Justia Business Law Opinion Summaries

Several cousins are shareholders in a closely held family corporation that owns industrial real estate. The dispute centers on the shares held by a trust established by one family member, Sheila, and who has the right to vote those shares after she became incapacitated and her husband resigned as trustee. The parties disagree about the operation of a buy-sell agreement, which the Levins argue restricts the transfer of voting power over the shares, while the Clapkins assert it allows the shares to be controlled by the children as successor cotrustees. The conflict over control of the trust’s shares led to a series of lawsuits between the parties.Previously, the Superior Court of Los Angeles County, handling multiple related actions, determined that the probate court had exclusive jurisdiction to decide the identity of the trust’s trustees. The probate court subsequently ruled in favor of the Clapkins, confirming them as successor cotrustees of the trust. After this order, the Levins filed a new lawsuit claiming the transfer of voting power violated the buy-sell agreement, while the Clapkins, in response, filed a cross-complaint seeking to enforce their right to vote the trust’s shares and to be registered as the record holders.The California Court of Appeal, Second Appellate District, reviewed the Levins’ special motion to strike most of the claims in the cross-complaint under Code of Civil Procedure section 425.16 (the anti-SLAPP statute). The court affirmed the trial court’s denial of the motion, holding that the claims did not arise from protected litigation activity but rather from the underlying dispute over voting rights and control of the corporation. The court also dismissed the Clapkins’ appeal from the denial of their request for attorneys’ fees, finding the order was not separately appealable. The main holding is that the anti-SLAPP statute did not apply because the claims arose from unprotected conduct regarding the internal corporate dispute, not from protected petitioning activity. View "Clapkin v. Levin" on Justia Law

A venture capitalist and two scientists, who had previously collaborated on successful biotechnology companies, engaged in discussions and took steps toward forming a new enterprise to develop and commercialize carbon-hydrogen bond activation technology. As these discussions progressed, disagreements arose regarding the scale of initial funding needed. The scientists believed more substantial investment was required than the amount offered by the venture capitalist. Ultimately, the scientists pursued alternative sources of funding, and the parties’ collaboration did not materialize into a finalized business.After this breakdown, the venture capitalist and his company filed a lawsuit in the Superior Court of San Diego County against the two scientists, alleging breach of oral and implied joint venture agreements, breach of fiduciary duty, promissory estoppel, and quantum meruit. The scientists moved for summary judgment. The Superior Court granted summary judgment in favor of the scientists on all claims. The court found that any oral or implied joint venture agreement was barred by the statute of frauds, there was no enforceable agreement, and the plaintiffs had not expected compensation directly from the defendants.On appeal, the California Court of Appeal, Fourth Appellate District, Division One, reviewed the case de novo. The appellate court affirmed the trial court’s judgment, holding that the statute of frauds applies to oral or implied joint venture agreements that, by their terms, cannot be performed within one year. The court found no genuine dispute that developing the technology would necessarily take more than one year, rendering the alleged joint venture unenforceable. The breach of fiduciary duty claim failed because it depended on a valid joint venture. The promissory estoppel and quantum meruit claims failed due to the absence of clear and unambiguous promises and because compensation was expected from the venture, not the defendants directly. The judgment was affirmed. View "Clarke v. Yu" on Justia Law

A South Korean video game conglomerate acquired a U.S.-based game studio known for its hit title, Subnautica, in 2021. The acquisition terms included a $500 million upfront payment and a possible $250 million in contingent earnout payments. To secure the studio’s continued creative success, the buyer contractually guaranteed that the founders and CEO would retain operational control and could only be terminated for cause. As the studio prepared to release Subnautica 2, internal projections showed that the game would likely trigger the large earnout payment. Fearing the contract was too generous, the buyer’s leadership sought ways to block the earnout, including consulting an AI chatbot for takeover strategies. The buyer then locked the studio out of its publishing platform, posted critical messages on its website, and fired the founders and CEO, initially claiming a lack of game readiness as cause.After the representative of the former shareholders sued in the Court of Chancery of the State of Delaware, the buyer changed its justification, asserting that the executives had abandoned their roles and improperly downloaded company data. The court found that both the studio’s leadership transitions and the data downloads were transparent, known to, and accepted by the buyer before the terminations. The court also found that the buyer’s new grounds for termination were pretextual and not supported by the evidence.The Court of Chancery held that the buyer breached the acquisition agreement by terminating the key employees without cause and usurping their operational control. As a remedy, the court ordered specific performance: the CEO was reinstated with full operational authority, and the earnout period was equitably extended by the duration of his ouster. Issues regarding potential damages for lost earnout revenue were reserved for a later phase. View "Fortis Advisors, LLC v. Krafton, Inc." on Justia Law

After the Texas Legislature enacted a law banning certain medical treatments for minors for the purpose of gender transition, PFLAG, Inc., a nonprofit organization with Texas members, became involved in litigation challenging the law. During this litigation, PFLAG’s executive director submitted an affidavit describing, among other things, how families sought “alternative avenues to maintain care” for transgender youth in Texas. The Office of the Attorney General, suspecting that some medical providers might be concealing violations of the new law through deceptive billing practices, issued a civil investigative demand (CID) to PFLAG seeking documents underlying the affidavit and related information. PFLAG declined to produce the documents and instead petitioned the 261st Judicial District Court in Travis County to set aside or modify the CID. The Attorney General subsequently narrowed the scope of the CID to exclude identifying information of PFLAG’s members and focused the requests more closely on the affidavit’s content.The district court granted a temporary restraining order and, after a trial, issued a final declaratory judgment and injunction largely protecting PFLAG from producing the requested documents. The district court focused its analysis on the original, broader CID and found that the Attorney General lacked a valid basis to believe PFLAG possessed relevant information. The court also concluded that the CID infringed on constitutional rights and failed to comply with statutory requirements.On direct appeal, the Supreme Court of Texas held that the district court erred in analyzing only the original CID and not the revised version. The Supreme Court clarified that the Attorney General’s statutory authority to issue a CID requires only a reasonable belief, not proof, that the recipient may have relevant material. The Court found the Attorney General’s belief reasonable given the content of the affidavit and ruled that PFLAG must produce most responsive documents, subject to privilege and redaction of identifying information. The district court’s order was reversed and the case remanded for further proceedings consistent with this opinion. View "OFFICE OF THE ATTORNEY GENERAL v. PFLAG, INC." on Justia Law

Tara Grall and her former husband, William Grall, were the sole shareholders of G-Team, P.C., an Alabama professional corporation that had ceased business operations. Amid their divorce proceedings, William initiated a derivative action against Tara, seeking to enforce the corporation's right to sell its real property to pay off mortgage debt. Tara argued that the property could not be sold due to an existing Small Business Administration lien. The trial court ordered the sale of the property and scheduled a hearing to determine the distribution of proceeds and finalize the winding up of G-Team. Tara, representing herself, filed multiple motions, including requests to stay hearings, appear remotely, and recuse the judge, but these were denied.Tara appealed several interlocutory orders to the Alabama Court of Civil Appeals, describing her appeal as interlocutory and requesting a stay, which was denied. Despite her pending appeal, the trial court conducted a final hearing and entered a purported final judgment on May 1, 2025, winding up G-Team. Tara then appealed that judgment as well. The Court of Civil Appeals transferred both appeals to the Supreme Court of Alabama, citing a lack of subject-matter jurisdiction.The Supreme Court of Alabama determined it lacked jurisdiction over both appeals. It held that the first appeal was not from a final judgment nor from an appealable interlocutory order under Rule 4(a)(1), Alabama Rules of Appellate Procedure, and therefore must be dismissed. The second appeal was from a judgment entered while the first appeal was pending, at which point the trial court was divested of jurisdiction; this made the subsequent judgment void and the second appeal also subject to dismissal. Both appeals were dismissed by the Supreme Court of Alabama. View "Grall v. Grall" on Justia Law

HPIL Holding, a Wyoming corporation, was the subject of a state court receivership proceeding initiated by minority shareholders who alleged mismanagement. The state court appointed a receiver after HPIL failed to respond to the complaint, which was served at its old Nevada address rather than its new Wyoming address. The appointed receiver and one of the petitioning shareholders allegedly diluted the corporation’s stock and sold a controlling interest to a third party. Later, minority shareholders intervened, leading the state court to set aside the default judgment and dismiss the receivership complaint for improper service, but it declined to vacate the receiver's actions. Subsequent derivative claims by minority shareholders were dismissed for failing to comply with Wyoming corporate law requirements.Following these state court actions, HPIL Holding, authorized by a minority shareholder, sued those involved in federal court, alleging breaches of fiduciary duty, torts, RICO violations, and civil conspiracy related to misconduct during and after the receivership. The United States District Court for the Eastern District of Michigan dismissed the suit for lack of subject-matter jurisdiction, citing the Rooker-Feldman doctrine, which bars federal district courts from reviewing state court judgments.On appeal, the United States Court of Appeals for the Sixth Circuit held that the Rooker-Feldman doctrine did not apply because HPIL’s federal claims alleged injuries caused by independent misconduct, not by the state court judgment itself, and did not seek appellate review or rejection of the state court’s rulings. The court emphasized that only direct appeals of state court judgments fall under § 1257(a)’s jurisdictional bar, and that ordinary principles of issue and claim preclusion—not Rooker-Feldman—should govern the effect of prior state court decisions. The Sixth Circuit reversed the district court’s dismissal and remanded for further proceedings. View "HPIL Holding, Inc. v. Zhang" on Justia Law

A married couple formed a business, Outkast Environmental, LLC, during their marriage, which was classified as community property. After their divorce was finalized in October 2019, Mr. Reis formed a new company, Outkast Industrial Group, LLC, in February 2020, which operated in a similar field. Disputes arose during the partition of their community property, with Ms. Reis claiming that Outkast Industrial should also be considered community property. She alleged that community funds were used to start the new business and that resources from the original company were diverted to the new entity. There was conflicting testimony regarding the source of funds and use of business assets.The 34th Judicial District Court (St. Bernard Parish) first found that Outkast Industrial was community property, relying on prior appellate decisions that treated new businesses as “substitute corporations” for former community businesses when a spouse transfers value or operations. The Court of Appeal, Fourth Circuit, affirmed this classification, finding no manifest error in the trial court’s assessment of credibility and the facts surrounding the formation and funding of Outkast Industrial.The Supreme Court of Louisiana reviewed the case and concluded that the lower courts erred by applying the concept of a “substitute corporation,” which the Supreme Court found has no basis in Louisiana law. The Supreme Court held that property classification is fixed at the time of acquisition; since Outkast Industrial was formed after termination of the community regime, it is Mr. Reis’s separate property. The Court distinguished between classification issues and potential claims for mismanagement or breach of fiduciary duty, which may entitle Ms. Reis to other remedies but do not change the classification of the new company. The Supreme Court reversed the lower courts’ rulings and remanded the case for further proceedings. View "REIS VS. REIS" on Justia Law

The dispute centers on a series of complex financial transactions involving a Wyoming family and their businesses, a local bank, and a commercial lender. The plaintiffs, including a married couple and their closely held LLC, entered into various loans and mortgages related to their commercial property and business operations. When financial difficulties arose—exacerbated by a downturn in the oil and gas industry—the parties restructured their debt, resulting in a 2017 mortgage and, after the operating company filed for bankruptcy, a 2019 settlement agreement. The plaintiffs later alleged that the bank and lender’s actions and omissions caused them to lose equity in both their home and commercial property, and the defendants counterclaimed for breach of the settlement agreement and sought attorney fees.The District Court of Natrona County dismissed or granted summary judgment for the bank and lender on all claims and counterclaims, finding the mortgage unambiguously secured two loans and the bank had no duty to release it after only one was repaid. It also concluded the plaintiffs could not establish justifiable reliance on any alleged misrepresentations, interpreted the settlement agreement as permitting (but not requiring) the lender to record the quitclaim deed after a sale period, and found no breach by the lender. The district court further ruled the plaintiffs breached the agreement by filing suit, thus entitling the bank and lender to attorney fees.On review, the Supreme Court of Wyoming affirmed the district court’s decisions dismissing the plaintiffs’ claims, holding the mortgage secured both loans and the bank acted within its rights. The Supreme Court, however, reversed the grant of summary judgment to the bank and lender on their counterclaims, finding that filing the lawsuit was not a breach of the settlement agreement or its implied covenant of good faith and fair dealing. Consequently, the award of attorney fees and costs to the bank and lender was also reversed. View "Adams v. ANB Bank" on Justia Law

A dispute arose after a member of a Nebraska nonprofit corporation, which operates a residential building, was elected to the board of directors by lifetime leaseholders and subsequently removed by a vote of the other board members pursuant to a provision in the corporation’s bylaws. The removed director filed a declaratory judgment action, naming as defendants the “Board of Directors,” the individual directors who voted for her removal, and her replacement, but did not name the corporation itself. She argued her removal violated state nonprofit law because, in her view, leaseholders were “members” under the statute, and directors elected by members could not be removed in this manner.The District Court for Douglas County considered cross-motions for summary judgment. It concluded that the corporation had no members as defined by the Nebraska Nonprofit Corporation Act, based on the corporation’s articles, and found the removal provision in the bylaws valid. The district court granted summary judgment in favor of the defendants. The removed director then appealed.The Nebraska Supreme Court determined that it could not address the substantive legal questions because the nonprofit corporation was an indispensable party to the declaratory judgment action. The court explained that a declaratory judgment determining the rightful composition of a corporation’s board necessarily affects the corporation’s interests, and such relief cannot be granted without the corporation’s participation. The court further held that naming the board of directors was not a substitute for naming the corporation itself, as the board is not a legal entity capable of being sued. Consequently, the Nebraska Supreme Court vacated the district court’s judgment and remanded the case with directions to dismiss it without prejudice due to lack of subject matter jurisdiction for failure to join an indispensable party. View "Powers v. Board of Directors of Elmwood Tower" on Justia Law

A family dispute over ownership of a South Dakota ranch led to extensive litigation between a corporation (HRI), a partnership (HRP), and individual family members, including Bret Healy. HRI, owned by three brothers in equal shares, petitioned for court-supervised dissolution after the board and a majority of shareholders voted in favor. Bret, representing HRP, filed a motion to dismiss the petition, asserting that HRP owned a majority of HRI’s stock and that the required shareholder approval for dissolution was lacking. This assertion contradicted prior factual findings in earlier related cases, which consistently determined that ownership claims advanced by Bret or HRP had been previously resolved against them.The Circuit Court of the First Judicial Circuit, Brule County, South Dakota, issued an order to show cause regarding possible violations of SDCL 15-6-11(b) (the South Dakota rule analogous to Rule 11), focusing on whether Bret and his attorney, Volesky, submitted unsupported or false filings for improper purposes. After briefing and a hearing, the circuit court found that Bret violated SDCL 15-6-11(b)(1) by acting with improper purpose, and that Volesky violated multiple subsections. The court imposed monetary sanctions of $240,000 against Bret and $10,000 against Volesky, and reported Volesky to the disciplinary board.On appeal, the Supreme Court of South Dakota affirmed the finding that Bret’s conduct was sanctionable under SDCL 15-6-11(c), concluding that his repeated litigation over ownership, despite numerous adverse rulings, was for improper purposes. However, the Supreme Court vacated the monetary sanction against Bret and remanded for a new hearing. The court held that, in determining sanctions, a trial court must consider the party’s ability to pay and whether non-monetary sanctions or a combination would be appropriate. The affirmation of sanctionable conduct was thus upheld, but the amount and type of sanction require further consideration. View "Dissolution Of Healy Ranch, Inc." on Justia Law