Justia Business Law Opinion Summaries

The plaintiff, William Boggs, was injured on August 9, 2016, while transferring liquid asphalt from a tanker truck to a distribution truck in Framingham, Massachusetts. He was sprayed with liquid asphalt, resulting in burns and permanent injuries. Boggs was employed by All States Asphalt, Inc. (All States), which accepted his workers' compensation claim. Boggs filed a complaint against Johnston Asphalt, LLC, alleging negligence in maintaining the truck that caused his injuries.The Kent County Superior Court granted summary judgment in favor of Johnston Asphalt on February 27, 2024. The court found no genuine issues of material fact and concluded that Johnston Asphalt owed no duty to Boggs. The court noted that the truck was owned and maintained by All States, and the only person who worked on the truck was an All States employee, Michael Kelly. The court also rejected Boggs' argument to pierce the corporate veil, finding no evidence that Johnston Asphalt and All States were not separate entities.The Rhode Island Supreme Court reviewed the case and affirmed the Superior Court's judgment. The Supreme Court held that Boggs failed to present competent evidence to demonstrate a genuine issue of material fact regarding Johnston Asphalt's duty of care. The court found that the single piece of mail addressed to Kelly at Johnston Asphalt's address was insufficient to establish that Kelly was an employee of Johnston Asphalt. The court also upheld the lower court's decision not to pierce the corporate veil, as Boggs did not meet the burden of proof required to disregard the corporate entity. View "Boggs v. Johnston Asphalt, LLC" on Justia Law

Restaurant patrons filed personal injury lawsuits after becoming ill from eating contaminated cilantro. The distributor, Martin Produce, Inc., who sold the cilantro to the restaurants, filed a third-party complaint for contribution against the wholesalers, Jack Tuchten Wholesale Produce, Inc., and La Galera Produce, Inc., from whom it purchased the cilantro. The issue was whether Martin satisfied its obligation to notify the wholesalers of its claim of breach of implied warranty of merchantability under the Uniform Commercial Code (UCC).The circuit court of Cook County granted summary judgment in favor of the wholesalers, finding that Martin failed to provide direct notice of its claim as required by the UCC. The appellate court reversed this decision, holding that the wholesalers had actual knowledge of the defect due to the personal injury lawsuits filed against them, which informed them of the alleged contamination.The Supreme Court of Illinois reviewed the case and affirmed the appellate court's judgment. The court held that the wholesalers had actual knowledge of the defect because they were named as defendants in the personal injury lawsuits, which provided them with sufficient notice of the alleged contamination. The court concluded that Martin was not required to provide direct notice under the UCC because the wholesalers were already aware of the specific transactions and the alleged defects. The case was remanded to the circuit court for further proceedings on Martin's breach of implied warranty of merchantability complaint against the wholesalers. View "Andrews v. Carbon on 26th, LLC" on Justia Law

Peter Farina has lived at the Victor Howell House, a group home for low-income individuals, since 1989. In 2000, the Janet Keenan Housing Corporation (JKHC), a non-profit, purchased the property to maintain it as affordable housing. Recently, JKHC attempted to sell the house to a private third party, leading to two tracks of litigation. The District of Columbia sued JKHC to halt the sale, arguing it violated JKHC’s charitable purposes. As the District and JKHC neared a settlement allowing the sale, Farina sought to intervene but was denied. Farina then filed his own lawsuit, claiming his rights under the Tenant Opportunity to Purchase Act (TOPA) and the Uniform Trust Code (UTC) were being violated.The Superior Court of the District of Columbia denied Farina’s motion to intervene in the District’s case, citing untimeliness and lack of standing. The court approved the settlement between the District and JKHC, which allowed the sale to proceed. In Farina’s separate lawsuit, the court ruled against him, stating his TOPA rights were extinguished by the court-approved settlement and that he lacked standing to bring his UTC claim.The District of Columbia Court of Appeals reviewed the case. The court held that Farina’s TOPA rights were not extinguished by the settlement, as the sale was an arm’s-length transaction and not exempt under TOPA. Farina must be given the opportunity to purchase the property under TOPA. However, the court agreed with the lower court that Farina lacked standing to bring his UTC claim, as he was neither a settlor nor a special interest beneficiary of JKHC. The court affirmed the judgment in the District’s case but vacated the judgment in Farina’s case, remanding it for further proceedings to afford Farina his TOPA rights. View "Farina v. Janet Keenan Housing Corporation" on Justia Law

Ezrasons, Inc., a New York corporation and beneficial owner of Barclays PLC shares, initiated a derivative action on behalf of Barclays against several current and former Barclays directors and officers, as well as Barclays Capital Inc. (BCI). The complaint alleged breaches of fiduciary duties under English law, causing significant harm to Barclays. Defendants moved to dismiss the complaint, arguing that under English law, only registered members of Barclays could maintain such an action, and Ezrasons was not a registered member.The Supreme Court granted the motion to dismiss, holding that the internal affairs doctrine required the application of English law, which precluded Ezrasons from having standing. The court rejected the argument that New York's Business Corporation Law (BCL) sections 626 (a) and 1319 (a) (2) overrode the internal affairs doctrine. The Appellate Division affirmed, agreeing that the internal affairs doctrine applied and that Ezrasons lacked standing under English law.The New York Court of Appeals reviewed the case and affirmed the Appellate Division's decision. The court held that the internal affairs doctrine, which mandates that the substantive law of the place of incorporation governs disputes related to corporate internal affairs, was not overridden by BCL sections 626 (a) and 1319 (a) (2). The court found no clear legislative intent to displace the doctrine and concluded that Ezrasons lacked standing under English law to maintain the derivative action. The order of the Appellate Division was affirmed, with costs. View "Ezrasons, Inc. v Rudd" on Justia Law

A creditor and a debtor’s law firm both claimed settlement funds held by the superior court. The creditor had a charging order against the debtor’s distributions from a limited liability company (LLC), while the law firm had an attorney’s lien on the funds. In a previous appeal, the attorney’s lien was deemed valid, but the case was remanded to determine if the funds were LLC distributions subject to the charging order and the value of the attorney’s lien.The superior court ruled that the funds were LLC distributions and subject to the charging order. It also found that the debtor failed to prove any money was owed to the law firm for work performed, thus invalidating the attorney’s lien. The court mistakenly released the funds to the creditor, who returned them within two days, but was sanctioned with attorney’s fees for temporarily keeping the funds.The debtor appealed, and the creditor cross-appealed the attorney’s fee award. The Supreme Court of Alaska affirmed the superior court’s rulings on the merits but reversed the attorney’s fee award. The court held that the funds were indeed LLC distributions subject to the charging order and that the debtor and law firm failed to prove the value of the attorney’s lien. The court also vacated the second final judgment and the attorney’s fee award against the creditor, finding no rule violation by the creditor. View "Baker v. Duffus" on Justia Law

The case involves codefendant brothers Joshua and Jamie Yafa, who were convicted of securities fraud and conspiracy to commit securities fraud for their involvement in a "pump-and-dump" stock manipulation scheme. They promoted the stock of Global Wholehealth Products Corporation (GWHP) through various means, including a "phone room" and social media, to inflate its price. Once the stock price rose significantly, they sold their shares, earning over $1 million. Following the sale, the stock price plummeted, causing significant losses to individual investors. A grand jury indicted the Yafas, along with their associates Charles Strongo and Brian Volmer, who pled guilty and testified against the Yafas at trial.The United States District Court for the Southern District of California sentenced the Yafas, applying the United States Sentencing Guidelines (U.S.S.G.) § 2B1.1. The court used Application Note 3(B) from the commentary to § 2B1.1, which allows courts to use the gain from the offense as an alternative measure for calculating loss when the actual loss cannot be reasonably determined. The district court found it difficult to calculate the full amount of investor losses and thus relied on the gain as a proxy. This resulted in a fourteen-level increase in the offense level for both brothers, leading to sentences of thirty-two months for Joshua and seventeen months for Jamie.The United States Court of Appeals for the Ninth Circuit reviewed the case. The court held that the term "loss" in § 2B1.1 is genuinely ambiguous and that Application Note 3(B)'s instruction to use gain as an alternative measure is a reasonable interpretation. The court concluded that the district court did not err in using the gain from the Yafas's offenses to calculate the loss and affirmed the district court's decision. View "USA V. YAFA" on Justia Law

In 2006, Cabot Oil & Gas Company began fracking in Dimock Township, Pennsylvania. By 2009, their operations caused a residential water well explosion, leading to methane gas contamination in local water supplies. The Pennsylvania Department of Environmental Protection (DEP) found Cabot in violation of environmental laws, resulting in the 2009 Consent Order, which mandated corrective actions and a $120,000 penalty. Cabot violated this order by 2010, leading to another consent order and additional fines. Over the next decade, Cabot received numerous violation notices and faced lawsuits, including a 2020 grand jury finding of long-term indifference to remediation efforts, resulting in criminal charges and a nolo contendere plea.Shareholders filed a derivative suit against Cabot’s directors, alleging breaches of fiduciary duties, including failure to oversee operations, issuing misleading statements, and insider trading. The United States District Court for the Southern District of Texas dismissed the claims, finding no serious oversight failure or bad faith by the directors, and insufficient particularized allegations to support claims of material misrepresentation or insider trading.The United States Court of Appeals for the Fifth Circuit reviewed the case de novo. The court affirmed the district court’s dismissal, agreeing that the directors had implemented and monitored compliance systems, and that the shareholders failed to demonstrate bad faith or conscious disregard of duties. The court also found that the statements in Cabot’s disclosures were not materially misleading and that the shareholders did not adequately plead demand futility regarding the insider trading claim. Thus, the court upheld the dismissal of all claims with prejudice. View "Ezell v. Dinges" on Justia Law

Petitioners were defrauded by a now-defunct corporation that sold them long-term health care and estate planning services they never received. Unable to obtain compensation directly from the corporation, petitioners secured a federal bankruptcy court judgment against the corporation and applied for restitution from the Victims of Corporate Fraud Compensation Fund. The Secretary of State, who administers the Fund, denied their applications, leading petitioners to file a verified petition in the superior court for an order directing payment from the Fund. The superior court granted the petition, and the Secretary appealed.The superior court found that the bankruptcy court judgment was a qualifying judgment for compensation under the Fund. The court noted that the complaint contained allegations of fraud and requested a judgment finding the elements of fraud under California law were satisfied. The superior court also found that the administrative record contained ample evidence supporting the bankruptcy court’s default judgment against the corporation for fraud.The California Court of Appeal, Second Appellate District, reviewed the case. The court concluded that the bankruptcy court’s final judgment, which expressly adjudged petitioners as victims of intentional misrepresentation, met the Fund’s requirement for a judgment based on fraud. The court affirmed the superior court’s judgment regarding petitioners' entitlement to payment from the Fund. However, it reversed and remanded the case for the superior court to specify the amount the Secretary shall pay each petitioner, as the original order did not account for the statutory limit of $50,000 per claimant and the need to consider spouses as a single claimant. View "Alves v. Weber" on Justia Law

The plaintiffs, representing nine closed-end mutual funds, sued Ocean Capital LLC and several individuals and firms for allegedly committing securities violations. The plaintiffs claimed that the defendants misled their shareholders by failing to make complete and accurate disclosures, violating Sections 13(d), 14(a), and 20(a) of the Securities and Exchange Act of 1934 and other applicable SEC rules. The district court granted the defendants' motions for judgment on the pleadings and to dismiss, leading the plaintiffs to appeal.The United States District Court for the District of Puerto Rico initially reviewed the case. U.S. Magistrate Judge Giselle Lépez-Soler recommended dismissing the plaintiffs' complaint on grounds of failure to state a claim and mootness. The district court adopted this recommendation, dismissing the plaintiffs' claims but retaining jurisdiction over the defendants' counterclaims. The plaintiffs then moved for a stay of the proceedings on the counterclaims, which was denied. The district court granted the defendants' requested relief on their counterclaims, ordering the plaintiffs to seat the defendants' nominees for the board of directors of three funds. The plaintiffs timely appealed these decisions.The United States Court of Appeals for the First Circuit reviewed the case. The court affirmed the district court's dismissal of the plaintiffs' Sections 13(d), 14(a), and 20(a) claims. The court found that the plaintiffs failed to state a Section 13(d) claim for the non-PRRTFF IV funds and did not demonstrate irreparable harm for PRRTFF IV. The court also concluded that the plaintiffs' Section 14(a) claims were insufficient, as the statements in question were not materially misleading. Consequently, the court upheld the district court's judgment on the defendants' counterclaims, ordering the plaintiffs to seat the defendants' nominees. View "Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc. v. Ocean Capital LLC" on Justia Law

Stephen Hofer, a licensed attorney and founder of Aerlex Law Group, hired Vicky Boladian as a part-time contract attorney in 2008. In 2013, they formed Aerlex Tax Services, LLC (tax LLC) to provide tax-related services. Hofer held a 55% equity interest, and Boladian held 45%. Their relationship deteriorated in 2017-2018, leading to litigation. In 2020, they settled by executing three agreements, each containing arbitration clauses. In 2023, they dissolved the tax LLC and transferred its assets to Aerlex Tax Services, LLP (tax LLP). Boladian later withdrew, forming her own firm and taking clients and assets.The plaintiffs, including Hofer and the tax LLP, filed a lawsuit against Boladian and her new firm, alleging 13 causes of action and seeking various damages and relief. They did not mention arbitration in their complaint. They sought a temporary restraining order and a preliminary injunction, both of which were denied. They also engaged in extensive discovery and demanded a jury trial. Boladian and her firm filed a cross-complaint, and three days later, the plaintiffs moved to compel arbitration.The Superior Court of Los Angeles County denied the motion to compel arbitration, finding that the plaintiffs had waived their right to arbitration by substantially litigating the case in court for over six months. The court applied the waiver standard from St. Agnes Medical Center v. PacifiCare of California, which was later overruled by the California Supreme Court in Quach v. California Commerce Club, Inc.The California Court of Appeal, Second Appellate District, reviewed the case de novo under the new standard set by Quach. The court concluded that the plaintiffs had waived their right to compel arbitration by engaging in extensive litigation conduct inconsistent with an intent to arbitrate. The order denying the motion to compel arbitration was affirmed. View "Hofer v. Boladian" on Justia Law