Justia Business Law Opinion Summaries

The City of Fort Collins contracted with Open International, LLC, for software services, which led to mutual breach-of-contract claims. The City also alleged that Open's precontractual statements were negligent or fraudulent misrepresentations. A jury found that Open fraudulently induced the City to enter the contract. The City elected to rescind the contract, and the district court held a bench trial on restitution, ordering a judgment of nearly $20 million against Open.The United States District Court for the District of Colorado denied Open's motions for judgment as a matter of law, which argued that the City’s tort claims were barred by the economic-loss rule and the contract’s merger clause. The court also denied Open's motion to require the City to elect a remedy before trial. The jury found in favor of the City on the fraudulent inducement claim, and the City chose rescission, leading to the dismissal of the jury and a bench trial on restitution.The United States Court of Appeals for the Tenth Circuit reviewed the case and affirmed the district court’s rulings and the jury’s verdict. The court held that the City’s tort claims were not barred by the economic-loss rule or the contract’s merger clause. The court found sufficient evidence to support the jury’s finding of fraud, particularly regarding Open’s grading of the functionality matrix and the use of a different software portal. The court also upheld the finding that the City did not waive its right to rescind the contract, as there was conflicting evidence about when the City discovered the fraud. Finally, the court affirmed the district court’s denial of Open’s Rule 50(b) motion, which argued that Open Investments could not be liable for rescission. View "City of Fort Collins v. Open International" on Justia Law

James E. Carroll, Jr. signed a contract with Isle of Palms Pest Control, Inc. and SPM Management Company, Inc. for termite protection services for his home. The contract specified the use of the Exterra Termite Interception and Baiting System, with a liability limit of $250,000 for new termite damage. However, the respondents abandoned the bait station system without informing Carroll and began using a liquid application, which was allegedly done negligently. Carroll continued to renew the bait station contract, unaware of the change, and discovered significant termite damage to his home ten years later.Carroll sued the respondents for negligence and breach of contract. The Circuit Court granted summary judgment to the respondents on the negligence claim, citing the economic loss rule, which confined Carroll's remedy to the breach of contract action. The Court of Appeals affirmed this decision.The Supreme Court of South Carolina reviewed the case and reversed the lower courts' decisions. The court clarified that the economic loss rule applies only in the product liability context when the only injury is to the product itself. Since the contract did not involve the sale of a product, the economic loss rule did not apply. The court found that the respondents' conduct in secretly switching to a liquid termiticide application was beyond the contract's scope, creating a duty of due care. The court held that there was sufficient evidence to create a genuine issue of material fact regarding the respondents' negligence and its proximate cause of the termite damage. The case was remanded for further proceedings, with the $250,000 liability limitation applying only if the verdict is based solely on the breach of contract claim. View "Carroll v. Isle of Palms Pest Control, Inc." on Justia Law

In 2016, the Village of Schaumburg enacted an ordinance requiring commercial and multifamily properties to route fire alarm signals directly to a regional emergency-dispatch center. This ordinance aimed to reduce fire department response times and had financial benefits for the Village. Several alarm companies, which previously used a different model for transmitting alarm signals, claimed that the ordinance caused them to lose business and led to more expensive and lower-quality alarm services for customers.The alarm companies sued the Village, alleging that the ordinance violated the Contracts Clause and tortiously interfered with their contracts and prospective economic advantage. The United States District Court for the Northern District of Illinois initially dismissed the federal claims and relinquished jurisdiction over the state-law claims. On appeal, the Seventh Circuit reversed in part, allowing the Contracts Clause claim to proceed. However, on remand, the district court granted summary judgment for the Village, finding that the alarm companies failed to provide evidence that the ordinance caused customers to breach existing contracts or that the Village intended to interfere with their business relationships.The United States Court of Appeals for the Seventh Circuit reviewed the case and affirmed the district court's decision. The court held that the alarm companies did not present sufficient evidence to show that the ordinance caused customers to breach contracts or that the Village acted with the intent to harm the alarm companies' businesses. The court also found that the alarm companies' claims of tortious interference with prospective economic advantage failed because the Village's actions were motivated by public safety and financial considerations, not a desire to harm the alarm companies. View "Alarm Detection Systems, Inc. v. Village of Schaumburg" on Justia Law

Avanzalia Panamá and its parent company, Avanzalia Solar, built a solar plant in Panama and sought to connect it to the El Coco substation, owned by Goldwind USA's affiliate, UEPI. Avanzalia alleged that Goldwind tortiously blocked their access to the substation, preventing them from selling electricity. Avanzalia filed a complaint with Panama's Autoridad de Servicios Públicos (ASEP), which required them to submit updated electrical studies and obtain an access agreement with UEPI. Despite obtaining the agreement, Avanzalia faced further delays and was unable to connect to the substation until May 2020.The United States District Court for the Northern District of Illinois granted summary judgment to Goldwind. The court found that Avanzalia could not satisfy the Illinois state law requirement for tortious interference, which necessitates that the defendant's actions be directed at a third party. The court also applied collateral estoppel, concluding that ASEP's findings were binding and precluded Avanzalia's claims related to pre-access agreement delays.The United States Court of Appeals for the Seventh Circuit reviewed the case. The court affirmed the district court's decision to afford comity to ASEP's order and apply collateral estoppel, barring Avanzalia's claims related to pre-access agreement delays. However, the appellate court found that the district court erred in not considering the impossibility theory of tortious interference under Restatement (Second) of Torts § 766A. The court vacated the summary judgment on this issue and remanded for further proceedings to determine whether Goldwind wrongfully prevented Avanzalia from performing its contractual obligations. The judgment was affirmed in all other respects. View "Avanzalia Solar, S.L. v. Goldwind USA, Inc." on Justia Law

Andrew and Jessie Welsh purchased The Press Bar and Parlor in 2016, managing it through two entities: Horseshoe Club, LLC, which owned the real estate, and Timeless Bar, Inc., which operated the bar. Andrew and Jessie were the sole members and officers of both entities. Illinois Casualty Company (ICC) issued a business owner’s policy covering the bar’s property and operations. Timeless Bar was the named insured, and Horseshoe Club was an additional insured. After their divorce in November 2019, Andrew took sole control of the businesses’ finances. On February 17, 2020, a fire destroyed The Press Bar and Parlor. Andrew and Jessie submitted a claim to ICC, stating the fire was of unknown origin. However, an investigation revealed Andrew had intentionally set the fire, leading to his conviction for arson. ICC denied the claim based on policy exclusions for concealment, misrepresentation, fraud, dishonesty, and intentional acts.The United States District Court for the District of Minnesota dismissed Jessie’s claims due to her lack of standing as a non-insured. On cross-motions for summary judgment, the court ruled in favor of ICC, attributing Andrew’s conduct to both business entities and concluding the policy did not cover the loss. The court also held that Minnesota’s statutory protection for innocent co-insureds did not extend to corporate entities.The United States Court of Appeals for the Eighth Circuit reviewed the district court’s grant of summary judgment de novo. The court affirmed the district court’s judgment, holding that Andrew’s misrepresentations were attributable to the business entities, and thus, ICC was justified in denying coverage. The court found no basis in Minnesota law to extend the innocent co-insured doctrine to corporations or limited liability companies. View "Timeless Bar, Inc. v. Illinois Casualty Co." on Justia Law

The case involves a dispute between the former owner-operator of a professional baseball franchise in Puerto Rico and the league, its president, and other franchise owners. The plaintiffs allege that the defendants conspired to force the former owner to relinquish control of the franchise, violating the Sherman Act, a federal civil rights statute, and various Puerto Rico laws. The plaintiffs claim that the defendants' actions were in retaliation for the former owner's public criticism of the conditions at the team's stadium and his proposal to move the team to another municipality.The United States District Court for the District of Puerto Rico dismissed the plaintiffs' Sherman Act claims, citing the "business of baseball" exemption. The court also ruled that the plaintiffs' claims under Puerto Rico's antitrust and fair competition laws were preempted by federal law. Additionally, the court dismissed the plaintiffs' federal civil rights claim on res judicata grounds, based on a prior judgment from the Superior Court of San Juan. The court then declined to exercise supplemental jurisdiction over the remaining Puerto Rico law claim.The United States Court of Appeals for the First Circuit affirmed the dismissal of the Sherman Act claims, agreeing that the "business of baseball" exemption applied to the Puerto Rico professional baseball league. However, the court vacated the District Court's dismissal of the Puerto Rico antitrust and fair competition claims, finding that the District Court had incorrectly applied the Supremacy Clause. The court also reversed the dismissal of the federal civil rights claim, concluding that the District Court had misapplied the doctrine of res judicata. Consequently, the court reversed the dismissal of the remaining Puerto Rico law claim, as a federal claim remained in the case. View "Cangrejeros de Santurce Baseball Club, LLC v. Liga de Beisbol Profesional de Puerto Rico, Inc." on Justia Law

East Gate-Logistics Park Chicago, LLC and NorthPoint Development, LLC (the East Gate parties) are involved in a dispute with CenterPoint Properties Trust and its affiliates (the CenterPoint parties) over development projects in the Joliet Intermodal Zone in Illinois. CenterPoint entered into a Memorandum of Understanding (MOU) with local authorities to build a toll bridge, while East Gate later secured an agreement allowing heavy trucks to bypass this toll bridge, which CenterPoint claims violates the MOU.The CenterPoint parties sued in Will County Court to enjoin the East Gate agreement, initially losing but later securing a preliminary injunction on remand from the Illinois Appellate Court. The state court has yet to rule on the merits. Subsequently, the East Gate parties filed a federal antitrust lawsuit, claiming the MOU unlawfully restricted competition. The CenterPoint parties argued the federal court lacked jurisdiction under the Rooker-Feldman doctrine, should abstain under the Colorado River doctrine, and that the Noerr-Pennington doctrine shielded them from antitrust liability.The United States District Court for the Northern District of Illinois rejected the Rooker-Feldman argument, dismissed the Noerr-Pennington motion without addressing the merits, but stayed the federal proceedings under Colorado River. The East Gate parties appealed the stay, while the CenterPoint parties cross-appealed the rejection of their motions.The United States Court of Appeals for the Seventh Circuit dismissed the appeal for lack of jurisdiction, determining that the stay did not effectively end the federal case and was merely a case management decision. The court also found no basis for immediate appeal of the interlocutory orders denying the motions to dismiss, as these could be reviewed after a final decision. View "East Gate-Logistics Park Chicago, LLC v. CenterPoint Properties Trust" on Justia Law

A corporation, its controlling stockholder, and associated individuals were sued by a minority stockholder for breach of contract, fraudulent concealment, and other claims. The defendants moved to dismiss the lawsuit based on forum non conveniens, citing mandatory forum selection clauses in the corporation’s certificate of incorporation and bylaws, which required stockholder lawsuits to be brought in the Delaware Court of Chancery. The trial court denied the motion, and the Court of Appeal denied a petition for writ of mandate, holding that the forum selection clauses were unenforceable because they would deprive the plaintiff of the right to a jury trial, which is not recognized in the Delaware Court of Chancery.The California Supreme Court reviewed the case to determine whether the lower courts were correct in declining to enforce the forum selection clauses on the basis that they would deprive the plaintiff of a jury trial. The Court of Appeal had found that the lack of a jury trial right in Delaware was dispositive and did not consider other arguments against enforcement of the forum selection clause.The California Supreme Court concluded that the lower courts were incorrect in their reasoning. The court held that forum selection clauses serve vital commercial purposes and should generally be enforced. It emphasized that California’s strong public policy in favor of the right to a jury trial applies to California courts and does not extend to other forums. Therefore, a forum selection clause is not unenforceable simply because it requires litigation in a jurisdiction that does not afford the same right to a jury trial as California. The court reversed the judgment of the Court of Appeal and remanded the case for further proceedings to consider other arguments against the enforcement of the forum selection clause. View "EpicentRx v. Superior Ct." on Justia Law

United Wisconsin Grain Producers LLC, along with six other ethanol producers, filed an antitrust lawsuit against Archer Daniels Midland Company (ADM). They alleged that ADM manipulated indexes used to set U.S. ethanol prices, forcing them to charge lower prices in their ethanol sales contracts. The plaintiffs claimed monopolization, attempted monopolization, and market manipulation under § 2 of the Sherman Act and parallel state laws.The United States District Court for the Central District of Illinois dismissed the case. The court found that United Wisconsin Grain failed to allege that ADM recouped its losses from below-cost prices by charging monopoly prices, which is necessary for a monopolization claim. Additionally, the plaintiffs waived their challenge to the dismissal of the attempted monopolization claim. The court also noted that the Sherman Act does not recognize a generalized market manipulation claim.The United States Court of Appeals for the Seventh Circuit reviewed the case. The court affirmed the district court's dismissal, agreeing that United Wisconsin Grain did not allege the necessary recoupment by way of monopoly prices for a monopolization claim. The court also concluded that United Wisconsin Grain waived its attempted monopolization claim by not adequately addressing it in their appeal. Lastly, the court held that the Sherman Act does not support a separate market manipulation claim based on generalized harm to the market. Thus, the district court's dismissal of the amended complaint was affirmed. View "United Wisconsin Grain Producers LLC v. Archer Daniels Midland Co." on Justia Law

A dispute arose between a surety bond company, Granite Re, Inc. (Granite), and a creditor bank, United Prairie Bank (UPB), over entitlement to funds held by a receiver in a receivership action. Granite issued payment bonds to Molnau Trucking LLC (Molnau) for public works projects, but Molnau defaulted on both the projects and loans from UPB. The issue was whether Granite or UPB had priority to the bonded contract funds held by the receiver. Granite argued for priority under equitable subrogation, having paid laborers and suppliers, while UPB claimed priority under the UCC, having perfected its security interests in Molnau’s accounts receivable before Granite issued the bonds.The district court granted summary judgment in favor of UPB, recognizing Granite’s equitable subrogation rights but ruling that UPB’s perfected security interest had priority. The court of appeals affirmed, applying a “mistake of fact” standard from mortgage context case law, which Granite did not meet.The Minnesota Supreme Court reviewed the case and held that the “mistake of fact” standard does not apply to performing construction sureties. The court concluded that Granite, as a surety, has the right to equitable subrogation without needing to show a mistake of fact. The court further held that a surety’s right to equitable subrogation is not a security interest subject to the UCC’s first-in-time priority rule. Instead, a performing surety has priority over a secured creditor regarding bonded contract funds.The Minnesota Supreme Court reversed the court of appeals’ decision and remanded the case to the district court for entry of judgment in favor of Granite, allowing Granite to request redistribution of the bonded contract funds. View "In re Receivership of United Prairie Bank v. Molnau Trucking LLC" on Justia Law