district court improperly shifted onto KDOR the burden of proving that Gene was lying when he testified about living in Florida and proving that Gene maintained a different domicile than Rita. The 2016 amendments to the BOTA statutes meant that the district court had to conduct a full trial de novo, not the review of the administrative record sought by KDOR. The district court properly conducted a full trial de novo.

Venue existed where BOTA’s order was entered or where it is effective. The order was entered in Shawnee County, so venue would be proper in Crawford County only if BOTA’s order is effective there. It is undisputed that the Bicknells no longer live in Crawford County and they failed to prove that BOTA’s order is effective there. Retrial must occur in Shawnee County.

DISSENT: (Arnold-Burger, C.J.) The majority erred by finding prejudicial burden shifting regarding Gene’s domicile. What the majority identified as burden shifting was really a weighing of the evidence that was appropriate within the statutory review framework. The majority correctly determined that venue did not lie in Crawford County. But improper venue does not always require a remand.

STATUTES: K.S.A. 2020 Supp. 60-237; K.S.A. 74-2426, -2426(c), -77-606, -609(b), -618, -619, -620, -621(a)(1) WORKERS COMPENSATION WORKERS COMPENSATION BOARD – AFFIRMED IN PART, REVERSED IN PART, REMANDED WITH DIRECTIONS LARSON V. EXCEL INDUSTRIES NO. 122,471–MARCH 12, 2021 FACTS: Thomas Larson worked for Excel Industries and was on a business trip in Chicago when he suffered a heart attack and a prolonged hospitalization. During his recovery, Thomas made it clear to his boss that he no longer wanted to travel for work and that request was granted. But by the time he returned to work, Thomas had a new boss and domestic travel was back as one of Thomas’ job duties. While on such a trip, Thomas’ return flight home was delayed due to bad weather. Thomas had not anticipated the delay and did not have enough of his cardiac prescription medication with him. He returned home late at night and suffered a fatal heart attack while still at the airport.

Pamela, Thomas’ widow, applied for surviving spouse benefits through workers compensation, claiming that Thomas’ death was caused by unusual exertion under the heart amendment.

At a hearing, dueling experts testified about whether there was unusual exertion in Thomas’ job duties which precipitated his fatal heart attack. The ALJ denied Pamela’s claim for benefits and the Workers Compensation Appeals Board affirmed that finding, holding that Thomas’ work trip was part of his normal employment. After making that finding, the Board declared all other issues moot. Pamela appealed.

ISSUES: (1) Correct interpretation of the heart amendment; (2) evidence of whether Thomas was engaged in unusual exertion; (3) whether issue of death from external forces was moot HELD: The heart amendment does not create a day-to-day test to measure usual exertion. The Board considered all relevant factors necessary to decide what was usual in the course of Thomas’ employment and correctly interpreted the heart amendment. Sufficient evidence existed to prove that domestic travel was still part of Thomas’ job duties at the time of his death and that there was nothing unusual about the trip which immediately preceded Thomas’ death. The Board erred by finding that Pamela’s argument that Thomas’ death was triggered by an external force or agency was moot. This was a separate theory unrelated to the unusual exertion argument, and the Board erred by not making findings of fact and conclusions of law on this issue. The matter is remanded for findings on Pamela’s external force argument.

STATUTES: K.S.A. 2020 Supp. 44-501(c); K.S.A. 77-621(a), -621(c)(7), -621(d) CRIMINAL: CONSTITUTIONAL LAW – CRIMINAL LAW – CRIMINAL PROCEDURE – EVIDENCE – FIFTH AMENDMENT – JURIES – MOTIONS SEDGWICK DISTRICT COURT – REVERSED AND REMANDED STATE V. BROWN NO. 119,790–MARCH 12, 2021 FACTS: State charged Brown with aggravated burglary and aggravated sexual battery. In Jackson v. Denno hearing, district court allowed State to admit Brown’s pre-Miranda statements, finding Brown was in custody but was not being interrogated when officer asked him “I’m assuming you know what this is about” and “I’m assuming you were kind of expecting us.”

District court allowed State to admit K.S.A. 60-455(d) evidence of Brown’s simple battery conviction in Butler County. In Daubert hearing district court denied defense motion for continuance to secure appearance of expert witness concerning Brown’s extreme intoxication. Jury convicted Brown as charged.

On appeal Brown claimed in part: (1) prosecutorial error during closing argument; (2) admission of his pre-Miranda statements violated the Fifth Amendment; (3) error to deny motion for continuance; and (4) error to admit K.S.A. 60-455(d) evidence of the Butler County battery conviction.

ISSUES: (1) Prosecutorial Error, (2) Admission of Pre-Miranda Statements, (3) Motion for Continuance, (4) Admission of K.S.A. 60-455(d) Evidence HELD: Prosecutor erred by calling Brown’s voluntary intoxication defense a “big fat excuse;” by telling jury to skip instructions on sexual battery as a lesser included offense and on voluntary intoxication; and by diluting role of jury saying u www.ksbar.org | May/June 2021 81

appellate decisions t the judge had the “hard job.” Under facts in case, including prejudicial effect of trial court’s misstatement that voluntary intoxication was not a defense, these errors were not harmless.

Convictions are reversed and case is remanded for new trial.

Law on custodial interrogation is reviewed. Trial court erred by admitting Brown’s pre-Miranda statements because officer’s indirect questioning of Brown while in custody was functional equivalent of custodial interrogation. Under facts in case, where Brown’s incriminating pre-Miranda statements were strongest evidence of his intent to make unwanted sexual advances, this error was not harmless. Convictions are reversed and case remanded for new trial with the pre-Miranda statements excluded from evidence.

Trial court erred by denying Brown’s motion for continuance which seriously prejudiced Brown’s ability to present his sole legally valid defense. To the extent it considered factors in State v. Howard, 221 Kan. 51 (1976), concerning prejudice to the defense and the materiality and importance of the unavailable witness’ probable trial testimony, it wrongly weighed those factors against Brown. No legal support for trial court’s conclusions that the proposed expert testimony was per se inadmissible because such testimony would not inhibit or limit Brown’s voluntary intoxication defense and intoxication is something juries understand. The proffered report establishes the expert’s opinion was not general testimony about intoxication, and the expert’s testimony was highly material and important to Brown’s voluntary intoxication defense.

Convictions are reversed and case remanded for new trial.

No error to admit evidence of Brown’s simple battery conviction because facts in the Butler County case established he had committed the elements of a sexual battery. Cautionary guidance provided if motion to admit this same evidence is made on remand.

CONCURRENCE AND DISSENT: (Malone, J.); Agrees with majority that district court did not err in admitting evidence of Brown’s Butler County battery conviction, but disagrees on all other issues and would uphold Brown’s convictions. Would find beyond a reasonable doubt that prosecutor’s improper comments in closing argument – even if egregious – did not affect outcome of the trial in light of the entire record. Close call whether Brown’s pre-Miranda statements resulted from an interrogation, but any error in allowing this evidence did not affect outcome of the trial. And under facts in case, district court did not abuse its discretion in denying last-minute motion for a continuance.

(McAnany, S.J.): Writes separately to join Judge Malone’s dissent that district court did not abuse its discretion in denying Brown’s motion for a continuance. Satisfied the court considered and weighed the Howard factors. Agrees with majority on all other issues.

82 The Journal of the Kansas Bar Association

STATUTES: K.S.A. 2020 Supp. 21-5205(b), -5413(a)(2), -5505, -5505(a); K.S.A. 2018 Supp. 60-455(d); K.S.A. 2017 Supp. 215413(a)(2), -5505(a), 60-455(d), -455(g)(1), -456(b), -457(b); K.S.A. 2016 Supp. 21-5202(h), -5205(b), -5505(a), -5505(b)(1), -5505(b)(2), -5807(b), -5807(b)(1); K.S.A. 22-3401 CRIMINAL: CRIMINAL LAW – CRIMINAL PROCEDURE – JURY INSTRUCTIONS – STATUTES SHAWNEE DISTRICT COURT – AFFIRMED STATE V. MCFARLAND NO. 122,665–APRIL 2, 2021 FACTS: McFarland posted Facebook message threatening to kill his ex-wife. Jury convicted him of intentional criminal threat. He appealed claiming error in the jury instruction which stated the State had to prove he intended to place “another” in fear, but the complaint specified the name of his ex-wife as the person he intended to place in fear. McFarland further claimed insufficient evidence supported his conviction, arguing nothing in the Facebook post referred to violence because the post did not reference the manner by which he would kill his ex-wife.

ISSUES: (1) Jury Instruction – Criminal Threat, (2) Sufficiency of the Evidence HELD: No case found directly addressing the situation where the complaint listed the specific person the threat intended to place in fear but the jury instruction did not. Kansas cases addressing what statute means by “to place another in fear” are examined. Here, the complaint and elements instruction both alleged intentional criminal threat and used language of K.S.A. 2017 Supp. 21-5415(a)(1), and the instruction was not broader than the complaint. The challenged jury instruction was legally and factually appropriate under facts in case.

Sufficiency of the evidence standard of review applies to proof of whether McFarland’s post was a threat to commit violence, but what constitutes violence under the statute is a legal question of statutory interpretation subject to de novo review.

The intentional taking of a person’s life is inherently a violent act no matter the method used or contemplated. McFarland’s threat was sufficient evidence to support his criminal threat conviction.

STATUTES: K.S.A. 2020 Supp. 21-5111(b), -5111(ff), -5415(a) (1), 22-3414(3) K.S.A. 2017 Supp. 21-5415(a)(1) CRIMINAL: CRIMINAL PROCEDURE – SENTENCING -STATUTES COWLEY DISTRICT COURT – REVERSED AND REMANDED STATE V. TERRELL NO. 122,680–APRIL 9, 2021 FACTS: Terrell convicted in 2002 of rape and was required to register under the Kansas Offender Registration Act (KORA).

He was convicted in 2004 for failure to register, and in 2018 of aggravated escape from custody. Based on a 2016 statutory

change which made a KORA violation a person felony if the crime requiring registration was a person felony, the sentencing court reclassified Terrell’s 2004 KORA violation from a nonperson felony to a person felony. Terrell filed motion to correct an illegal sentence, alleging error in the reclassification of his 2004 KORA conviction. District court denied relief citing State v. Keel, 302 Kan. 560 (2015). Terrell appealed.

ISSUES: Sentencing – Criminal History Calculation HELD: Terrell’s sentence is vacated and case is remanded for resentencing. The Kansas Sentencing Guidelines Act (KSGA) is silent as to how a sentencing court should classify a postKSGA in-state conviction if the person/nonperson designation was modified after July 1, 1993. The reasonable and sensible application of KSGA is for post-KSGA Kansas convictions to be classified based on classification in effect at time of the prior crime of conviction. Nothing in KSGA reflects a legislative intent to reclassify prior post-KSGA convictions based on subsequent amendments to existing statutes. When Terrell was convicted in 2004 of KORA violation, intent of Legislature was for that violation to be classified as a nonperson felony. District court imposed an illegal sentence when it reclassified the 2004 KORA violation as a person felony for purpose of determining Terrell’s criminal history score at the 2018 sentencing.

STATUTES: K.S.A. 2020 Supp. 21-5101 et seq., -6801 et seq., -6810(d)(2), -6810(d)(3)(B),-6810(d)(6), -6810(d)(7), -6810(d) (8), -6810(d)(9), -6811(e)(3); K.S.A. 2017 Supp. 21-5807, -6810(d)(8); K.S.A. 2016 Supp. 22-4903(c)(1); K.S.A. 2015 Supp. 8-287; K.S.A. 2010 Supp. 21-3716; K.S.A. 2004 Supp. 224903; K.S.A. 21-3502(c), 22-3504, -4710(d)(9), -4901 et seq.

CRIMINAL: CONSTITUTIONAL LAW – CRIMINAL LAW – EVIDENCE – PROSECUTORS – WITNESSES JOHNSON DISTRICT COURT – AFFIRMED STATE V. HATFIELD NO. 120,996–APRIL 9, 2021 FACTS: Infant (K.G.) developed breathing and seizure-like symptoms several hours after being dropped off at Hatfield’s in-home daycare. Anderst, head of Children’s Mercy childabuse investigative unit, diagnosed K.G. with abusive head trauma. District court reviewed Anderst’s preliminary hearing testimony and allowed him to testify as an expert, concluding Anderst’s approach to diagnose abusive head trauma was generally accepted in the medical community and he adequately explained his methodology and findings to render his testimony reliable. Jury convicted Hatfield of aggravated battery and operating an unlicensed daycare. On appeal she claimed: (1) district court erred in allowing Anderst to testify as an expert witness because he employed unreliable methods to reach his diagnosis, his testimony of nonaccidental abusive head trauma usurped role of jury on question of intent, and failure to conduct a pretrial Daubert hearing deprived Hatfield right of confrontation; (2) district court violated Hatfield’s

right to present a defense when it cautioned her that a question asked during cross-examination of a detective might open door to otherwise inadmissible evidence of other crimes and civil wrongs; (3) multiple errors in prosecutor’s closing argument; (4) cumulative error denied her a fair trial; and (5) insufficient evidence supported the aggravated-battery conviction.

ISSUES: (1) Expert Witness Testimony, (2) Right to Present a Defense, (3) Prosecutorial Error, (4) Cumulative Error, (5) Sufficiency of the Evidence HELD: District court did not abuse its discretion when it allowed Anderst to testify as expert witness. Anderst’s testimony was based on and applied reliable methods and principles. Hatfield’s challenges concern credibility more than methodologies, and the deficiencies and inconsistencies cited in Anderst’s testimony do not render district court’s reliability finding unreasonable. Hatfield’s general objection to Anderst’s testimony did not raise the particular issue of whether the testimony impermissibly invaded province of the jury, and even if sufficiently preserved the argument lacks merit. And under facts in case, district court did not violate Hatfield’s constitutional right to confront witnesses when it denied her request for a pretrial Daubert hearing.

District court did not err when it cautioned Hatfield about potential consequences of earlier questions.

Prosecutor did not commit reversible error during closing argument. Prosecutor did not attempt to shift State’s burden of proof, and did not err by showing jury photographs of K.G. that had previously been admitted as evidence. Claims of mischaracterization or misstatement of the evidence in prosecutor’s closing argument are examined finding none but for prosecutor erroneously commenting on K.G.’s contusion on the neck rather than on top of head, but this single unintentional misstatement did not affect outcome of the trial.

Cumulative error doctrine not applicable where only one error is found.

Sufficient evidence supports the aggravated-battery conviction.

STATUTES: K.S.A. 2020 Supp. 21-5413(b)(1)(A), 60-455, -456(b), -456(d), -457(b)K.S.A. 60-404 CRIMINAL: CONSTITUTIONAL LAW – CRIMINAL LAW – FOURTH AMENDMENT – EVIDENCE – MOTIONS – STATUTES STATE V. SCHEUERMAN NO. 122,253–APRIL 16, 2021 FACTS: Scheuerman was passenger in girlfriend’s car when police stopped the vehicle to arrest him on outstanding warrant and he admitted that any drugs in the car belonged to him. Following inventory search of the impounded car u www.ksbar.org | May/June 2021 83

appellate decisions t State charged Scheuerman with offenses including possession of methamphetamine with intent to distribute at least 3.5 grams but less than 100 grams, K.S.A. 2016 Supp. 21-5705(d) (C)(3). Scheuerman filed unsuccessful motion to suppress evidence obtained in search of a backpack in the car, arguing officers lacked probable cause for the stop or search of the car. On stipulated facts including his possession of at least 3.5 grams of methamphetamine, Scheuerman was convicted in bench trial on the amended lesser charge of possession of methamphetamine with intent to distribute at least 1 gram but less than 3.5 grams, K.S.A. 2016 Supp. 21-5705(d)(B)(3).

Scheuerman appealed claiming district court erred in denying the motion to suppress, arguing the inventory search was illegal because police had no reason to impound the girlfriend’s car.

He also claimed insufficient evidence supported his conviction because State provided no evidence that he possessed less than 3.5 grams of methamphetamine.

ISSUES: (1) Fourth Amendment – Standing to Challenge Search, (2) Sufficiency of the Evidence HELD: Scheurman had no standing to challenge the search because he lacked any ownership or possessory interest in the car. And he cannot claim possessory interest in the backpack

84 The Journal of the Kansas Bar Association

because he did not challenge in district court the search of that item. District court erred in reasoning the State could not argue that Scheuerman lacked standing to challenge the search while also relying on his admission that the drugs were his. District court’s decision to deny the motion to suppress is affirmed as right for the wrong reason.

State’s argument – that Scheuerman’s stipulation to facts sufficient to find him guilty of the original offense is sufficient evidence to convict him of a lesser included offense - is rejected. The elements of Scheuerman’s amended charge are not all contained within the originally charged crime. His stipulation to possessing at lest 3.5 grams of methamphetamine cannot provide a factual basis to satisfy the quantity element of his crime of conviction. His conviction for possession of methamphetamine with intent to distribute contrary to K.S.A. 2016 Supp. 21- 5705(D)(B)(3) is reversed and the corresponding sentence is vacated.

STATUTES: K.S.A. 2020 Supp. 21-5109(b)(1)-(2), -5705(a)(1),5705(d)(3)(B), -5705(d)(3)(C), -5705(e)(2), -5801; K.S.A. 2016 Supp. 21-5705(d)(3)(B), -5705(d)(3)(C), -5705(e)(2) u

appellate practice reminders

Online Annual Attorney Registration MANDATORY for 2021

T

he time has come to let go of the paper!

[Cue “Let It Go” from "Frozen".] It’s time to channel your inner Elsa. Annual attorney registration is now completely electronic. No paper. No lost registration forms. No hassle.

If you have not done so already, please set up your account on the attorney registration portal which is accessible on the Kansas Supreme Court website (kscourts.org). Click on the “Attorney” link which will take you to the Attorney Registration page and then click on “Attorney Registration Portal.”

You can do that anytime – like right now! You can also update information on your attorney profile page at any time. If you have already created your attorney registration portal account, make sure to check that all your information is correct. Then once the annual registration email notice goes out, you will be ready to complete your registration.

Again, a reminder that we now have American Express as a credit card option and we have the technology in place to allow firms or offices to pay for multiple attorneys with a single credit card payment, once all the attorneys have submitted their registration online.

What else has changed? SHOW ME THE MONEY! It’s now time to channel your inner Tom Cruise. Your annual attorney registration fee now includes your annual CLE fee as well. Can I get an “Amen” for only one payment now for registration and CLE fees? Genius, I say. The Supreme Court was quite forgiving during last year’s COVID catastrophe,

so count on very strict deadlines this year. An attorney who fails to register and pay the annual registration fee and any applicable late fee may be suspended from practicing law.

Make sure you are familiar with the above changes. For questions about registration issues contact Kansas Attorney Registration, registration@kscourts.org and for CLE issues contact Kansas CLE, cleadmin@kscle.org. u For questions about these or other appellate procedures and practices, the appellate clerk’s office is only a phone call (785) 296-3229 or an email (appellateclerk@ kscourts.org) away. Douglas T. Shima, Clerk of the Appellate Courts.

www.ksbar.org | May/June 2021 85

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