Justia Business Law Opinion Summaries

Between 1983-2015, Heneghan was an associated person (AP) of 14 different National Futures Association (NFA)-member firms. Troyer invested hundreds of thousands of dollars in financial derivatives through NFA Members. The first interaction between Troyer and Heneghan was in 2008. After receiving an unsolicited phone call from Heneghan, Troyer invested more than $160,000. Despite changes in Heneghan’s entity affiliation, his working relationship with Troyer remained constant. At one point, Heneghan’s then-firm, Statewide, withdrew from the NFA following an investigation. Heneghan was the subject of a four-month NFA approval-hold in 2012. Troyer began sending money to Heneghan personally in 2013, allegedly to obtain trading firm employee discounts; these investments totaled $82,000. Troyer neither received nor asked for any investment documentation for this investment. In 2016-2015, NFA investigated Heneghan’s then-firm, PMI, Despite Troyer’s alleged substantial investment, no PMI accounts were listed for either Troyer or Heneghan. In 2015, Troyer directed Heneghan to cash out the fund; “all hell broke loose.” In 2016, the NFA permanently barred Heneghan from NFA membership. Troyer filed suit under the Commodities Exchange Act. 7 U.S.C. 25(b).The Seventh Circuit affirmed the summary judgment rejection of Troyer’s claim. NFA Bylaw 301(a)(ii)(D), which bars persons from becoming or remaining NFA Members if their conduct was the cause of NFA expulsion, is inapplicable. Statewide’s agreement not to reapply represented a distinct sanction from expulsion and did not trigger Bylaw 301(a)(ii)(D). View "Troyer v. National Futures Association" on Justia Law

BRC and Continental signed a five-year contract. Continental agreed to supply BRC with “approximately 1.8 million pounds of prime furnace black annually” taken in “approximately equal monthly quantities.” The price of carbon black consists of a baseline price and “feedstock” adjustments. The contract listed baseline prices with instructions for calculating feedstock adjustments. In 2010, BRC bought 2.6 million pounds of carbon black. In early 2011, BRC bought about 1.3 million pounds. In April 2011, supplies were tight. Continental tried to increase baseline prices. BRC replied that the price increase would violate the contract. BRC placed new orders relying on the contract’s prices. Continental did not respond to BRC's protests. On May 11, Continental missed a shipment to BRC. Continental would not confirm future shipment dates or tell BRC when to expect a response. On May 16, BRC formally invoked U.C.C. 2-609, asking for adequate assurance that Continental would continue to supply carbon black under the existing contract, requesting a response by May 18. Continental gave contradictory responses and continued to demand that BRC accept the price increase. On June 2, BRC notified Continental that it was terminating the contract and had filed suit. BRC proceeded to “cover” by buying from another supplier at higher prices.The Seventh Circuit affirmed an order that Continental pay damages. The district court properly applied U.C.C. 2-609 to find that Continental gave BRC reasonable grounds for doubting that it would perform and that Continental repudiated by failing to provide adequate assurance that it would continue to perform. The court properly applied U.C.C. 2-712 to find that cover was commercially reasonable and awarded prejudgment interest. View "BRC Rubber & Plastics, Inc. v. Continental Carbon Co." on Justia Law

The district court granted summary judgment for plaintiff in a derivative suit on behalf of 1-800-Flowers.com against Master Fund, ruling that Master Fund was the beneficial owner of more than ten percent of the shares of 1-800-Flowers, Inc., which were bought and sold within a period of six months, and requiring Master Fund to disgorge $4,909,393 in short-swing profits for violating section 16(b) of the Securities Exchange Act of 1934. Master Fund appealed and plaintiff cross-appealed.The Second Circuit concluded that factual questions remain on the issue of Master Fund's beneficial ownership and therefore remanded. In this case, RCM is a registered investment advisor; Master Fund, Offshore, and QP are customers of RCM; and William C. Martin holds positions in RCM, Master Fund, and Offshore, and indirectly has a role in QP. The relationship among RCM, Master Fund, Offshore, and QP is governed by an Investment Management Agreement (IMA), which was signed by Martin on behalf of all four parties to the agreement.The court concluded that it would be inconsistent with principles concerning section 16(b) of the Securities Exchange Act of 1934 to accept the district court's first reason for rejecting Master Fund's delegation of voting and investing authority to RCM. The court explained that, although Rule 13d-3(a) includes within the definition of a beneficial owner "any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has" voting or investment authority, 17 C.F.R. 240.13d-3(a), using generalized wording such as "intertwined" or "not unaffiliated" to bring a person within the coverage of Rule 13d-3(a) would extend the reach of section 16(b) beyond the text of both the statute and the rule. The court also concluded that making an investment advisor a customer's agent for the specified purpose of carrying out the advisor's traditional functions for a customer does not make the advisor an agent for all purposes. Finally, the court concluded that there remains to be determined as a factual matter whether, under all the relevant circumstances, Martin is in control of Master Fund and the feeder funds with authority to commit these entities to altering or terminating the IMA. View "Packer v. Raging Capital Management, LLC" on Justia Law

The Supreme Court reversed the orders of the circuit court granting Respondents' motions to dismiss, holding that Petitioners' pleading stated a sufficient basis upon which relief could be granted and that Respondents failed to show beyond a reasonable doubt that Petitioners could prove no set of facts in support of their claims that would entitle them to relief.On appeal, Petitioners argued that in granting Respondents' motions to dismiss pursuant to Rule 12(b)(6) the circuit court failed to consider all the Petitioners' factual allegations. Further, Petitioners alleged that for the few allegations it did consider, the circuit court improperly imputed inferences favorable to Respondents. The Supreme Court reversed, holding (1) Respondents failed to establish beyond doubt that Petitioners' pleading did not state a claim upon which relief may be granted; and (2) Petitioners sufficiently alleged a claim for aiding and abetting tortious interference. View "Mountaineer Fire & Rescue Equipment, LLC v. City National Bank of West Virginia" on Justia Law

This case arises from the parties' dispute concerning a construction project to expand the Manhattan Village Shopping Center in Manhattan Beach, California. The parties' predecessors executed the Construction, Operation and Reciprocal Easement Agreement (the COREA) in 1980. The parties resolved disputes in a Settlement Agreement in 2008 where, under the terms of the settlement agreement, RREEF agreed not to oppose Hacienda's plan to convert office space into restaurants and Hacienda agreed not to oppose RREEF's expansion project subject to certain limitations in the Agreement. At issue is RREEF's project.The Ninth Circuit affirmed the district court's grant of summary judgment on the nuisance claim and reversed the district court as to the remaining claims. In regard to the claim for breach of contract, the panel concluded that RREEF has discretion to pursue the project and alter the site plan, and Hacienda's objections to the city are limited to RREEF's material changes. That RREEF has discretion to revise the site plan does not mean that Hacienda gave up its rights under the COREA, especially considering that the Settlement Agreement, by its own terms, does not amend the COREA. In regard to the claim for interference with easement rights, the panel concluded that the Settlement Agreement does not extinguish plaintiffs' easement rights under the COREA, and the district court erred in holding otherwise. In regard to the claim for breach of the covenant of good faith and fair dealing, the panel concluded that plaintiffs have presented sufficient evidence to raise a triable issue as to whether RREEF's construction of the North Deck was contrary to "the contract's purposes and the parties' legitimate expectations." In regard to the claim for interference with business and contractual relations, the panel concluded that plaintiffs have raised triable issues concerning whether defendants' construction interfered with Hacienda's tenant contracts, and whether defendants acted with the knowledge that "interference is certain or substantially certain to occur as a result of [their] action."The panel also reversed the district court's grant of summary judgment as to plaintiffs' request for declaratory relief. In regard to RREEF's counterclaims, the panel concluded that policy considerations weighed against applying the litigation privilege. Finally, the panel concluded that the attorneys' fee question was moot and vacated the district court's order denying the parties' motions for attorneys' fees. View "3500 Sepulveda, LLC v. RREEF America REIT II Corp. BBB" on Justia Law

The Court of Appeal affirmed the trial court's order amending a judgment to add alter ego judgment debtors. After Triyar entered into a contract to purchase a hotel property from WSI, Triyar filed suit against WSI for causes of action including fraud and specific performance. The trial court found that WSI had not breached the contract, because Triyar's failure to learn of the Hyatt agreement's termination was due to Triyar's fault in failing to conduct a sufficient investigation. The trial court then awarded WSI $2,172,615 in attorney fees and costs. After Triyar appealed, the trial court awarded an additional $193,273.20 in fees and costs. After WSI was unable to collect any amount of the judgment, WSI made a motion to amend the judgment to add Steven Yari and Shawn Yari. The trial court found that Triyar is not capitalized for buying major hotels, and the finding that the Yaris were alter egos was a fair outcome. The trial court also found that even if the alter ego doctrine does not strictly apply, the inequities are such that an exception can be made.Under either de novo or abuse of discretion review, the court held that WSI prevailed on its motion to add the Yaris as judgment debtors. In this case, the Yaris concede that they had control of the underlying litigation and were virtually represented in that proceeding. The court also concluded that there is overwhelming evidence of a unity of interest and ownership such that the separate personalities of the entity and the owners do not exist. Furthermore, it would be inequitable to preclude WSI from collecting its judgment by treating Triyar as a separate entity. View "Triyar Hospitality Management v. WSI (II) – HWP, LLC" on Justia Law

Donald Moore, Scott Moore, and the Glenn W. Moore & Sons partnership appealed an amended judgment ordering the partnership to pay $140,206 to Delbert Moore’s step-children, Charles Minard, Candice Eberhart, and Terry Minard. Before his death, Delbert Moore was a partner with his brother Donald Moore and nephew Scott Moore in the Glenn W. Moore & Sons partnership, a ranching business. Delbert Moore’s will directed that a majority of his real property be sold within six months of his death and the proceeds be distributed to his three step-children, Charles Minard, Candice Eberhart, Terry Minard, and his nephew Scott Moore. His will also devised his one-third interest in the partnership to his three step- children. Delbert Moore’s real property sold in May 2015. The partnership and Delbert Moore’s estate each hired an accountant to prepare an accounting of the partnership’s profits and losses; the Estate’s one-third share of the partnership’s profits was $140,206. The partnership argues the district court erred in adopting the Estate’s accounting of the partnership’s profits and losses. Finding no reversible error in the district court's judgment, the North Dakota Supreme Court affirmed. View "Estate of Moore" on Justia Law

Cahill was the office administrator for the Family Vision optometry practice and handled insurance billings. She left her employment and filed for bankruptcy protection. About 90% of Family’s revenue came from claims submitted to VSP, which covers claims from optometrists only if they have “majority ownership and complete control” of their medical practices. VSP disburses payments after the provider signs an agreement certifying itself as “fully controlled and majority-owned” by an optometrist. At the time Cahill was submitting Family’s claims, the practice was actually owned by a practice management company with more than 150 surgery centers and other medical practices.About a year after Cahill left Family, the trustee of Cahill’s bankruptcy estate sued under the Insurance Claims Fraud Prevention Act, 740 ILCS 92/1, which added civil penalties to existing criminal remedies for fraud against private insurance companies and allows a claim to be raised on the state’s behalf by a private person (relator), in a qui tam action. The relator becomes entitled to remuneration if the lawsuit succeeds. A relator must be an “interested person” but the Act does not define that term.The Illinois Supreme Court affirmed the reinstatement of the case. A former employee-whistleblower with personal, nonpublic information of possible wrongdoing qualifies as an “interested person” under the Act and need not allege a personal claim, status, or right related to the proceeding. The state need not suffer money damages to partially assign its claim to a relator. The Act is intended to remedy fraud against private insurers, where the only injury to the state is to its sovereignty, based on a violation of criminal law. View "Leibowitz v. Family Vision Care, LLC" on Justia Law

Gulf LNG Energy, LLC owned and operated a liquefied natural gas (“LNG”) terminal in Mississippi (the “Pascagoula Facility”). Gulf LNG Pipeline, LLC (collectively with Gulf LNG Energy, LLC, “Gulf”), owned and operated a five-mile long pipeline that distributed LNG from the Pascagoula Facility to downstream inland pipelines. Eni USA Gas Marketing LLC (“Eni”), marketed natural gas products and offered related services to customers in the U.S. In 2007, Gulf and Eni entered into a Terminal Use Agreement (the “TUA”), whereby Gulf would construct the Pascagoula Facility, and Eni would use the Facility to receive, store, regasify, and deliver imported LNG to downstream businesses. Under the TUA, Eni agreed to pay Gulf fees for using the Facility, including monthly Reservation Fees and Operating Fees. In 2016, Eni filed for arbitration, alleging the U.S. natural gas market had undergone a “radical change” due to “unforeseen, vast new production and supply of shale gas in the United States [that] made import of LNG into the United States economically irrational and unsustainable.” Eni alleged the essential purpose of the TUA had been frustrated and thus terminated because of “fundamental and unforeseeable change in the United States natural gas/LNG market,” and sought a declaration that Eni could terminate the TUA at any time because Gulf breached warranties and covenants. After the first arbitration, the panel order Eni to pay Gulf "just compensation ...for the value their partial performance of the TUA conferred upon Eni." Gulf subsequently sued Eni to collect the arbitration award; judgment was entered in Gulf's favor. Eni initiated a second arbitration, again asserting breaches of the TUA. Gulf moved to dismiss the second arbitration. The Court of Chancery ruled the issues raised in the second arbitration were already decided in the first (and subsequent court case). The Delaware Supreme Court, after its review of these proceedings, determined: (1) the Court of Chancery had jurisidction to enjoin a collateral attack on the first arbitration award; and (2) the Court of Chancery should have enjoined all claims in the second arbitration between the parties, because the admitted goal of the second arbitration was to "raise irregularities and revisit the financial award in the first arbitration." The Court, therefore, affirmed part of the Court of Chancery's judgment affirming dismissal of the second arbitration, and reversed any part of the lower court's judgment allowing certain issues in the second arbitration to be considered. View "Gulf LNG Energy v. ENI USA Gas Marketing" on Justia Law

Trevor Jones contended he was entitled to a percentage of the successful Pura Vida bracelet business established with his former friends and colleagues, defendants Paul Goodman and Griffin Thall. He claimed the parties had formed a partnership regarding a bracelet business and sued Goodman and Thall seeking (among other things) a partnership buyout under California Corporations Code section 16701. Defendants denied Jones’s claims, and judgment was entered in their favor. After trial, Defendants sought to recover attorney fees pursuant to section 16701, which authorized an equitable award of attorney and expert fees “against a party that the court finds acted arbitrarily, vexatiously, or not in good faith.” The trial court denied Defendants’ motion on two grounds: (1) the motion was untimely under applicable rules; and (2) on the merits, the court declined to find that Jones acted arbitrarily, vexatiously, or not in good faith. Defendants appealed, contesting the trial court's sua sponte determination the motion was untimely, and they further challenged the court’s refusal to find Jones acted arbitrarily, vexatiously, or not in good faith. After review, the Court of Appeal concurred with the trial court, rejected Defendants’ claims of error, and affirmed the order. View "Jones v. Goodman" on Justia Law