Justia Business Law Opinion Summaries

Gaia and State Street were bound by a mezzanine loan agreement with Lehman Brothers to help finance the construction of a residential building in Manhattan. At issue on appeal was whether equitable estoppel, principles of good faith and fair dealing, or general principles of equity prevented State Street from keeping the Accrued Interest. The court concluded that Gaia could not rely on equitable estoppel to recover the Accrued Interest because Gaia did not demonstrate an omission or misrepresentation by State Street on which Gaia reasonably relied to its substantial detriment; State Street was entitled to act in its own self-interest and require payment of the Accrued Interest, even if such action lessened Gaia's anticipated profits, because State Street acted consistently with the contract and did not violate a presumed obligation or Gaia's reasonable expectations; State Street's actions were not taken in bad faith; State Street did not unlawfully demand payment of the Accrued Interest and it was not liable for the Doral damages; and the Professional Fee provision applied in this action and State Street was entitled to Professional Fees incurred as a result of this litigation. Accordingly, the court reversed and remanded. View "Gaia House Mezz LLC v. State St. Bank & Trust Co." on Justia Law

Plaintiffs appealed from the district court's grant of judgment in favor of defendants. Plaintiffs brought claims of fraudulent misrepresentation, negligent misrepresentation, fraudulent concealment, and tortious interference with prospective economic advantage against defendants related to the auction of a company plaintiffs purchased. The court concluded that the district court, in its instructions to the jury, erred in its description of the English burden-shifting rule. Accordingly, the district court's order granting judgment for defendants on the fraudulent misrepresentation claim was vacated and the case was remanded for a new trial. The district court's dismissal of the negligent misrepresentation claim at summary judgment and of the fraudulent concealment claim as a matter of law were affirmed. View "Terra Firma Investments v. Citigroup" on Justia Law

Morning Mist appealed from the judgment of the district court affirming the order of the bankruptcy court, which determined that the debtor had its "center of main interests" (COMI) in the British Virgin Islands (BVI), and therefore recognized debtor's liquidation in the BVI as a "foreign main proceeding" under 11 U.S.C. 1517. To determine the proper COMI, the court considered the relevant time period for weighing the interests, and the principles and factors for determining which jurisdiction predominated. The court concluded that the relevant time period was the time of the Chapter 15 petition, subject to an inquiry into whether the process had been manipulated. The relevant principle was that the COMI lies where the debtor conducts its regular business, so that the place was ascertainable by third parties. The statute included a presumption that the COMI was where the debtor's registered office was found. Among other factors that could be considered were the location of headquarters, decision-makers, assets, creditors, and the law applicable to most disputes. Applying these principles, the court affirmed the decision of the district court recognizing the BVI liquidation as a foreign main proceeding. View "Morning Mist Holdings Ltd. v. Krys" on Justia Law

Plaintiff brought a derivative suit on behalf of Goldman Sachs under Section 16(b) of the Securities Exchange Act, 15 U.S.C. 78p(b), seeking to require defendant to disgorge all profits from short-swing transactions in Goldman Sachs shares. On appeal, plaintiff challenged the district court's orders and judgment granting defendant's motion to dismiss pursuant to Rule 12(b)(6). The court agreed with the district court that plaintiff failed to plead that defendant was a beneficial owner under Section 16(b) and Rule 16a-1, 17, C.F.R. 240, 16a-1. The court also declined to extend the term "beneficial owner" to encompass, perforce, "tippers" who provided insider information, in exchange for payment, to another party who engaged in the short-swing trading of shares. Accordingly, the court affirmed the orders and judgment of the district court. View "Mercer v. Gupta" on Justia Law

Plaintiff appealed from the district court's judgment dismissing her claims against her ex-husband and his brother for failure to state a claim and untimeliness. Plaintiff alleged that, in representing a certain investment as worthless and concealing the $5.5 million received on its account, defendants conspired in violation of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1962(d), committed common law fraud, and breached fiduciary duties, and that her ex-husband was unjustly enriched. The court held that the district court's reasons for dismissing the fraud-based claims were erroneous and that the district court erred in ruling on the existing record that the RICO, common law fraud, and breach of fiduciary duty claims were time-barred. The court sustained the dismissal of the unjust enrichment claim as untimely. Accordingly, the court affirmed in part and vacated and remanded in part. View "Cohen v. Cohen" on Justia Law

In these two civil enforcement actions for securities fraud, various entities that were defrauded by defendants appealed from the district court's order approving initial pro rata distributions recovered from defendants and associated entities by the Receiver in accordance with the Plan proposed by the Receiver. Interested parties, 3M Group, contended principally that the district court should have rejected the proposed pro rata distributions because under the Plan, fraud victims who chose allegedly safer investments fare no better than victims whose investments were riskier. Interested party, KCERA, contended that the district court should have rejected the proposed Plan because it did not provide an adjustment for inflation to compensate for longer-term investors. The court considered all of the contentions of the 3M Group and KCERA in support of their respective appeals and found them to be without merit. Accordingly, the court affirmed the order. View "CFTC v. 3M Employee Welfare Benefit Assoc. Trust I, et al." on Justia Law

Lehigh appealed the district court's award of damages to plaintiffs under the Petroleum Marketing Practices Act (PMPA), 15 U.S.C. 2801-2841. At issue was whether a franchisor could be held under the PMPA for failing to provide notice to a "trial franchisee" prior to termination of its franchise. The court held that the PMPA provided a right of action, both to "full" and "trial" franchisees, when a franchisor failed properly to notify it prior to terminating the franchise. The court also concluded that the district court did not abuse its discretion in awarding plaintiffs compensatory damages, punitive damages, attorney's fees and costs, and interest. View "Jimico Enterprises, Inc. v. Lehigh Gas Corp." on Justia Law

LSED sought to rescind an agreement to purchase bond insurance from FGIC and recover its $13 million premium payment. LSED based its claim on failure of cause, a tenet of Louisiana law that required all contracts be supported by cause. Because the court found that the principal cause of the agreement between the parties was the purchase of bond insurance to protect the bondholders in the event of default, not to reduce the interest rate LSED paid to borrow money, the court affirmed the district court's decision. View "In Re: Merrill Lynch & Co., Inc." on Justia Law

Plaintiff appealed the district court's dismissal of his complaint against defendant Justin Korn. Plaintiff, a former shareholder and officer of defendant GVC, sought indemnification from GVC after successfully defending a suit brought by GVC in Delaware, and also sought to pierce the corporate veil to hold Korn accountable for any resulting judgment. The district court entered a stipulated judgment against GVC, but dismissed the complaint against Korn. Because the district court erroneously held that plaintiff could not pursue both indemnification and an alter-ego veil-piercing theory, the court vacated the order of dismissal and remanded for further proceedings. View "Kertesz v. General Video Corp." on Justia Law

This case arose when WWP sued Shinkong seeking damages and injunctive relief arising out of the failure of a joint venture between the parties. On appeal, WWP challenged the district court's order striking its expert report and claim for money damages after it attempted to file its expert disclosures seven weeks late, and later granting Shinkong summary judgment. Because the court found that WWP lacked sufficient notice of such severe consequences for late filing; an opportunity to respond before being sanctioned; and because the court found the penalty far exceeded the transgression, the court vacated and remanded for further proceedings. View "World Wide Polymers, Inc. v. Shinkong Synthetic Fibers Corp." on Justia Law