The receiver filed suit against Associated Bank, which provided banking services to some of the scammers' entities, accusing the bank of aiding and abetting the Ponzi scheme. The Eighth Circuit affirmed the district court's conclusion that there was insufficient evidence to reasonably infer the bank knew about and assisted the scammers' tortious conduct. The court held that a conclusion that the bank aided and abetted the Ponzi scheme could only be reached through considerable conjecture and speculation. In this case, the receiver failed to show that the bank had actual or constructive knowledge of the fraud or that it provided substantial assistance to the tortious conduct. View "Zayed v. Associated Bank, N.A." on Justia Law

The Supreme Court reversed the judgment of the circuit court finding that laches barred Plaintiff’s motion for a temporary injunction, sustaining a special plea in bar, and entering judgment in favor of a Corporation, holding that the circuit court erred in its interpretation of Va. Code. 13.1-724. Plaintiff sought a declaratory judgment that a letter of intent to sell assets of the Corporation to a third party buyer for $10 million were null and void because they violated section 13.1-724, which requires more than two-thirds shareholder approval for a disposition of of corporate assets that leaves a corporation without a significant continuing business. Plaintiff also sought a temporary injunction to stop the proposed sale until the circuit court could address the merits of the complaint. The Corporation responded by filing a special plea in bar. The circuit court denied Plaintiff’s emergency motion for an injunction, granting the plea in bar, and entered judgment in favor of the Corporation. The Supreme Court reversed, holding (1) the circuit court erred in its interpretation of section 13.1-724 and thus erred in entering judgment in favor of the Corporation; and (2) the circuit court abused its discretion when it found that laches barred Plaintiff’s request for a temporary injunction. View "May v. R.A. Yancey Lumber Corp." on Justia Law

BankDirect and Capital make loans to finance insurance premiums. In 2010, Capital, having exhausted the line of credit, approached BankDirect, which was willing to purchase Capital's loans and pay Capital to service those loans. BankDirect had a right to purchase Capital’s business after five years. If BankDirect did not purchase Capital, either party could extend the term by notice before January 4, 2016; otherwise, the agreement would terminate on January 31, 2016. Any extension could not go beyond June 1, 2018. BankDirect exercised the option in November 2015, but Capital refused to honor it. BankDirect sued. Capital sought an injunction to require BankDirect to continue purchasing loans and paying it to service them. BankDirect continued the arrangement through May 1, 2017, when it seized several Capital accounts and stated that it would no longer buy Capital's loans. BankDirect withdrew its request for specific performance. The district court concluded that Capital was entitled to a preliminary injunction so that the purchase‐and‐service arrangement would continue pending a judgment but did not address the 2018 terminal date or other disputes; failed to enter an injunction as a separate document under Fed. R. Civ. P. 65(d)(1)(C); and did not require Capital to post a bond (Rule 65(c)). The Seventh Circuit declined to address the merits or Rules 65(c) and (d), stating that the “injunction” should have contained a terminal date: June 1, 2018, and remanded for a determination of whether damages are available. View "Bankdirect Capital Finance, Inc. v. Texas Capital Bank National LLC" on Justia Law

Assuming the Foreign Sovereign Immunities Act's immunity applies, the DC Circuit held that it leaves intact the district courts' subject-matter jurisdiction over federal criminal cases involving foreign sovereigns. The court affirmed the district court's order holding the subpoena's target, a corporation owned by a foreign sovereign, in contempt for failure to comply. In this case, the court held that there was a reasonable probability the information sought through the subpoena at issue concerned a commercial activity that caused a direct effect in the United States. The court held that the Act, even where it applies, allows courts to exercise jurisdiction over such activities and the ancillary challenges in this appeal lacked merit. View "In re: Grand Jury Subpoena" on Justia Law

When O'Gara Coach moved to disqualify Richie Litigation from representing its former senior executive, Joseph Ra, in litigation, O'Gara Coach argued that Darren Richie had been a client contact for outside counsel investigating the charges of fraudulent conduct that ultimately led to an action alleging that O'Gara Coach and Ra had committed fraud in connection with Marcelo Caraveo's acquisition of luxury vehicles from O'Gara Coach. The Court of Appeal reversed the trial court's order denying the motion to disqualify Richie Litigation. The court held that Darren Richie could not act as Ra's counsel because he obtained privileged information relating to the pending litigation as O'Gara Coach's President and CEO. Furthermore, Richie Litigation, not just Richie, must be disqualified under established rules for vicarious disqualification. View "O'Gara Coach Co. v. Ra" on Justia Law

In 2008, Fisker, a manufacturer of luxury hybrid electric cars, became part of a trend in venture capital investments toward green energy technology start-ups. The Department of Energy advanced Fisker $192 million on a $528.7 million loan, secured with assistance from the Kleiner venture capital firm, a Fisker controlling shareholder. Tech-industry rainmakers and A-list movie stars invested in Fisker, which was competing with another emerging player, Tesla. In 2009, before sales began on its first-generation vehicles, Fisker announced that its second-generation vehicles would be built in Delaware. Delaware agreed to $21.5 million in state subsidies. Vice President Biden and Delaware Governor Markell participated in Fisker’s media unveiling of the collaboration. Riding this publicity, Fisker secured funding from additional venture capital firms and high net worth investors, including the five plaintiffs, who collectively purchased over $10 million in Fisker securities. In 2011, Fisker began selling its flagship automobile. In 2012, it stopped all manufacturing. In April 2013, Fisker laid off 75% of its remaining workforce; the U.S. Government seized $21 million in cash for Fisker’s first loan payment. The Energy Department put Fisker’s remaining unpaid loan amount ($168 million) out to bid. Fisker filed for bankruptcy. In October 2016, the plaintiffs filed a class action, alleging fraud, breach of fiduciary duty, and negligent misrepresentation. The Seventh Circuit affirmed the dismissal of plaintiffs’ claims as precluded by Illinois law’s three-year limitations period. Those claims accrued no later than April 2013. View "Orgone Capital III, LLC v. Daubenspeck" on Justia Law

The Supreme Court affirmed the judgment of the court of appeals granting a writ of quo warranto sought by the attorney general and ordering the dissolution of Omar Ibn El Khattab Mosque, Inc., holding that the corporation’s failure to adhere to statutory requirements amounted to a surrender of the corporation’s rights and privileges necessitating the remedy of dissolution. Following its inception, the corporation failed to comply with corporate formalities, leading to internal disagreements. A rift subsequently formed between members of the corporation’s congregation, and competing boards of directors were elected, both claiming authority over the corporation and its charitable funds. The leadership struggle led to the funds being frozen and transferred to the Franklin County Clerk of Courts. The attorney general later brought this action seeking to dissolve the corporation. The court of appeals granted the writ and remanded the matter to the court of common pleas to supervise the winding down of the corporation and appoint a trustee or receiver to oversee the creation of a successor entity. The Supreme Court affirmed, holding that the facts established a causal link between the failure to observe corporate formalities and the congregation’s schism and the loss of charitable funds. View "State ex rel. DeWine v. Omar Ibn El Khattab Mosque, Inc." on Justia Law

The Supreme Judicial Court affirmed the superior court’s dismissal of employees’ (Employees) putative class action lawsuit brought against the corporate officers (Officers) of a ISIS Parenting, Inc. (Company), holding that the superior court judge properly granted the Officers’ motion to dismiss. After the Company abruptly ceased operations and terminated its entire workforce, the Employees brought a class action lawsuit against the Company in federal court alleging a violation of the Federal Worker Adjustment and Retraining Notification Act, 29 U.S.C. 2101-2109 (WARN Act). After receiving a nearly $2 million default judgment, the Employees brought a putative class action lawsuit against the Officers in state court under Mass. Gen. Laws ch. 149, 148 (Wage Act), alleging (1) the WARN Act damages constituted wrongfully withheld “earned wages” for which the Officers were liable; and (2) the Officers committed a breach of fiduciary duties owed to the Company by allowing the Company to violate the WARN Act. The superior court granted the Officers’ motion to dismiss. The Supreme Judicial Court affirmed, holding that the Employees’ complaint was properly dismissed because (1) WARN Act damages are not “earned wages” under the Wage Act; and (2) the Employees did not assert a viable claim for breach of fiduciary duties. View "Calixto v. Coughlin" on Justia Law

Appellant Rainforest Chocolate, LLC appealed the grant of summary judgment motion in favor of appellee Sentinel Insurance Company, Ltd. Rainforest was insured under a business-owner policy offered by Sentinel. In May 2016, Rainforest’s employee received an email purporting to be from his manager. The email directed the employee to transfer $19,875 to a specified outside bank account through an electronic-funds transfer. Unbeknownst to the employee, an unknown individual had gained control of the manager’s email account and sent the email. The employee electronically transferred the money. Shortly thereafter when Rainforest learned that the manager had not sent the email, it contacted its bank, which froze its account and limited the loss to $10,261.36. Rainforest reported the loss to Sentinel. In a series of letters exchanged concerning coverage for the loss, Rainforest claimed the loss should be covered under provisions of the policy covering losses due to Forgery, for Forged or Altered Instruments, and for losses resulting from Computer Fraud. Sentinel denied coverage. In a continuing attempt to obtain coverage for the loss, Rainforest also claimed coverage under a provision of the policy for the loss of Money or Securities by theft. Sentinel again denied coverage, primarily relying on an exclusion for physical loss or physical damage caused by or resulting from False Pretense that concerned “voluntary parting” of the property—the False Pretense Exclusion. Finding certain terms in the policy at issue were ambiguous, the Vermont Supreme Court reversed summary judgment and remanded for the trial court to consider in the first instance whether other provisions in the policy could provide coverage for Rainforest's loss. View "Rainforest Chocolate, LLC v. Sentinel Insurance Company, Ltd." on Justia Law

The Ninth Circuit affirmed the district court's dismissal of a shareholder derivative suit on behalf of the Walt Disney Company, holding that plaintiff failed to satisfy Federal Rule of Civil Procedure 23.1's demand futility requirement. In this case, plaintiff alleged that Disney and its board of directors and several corporate officers participated in a conspiracy to enact illegal anticompetitive agreements between Disney and other animation studios. The panel held that the allegations in plaintiff's amended complaint did not constitute particularized facts demonstrating demand futility. The panel explained that, whether the board's misconduct is characterized as conscious inaction or active connivance, plaintiff needed to demonstrate that a majority of the director defendants knew of the conspiracy, and he failed to do so. View "Towers v. Iger" on Justia Law