Justia Business Law Opinion Summaries

Stackpole (Purchaser) makes car parts. Precision (Seller) makes automotive subcomponents. In 2014, Seller gave Purchaser quotes on pumps, making “[a]cceptance of order” subject to APQP [Advanced Product Quality Planning Review]. Purchaser issued a “Letter of Intent” to buy 1.1 million 10R/10L shafts and 306,000 Nano shafts. Seller's employee signed the letter, which provided that Purchaser would issue purchase orders for actual shipments. The purchase orders contained six pages of supplemental terms, allowing Purchaer to “terminate . . . this contract, at any time and for any reason, by giving written notice,” and providing that purchase orders would “not become binding” until the additional provisions were “signed and returned.” Seller did not sign the purchase orders but shipped parts to Purchaser for two years. In 2017, Seller stated that it needed a price increase or it would have to halt production. Purchaser agreed to price increases “under duress and protest,” then sued for breach of contract. Seller counterclaimed, alleging that Purchaser had impermissibly withheld its approval to make the parts by an automatic rather than manual process.The district court awarded Purchaser summary judgment, finding the parties had formed a contract “for successive performances.” “indefinite in duration.” Michigan law makes such contracts presumptively terminable upon “reasonable notification” A jury awarded $1 million. The Sixth Circuit affirmed. The Letter of Intent constituted a contract, notwithstanding the failure to engage in APQP. No contextual factor suggests a right to terminate the Letter of Intent without notice. View "Stackpole International Engineered Products, Ltd.. v. Angstrom Automotive Group, LLC" on Justia Law

LAD-T, LLC, dba Toyota of Downtown Los Angeles (LAD-T), and its parent company Lithia Motors Inc. (Lithia; collectively, Defendants) appeal from an order denying their motion to compel arbitration of Plaintiff’s claims brought under the California Fair Employment and Housing Act (FEHA). Defendants contend the trial court erred in finding Business and Professions Code section 17918 barred them from enforcing an arbitration agreement made in the name of an unregistered fictitious business, DT Los Angeles Toyota.   The Second Appellate District vacated the order denying Defendants’ motion to compel arbitration remanded for the trial court to address whether Defendants have waived their right to compel arbitration. The court ruled that if the trial court finds waiver, it should again deny the motion to compel arbitration; if it finds no waiver, it should grant the motion. The court explained that it agrees with Plaintiff that Defendants failed to act diligently in filing their fictitious business name statement. Accordingly, in the interests of justice the court vacated the court’s order denying the motion to compel arbitration and direct the court to again consider the motion to compel arbitration limited to the narrow issue of whether Defendants have waived their right to compel arbitration by their delay in filing the fictitious business name statement. View "Villareal v. LAD-T, LLC" on Justia Law

In 2004, Foster, a real estate investor, purchased Florida property, with a $1.1 million loan secured by a PNC mortgage. Foster and PNC had multiple disputes. PNC acquired force‐placed insurance. While the parties disputed that issue, Foster only made payments in the amount originally specified in a 2010 modification although the payments had increased as a result of the force‐placed insurance policies. In 2012, PNC began returning Foster’s payments as incomplete payments. As of May 2019, PNC claimed Foster owed more than $1.75 million. PNC reported delinquent payments to credit agencies; Foster’s credit score dropped.Foster’s lawsuit included a claim under the Fair Credit Reporting Act (FCRA) for PNC’s failure to investigate the two credit reporting disputes; a breach of contract claim regarding the force‐placed insurance policies; a breach of the implied duty of good faith and fair dealing claim for the insurance; and a breach of fiduciary duty claim for the alleged mishandling of the escrow account. PNC counterclaimed to seek judgment on the loan. After determining that Foster’s affidavit was conclusory and speculative as to proof of insurance and his loan payments and that his evidence of damages was too general and conclusory, the district court granted PNC judgment. The Seventh Circuit affirmed but found that the FCRA claim should be dismissed for lack of standing. Foster did not establish an injury-in-fact fairly traceable to PNC’s conduct. View "Foster v. PNC Bank, National Association" on Justia Law

Michael O’Connor signed up for a loyalty program when he bought a pair of shoes and socks from Road Runner Sports, Inc. and Road Runner Sports Retail, Inc. (collectively, “Road Runner”). He alleged Road Runner did not tell him the loyalty program was an automatic renewal subscription and that his credit card would be charged an annual subscription fee. After discovering he had been charged for four years of subscription fees, he joined as the named plaintiff in a class action lawsuit alleging Road Runner had violated California’s Automatic Renewal Law and consumer protection statutes. Road Runner asserted O’Connor was bound by an arbitration provision it added to the online terms and conditions of the loyalty program, some three years after he enrolled. Although Road Runner conceded O’Connor did not have actual or constructive notice of the arbitration provision, it contended O’Connor created an implied-in-fact agreement to arbitrate when he obtained imputed knowledge of the arbitration provision through his counsel in the course of litigation and failed to cancel his membership. The Court of Appeal disagreed this was sufficient under California law to prove consent to or acceptance of an agreement to arbitrate. Accordingly, the Court affirmed the trial court’s order denying Road Runner’s motion to compel arbitration. View "Costa v. Road Runner Sports" on Justia Law

Plaintiff brought this putative class action against more than twenty banks and brokers, alleging a conspiracy to manipulate two benchmark rates known as Yen-LIBOR and Euroyen TIBOR. Plaintiff brought claims under the Commodity Exchange Act (“CEA”), and the Sherman Antitrust Act, and sought leave to assert claims under the Racketeer Influenced and Corrupt Organizations Act (“RICO”). The district court dismissed the CEA and antitrust claims and denied leave to add the RICO claims. Plaintiff appealed, arguing that the district court erred by holding that the CEA claims were impermissibly extraterritorial, that he lacked antitrust standing to assert a Sherman Act claim, and that he failed to allege proximate causation for his proposed RICO claims.   The Second Circuit affirmed. The court explained that the conduct—i.e., that the bank defendants presented fraudulent submissions to an organization based in London that set a benchmark rate related to a foreign currency—occurred almost entirely overseas. Indeed, Plaintiff fails to allege any significant acts that took place in the United States. Plaintiff’s CEA claims are based predominantly on foreign conduct and are thus impermissibly extraterritorial. Further, the court wrote that the district court also correctly concluded that Plaintiff lacked antitrust standing because he would not be an efficient enforcer of the antitrust laws. Lastly, the court agreed that Plaintiff failed to allege proximate causation for his RICO claims. View "Laydon v. Coöperatieve Rabobank U.A., et al." on Justia Law

Ultra Petroleum Corp. (HoldCo) and its affiliates, including its subsidiary Ultra Resources, Inc. (OpCo), entered Chapter 11 bankruptcy deep in the hole. But during the bankruptcy process, these debtors (collectively, Ultra) hit it big—as natural gas prices soared, they became supremely solvent. Ultra proposed a $2.5 billion bankruptcy plan. It provided that OpCo’s creditors would be paid—in full and in cash—their outstanding principal and all interest that had accrued before bankruptcy, plus interest on both at the Federal Judgment Rate for the duration of the bankruptcy proceeding. Two groups of creditors complain that the plan falls some $387 million short.   The issue on appeal is whether the Bankruptcy Code precludes the creditors’ claims for the Make-Whole Amount; second, even if it does, whether the traditional solvent-debtor exception applies; and third, whether post-judgment interest is to be calculated at the contractual or Federal Judgment rate.   The Fifth Circuit affirmed the bankruptcy court’s judgment. The court held the Bankruptcy Code disallows the Make-Whole Amount as the economic equivalent of unmatured interest. But because Congress has not clearly abrogated the solvent-debtor exception, the court held that it applies to this case. And the solvent-debtor exception demands that Ultra pay what it promised now that it is financially capable. The court further held, given Ultra’s solvency, post-petition interest is to be calculated according to the agreed-upon contractual rate. View "Ultra Petro Corp v. Ad Hoc Com" on Justia Law

The Sears Holdings Corporation and its affiliates (collectively, the “Debtors” or “Sears”) carried approximately $2.68 billion of first- and second-lien secured debt at the time of its bankruptcy petition. The holders of the second-lien debt alleged that they were paid less than the value of the collateral that secured their claims. To recoup the difference, the second-lien holders sought relief under section 507(b) of the Bankruptcy Code, arguing that the value of their collateral decreased during the course of the bankruptcy proceeding, which entitled them to priority payment of the difference. The bankruptcy court disagreed, finding that the value of the second-lien holders’ collateral had not decreased since the date the Debtors filed for bankruptcy and that, in fact, the second-lien holders had received more than the value of their collateral.   On appeal, the second-lien holders raise a number of objections to the bankruptcy court’s valuation methodology, as well as to its valuation of several specific categories of collateral. The Second Circuit affirmed. The court explained that the bankruptcy court committed no legal or factual error in its decision to value the collateral based on NOLV. The bankruptcy court reasonably concluded that the second-lien holders failed to meet their burden of demonstrating the NBB’s value, and therefore did not err by valuing the NBB at zero. Similarly, the bankruptcy court did not err by deducting their full face value from the value of the collateral. Accordingly, the bankruptcy court did not commit clear error by denying the second-lien holders’ section 507(b) claims. View "In re Sears Holdings Corp." on Justia Law

In 2016, Scioto Properties SP-16, LLC, purchased the residence on Lot 62 in The Grove. Scioto was a for-profit limited-liability company based in Ohio. Scioto specialized in helping individuals with developmental and/or physical disabilities to find residential housing. Under the express terms of the warranty deed, Scioto agreed to abide by any and all protective covenants. Despite the covenants’ clear prohibition of commercial and professional use, Scioto leased the home on Lot 62 to Brandi’s Hope in June 2017. Brandi’s Hope is a for-profit Mississippi limited-liability company that provides services to individuals with developmental and/or physical disabilities. A condition of the lease with Scioto was that Brandi’s Hope agreed to use the home on Lot 62 “solely to provide residential support services” to the residents living in the home. In October 2017, Brandi’s Hope entered into four separate subleases with four individuals. As a condition of living in the home, each disabled individual agreed to exclusively use Brandi’s Hope’s residential support services. While no Brandi’s Hope employee lives with the clients, Brandi’s Hope employees provided around-the-clock care, taking turns tending to clients overnight. Brandi’s Hope is compensated for its services by the Mississippi Department of Medicaid. Soon after the four individuals moved in, the owners of the residence directly across the street, Andy and Sheryl Graf, filed a complaint in the Chancery Court of Lee County against Scioto and Brandi’s Hope.1 The Grafs alleged the residence on Lot 62 was being used for business purposes, which violated the protective covenants. The Grafs sought a declaratory judgment and injunctive relief. Brandi’s Hope asked the Mississippi Supreme Court to focus on how its sublessees used the home as their residence, and insisted the fact these men received round-the-clock residential support services from Brandi’s Hope did not change the residential character of the men’s use. The Supreme Court determined the chancery court did not err by declaring that Brandi’s Hope’s commercial use violated the clear and unambiguous intent of the protective covenants. View "Scioto Properties SP-16, LLC et al. v. Graf" on Justia Law

On appeal from the district court’s judgment declaring valid and enforceable against Appellants instruments governing a debt issue—notes, indenture, and pledge agreement. The district court granted Appellees’ motion for summary judgment, holding the notes, pledge agreement, and indenture valid and enforceable under New York law, and denied Appellants’ cross-motion, which argued the documents were void under the law of Venezuela, the jurisdiction of the issuer of the notes, and that the court should decline to enforce the notes on the basis of the act-of-state doctrine.   The Second Circuit deferred a decision and certified the following questions on the issue to the New York Court of Appeals: 1. Given PDVSA’s argument that the Governing Documents are invalid and unenforceable for lack of approval by the National Assembly, does New York Uniform Commercial Code section 8-110(a)(1) require that the validity of the Governing Documents be determined under the Law of Venezuela, “the local law of the issuer’s jurisdiction”? 2. Does any principle of New York common law require that a New York court apply Venezuelan substantive law rather than New York substantive law in determining the validity of the Governing Documents? 3. Are the Governing Documents valid under New York law, notwithstanding the PDV Entities’ arguments regarding Venezuelan law? View "PDVSA, et al. v. MUFG Union Bank, GLAS Americas" on Justia Law

Plaintiff-Appellee Atlas Biologicals, Inc. (“Atlas”) sued its former employee Thomas Kutrubes for various federal intellectual-property claims. Kutrubes, seemingly as an attempt to thwart Atlas’s ability to collect a likely judgment against him, transferred his 7% ownership interest in Atlas to Atlas’s rival Defendant- Appellant Biowest, LLC (“Biowest”). Once Atlas found out about this alleged transfer, it sought a writ of attachment in the district court against Kutrubes’s interest in Atlas, which the district court granted. But in granting the writ, the district court explained that it did not know what interest Kutrubes still had in Atlas and raised the idea of Atlas filing a separate declaratory judgment action. Atlas did so, and that was the lawsuit before the Tenth Circuit in this appeal: whether the district court properly found in favor of Atlas in this action in light of the fact that it did not have an independent source of federal jurisdiction to decide the question of state law that the action presented—a question that implicated a third party not involved in the initial suit, Biowest. Reviewing these matters de novo, the Tenth Circuit conclude the district court acted properly and within the scope of its jurisdiction, and agreed with the district court’s resolution of the merits. Accordingly, judgment was affirmed. View "Atlas Biologicals v. Biowest, et al." on Justia Law