Justia Business Law Opinion Summaries

Marcus Food Company, a Kansas corporation based in Wichita, entered into an oral agreement in 1999 with Robert DiPanfilo, a citizen of Canada, under which DiPanfilo served as an independent sales and purchasing agent for the company. The agreement included a provision that rendered DiPanfilo liable to Marcus Food for 45% of any net losses on his accounts. After the parties’ relationship ended 10 years later, Marcus Foods attempted to collect on debts allegedly owed it under the agreement by suing DiPanfilo in the federal district court. A default judgment was entered against DiPanfilo following his failure to appear or respond to the complaint. DiPanfilo then moved to set aside the default judgment six-and-a-half months later on the grounds that it was void for lack of jurisdiction and/or because his delay was due to excusable neglect. After a hearing, the court denied DiPanfilo’s motion, finding personal jurisdiction over DiPanfilo, subject matter jurisdiction over the case, and insufficient support for his excusable-neglect argument. DiPanfilo appealed. Upon review of the district court's record and the applicable legal authority, the Tenth Circuit found no error in the district court's judgement and affirmed its judgement in favor of Marcus Foods.

Sorenson Communications, Inc. challenged the 2010-2011 rates set by the Federal Communication Commission (FCC or Commission) to compensate Video Relay Service providers, including Sorenson. Video Relay Service (VRS) is a type of telecommunication relay service (TRS), "which enables a person with a hearing disability to remotely communicate with a hearing person by means of a video link and a communications assistant." FCC regulations provide certain minimum standards that VRS providers must meet. Among these requirements, VRS providers must operate every day, twenty-four hours a day, and must answer 80 percent of all calls within 120 seconds. TRS customers do not pay to access the service. Instead, TRS providers are compensated by the TRS Fund at a rate determined by the FCC. The TRS Fund is financed by interstate telecommunications providers on the basis of interstate enduser telecommunications revenues. Until 2007, the Commission set VRS rates annually, which resulted in significant variation in compensation each year. In 2007, the FCC adopted a three-tiered rate structure for compensating VRS providers, with rates that declined as the number of minutes per month increased. Sorenson asked the FCC to stay its 2010 Order which retained the tiered structure of the 2007 order, but reduced rates on all tiers. Upon review, the Tenth Circuit denied Sorenson's petition for review because the Commission’s order was consistent with its statutory mandate and was not arbitrary or capricious.

The issue before the Tenth Circuit in this case pertained to a "class-of-one" equal protection lawsuit against a county government based on its demand that a property owner correct a nuisance. Kansas Penn Gaming, LLC alleged that after it and Cherokee County became involved in litigation concerning a casino development agreement, the County health department targeted Kansas Penn for a regulatory enforcement action. In particular, the County sent Kansas Penn a notice stating that the unkempt condition of its property violated state and local nuisance laws and regulations and warning that failure to clean up the property would lead to an enforcement action. Although the County never brought an enforcement action against Kansas Penn, Kansas Penn sued the County and some of its officials under 42 U.S.C. 1983. In its complaint, Kansas Penn alleged the notice of nuisance violated its right to equal protection by arbitrarily and maliciously singling it out for selective enforcement. Because the Tenth Circuit agreed with the district court that Kansas Penn failed to state a claim for relief under the standard set forth by "Bell Atl. Corp. v. Twombly," the Court affirmed dismissal of the complaint.

Appellants F. Jeffrey Miller and Hallie Irvin were charged in an eleven-count indictment with a variety of crimes stemming from an alleged conspiracy to defraud mortgage lenders in connection with the subprime housing market. After a month-long jury trial, Miller and Irvin were each convicted on several of the charges and sentenced. They appealed their convictions, citing numerous evidentiary and legal errors. Miller also challenged his sentence. Miller was a builder and developer involved in residential construction in Kansas, Missouri, and other states. With many competing developers marketing their homes to well-qualified buyers, Miller chose to focus his business on buyers with low income and poor credit. The marketing of Millerâs homes was handled by Stephen Vanatta, who would refer potential buyers to a mortgage broker named James Sparks for financing. Because a prior felony conviction for passing a bad check prohibited Vanatta from maintaining a checking account, his portion of commissions were paid by checks issued to his wife, appellant Irvin. Upon review, the Tenth Circuit found the district court erred on three of the eleven charges against Defendant Miller, but affirmed the district court in all other aspects. The Court remanded the case for further proceedings.

Plaintiff Qwest Corporation (Qwest) and Defendants Colorado Public Utilities Commission (CPUC), individual commissioners, and Cbeyond Communications, LLC (Cbeyond) (together, defendants), cross-appealed the district courtâs decision construing 47 C.F.R. 51.5, a Federal Communications Commission (FCC) regulation relating to local telephone service providers. In order to facilitate competition in the local telephone service market, federal law requires incumbent local exchange carriers (ILECs), such as Qwest, to lease certain parts of their telecommunications networks to competitive local exchange carriers (CLECs), such as Cbeyond. ILECs are relieved of this obligation if, among other circumstances, the number of âbusiness linesâ in a local exchange reaches a certain threshold because, in the FCCâs view, a sufficient number of business lines shows that it would be economic for CLECs to invest in their own infrastructure. The term âbusiness lineâ and the method of counting business lines are defined in the regulation. The parties disagree as to which types of a particular network elementâUNE loopsâare included in the business line count. The district court held that UNE loops serving non-business customers are included in the business line count and that non-switched UNE loops are not included in the business line count. Upon review, the Tenth Circuit affirmed the portion of the district court ruling that the business line count includes nonbusiness UNE loops; the Court reversed the district court's decision that the business line count does not include non-switched UNE loops.

Jack Katz and Infinity Clark Street Operating were minority shareholders in a real estate investment trust (REIT) owned by Archstone Smith Trust, a public company. Archstone entered into a merger agreement in which two investors acquired all of Archstoneâs outstanding public shares. As part of the merger, Katz and Infinity were squeezed out of the REIT and had the option of receiving either cash or stock in the newly formed entity in exchange for their shares. Katz opted for cash; Infinity chose stock. Claiming the offering documents associated with the merger contained false and misleading statements or omissions, Katz and Infinity separately sued. In Colorado, Infinity filed a federal class action lawsuit alleging breaches of contract and fiduciary duty relating to the merger and would later be sent to arbitration. Meanwhile, Katz filed a class action lawsuit in Illinois state court asserting securities law claims arising from the merger. The Illinois case was removed to federal court and eventually transferred to Colorado. Katz then filed an amended complaint joining Infinity as a party plaintiff, even though Infinityâs case was still waiting the outcome of arbitration. The district court dismissed Katzâs complaint, ruling that by joining the case, Infinity was improperly splitting claims that should have been alleged in its earlier action. The court also found Katz lacked standing to bring his securities law claims since he was not a purchaser when he opted to sell his shares. Katz and Infinity challenged the district courtâs decision on appeal. The issue before the Tenth Circuit was whether a plaintiff can split potential legal claims against a defendant by bringing them in two different lawsuits. The Court concluded that related claims must be brought in a single cause of action, and the district court properly dismissed the claim-splitting plaintiffs.

Third-party defendant Providence Holdings, Inc. appealed a partial summary judgment that awarded Skilstaf, Inc. and Park Avenue Property & Casualty Insurance Company, Inc. (PACA) damages arising out of a loan dispute. Providence is an insurance holding company. Skilstaf and PACA loaned Providence $3.1 million under three âsurplus loan agreementsâ to help one of its subsidiaries carry out its insurance business and âmeet regulatory requirements as to capital and surplus.â Providence was required to repay Skilstaf and PACA âwhen and as interest and principal are received on the . . . surplus note[s],â In 2005, Providence canceled the surplus certificates and converted them to paid-in capital. In 2008, Providence sold its subsidiary. At some point thereafter, the subsidiary was placed into receivership and liquidated. Providence made interest payments under the surplus loan agreements to Skilstaf and PACA through November 2009, but failed to repay any principal. Skilstaf and PACA sued Providence, and moved for summary judgment, arguing that the surplus loan agreements mandated repayment of the loans when Providence converted the surplus certificates to paid-in capital. The district court agreed, stating that âthe indebtedness represented by the surplus notes was discharged by the conversion and that this discharge/conversion effected a repayment of the surplus notes within the meaning of the surplus loan agreements.â Upon review, the Tenth Circuit affirmed the lower court for substantially the same reasons.

Plaintiff ClearOne Communications, Inc. (ClearOne) filed suit against Defendant Biamp Systems (Biamp) alleging that Biamp misappropriated ClearOne's trade secrets by licensing a product from another company that incorporated those trade secrets. A jury found in ClearOne's favor on all of its claims against Biamp. The district court assessed damages for lost profits and unjust enrichment, and awarded ClearOne exemplary damages, attorneys' fees and nontaxable expenses. Biamp raised multiple issues on appeal pertaining to the trial court's application of the applicable statutory authority and in its award of damages. Upon review, the Tenth Circuit affirmed all aspects of the district court's judgment except for the lost profits and exemplary damages awards. The Court reversed and remanded the case for reconsideration of damages owed to ClearOne Communications.

The primary issue in this Chapter 7 bankruptcy case was whether the United States Bankruptcy Appellate Panel for the Tenth Circuit had jurisdiction to review on "order for relief" entered by a bankruptcy judge for the District of Delaware. The Delaware judge entered the order after venue was transferred to the District of Colorado. The parties agreed that the order should be vacated on the ground that it is void because it was issued after the transfer was complete. However, the Tenth Circuit Bankruptcy Appellate Panel concluded that it did not have jurisdiction because the governing statute provides that an appeal of a decision by a bankruptcy judge "shall only be taken only to the district court for the judicial district in which the bankruptcy judge is serving." Upon review, the Tenth Circuit Court of Appeals agreed with the Tenth Circuit Bankruptcy Appellate Panel and affirmed its decision.

This case stems from a fire that destroyed a Michigan apartment building. The owner, Rapid Funding, LLC (a Colorado company), submitted a claim to its insurer James River Insurance Company (an Ohio company). James River denied the claim because it determined that the building's pre-fire value was less than zero. Rapid Funding sued in Colorado federal district court for breach of contract and insurance bad faith and received the full $3 million amount of the policy plus $2.35 million in punitive damages. James River argued on appeal that the damages verdict was based on valuation testimony that should have been excluded at trial. Upon review of the applicable legal authority and briefs submitted by the parties, the Tenth Circuit held that the valuation testimony was erroneously admitted, and the error was not harmless. The Court reversed and remanded the case for a new trial limited to the damages issue.