Justia Business Law Opinion Summaries

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In this action brought by Plaintiffs, three out of the five children of Dr. Robert M. Harris and Mary Ellen Harris, who were gifted certain shares of the corporation formed by their father (Company), as tenants of by the entirety, the Court of Chancery deferred a decision on Michael Schwager's motion to dismiss the counts that named him as a defendant, holding that a determination must be made as to whether personal jurisdiction over Schwager existed.Plaintiffs alleged that as Dr. Harris's health was failing, Mary Ellen and her friends and advised scheme to seize control of the Company and engaged in a series of self-dealing transactions that tunneled millions of dollars out of the Company. Plaintiffs brought claims for breach of fiduciary duty and abetting breaches of fiduciary duty against Mary Ellen and her advisors, including Michael Schwager, challenged a merger that Mary Ellen effectuated to move the company to New Jersey, and argued that Mary Ellen violated the trust agreement. Schwager filed a motion to dismiss the claims against him for lack of personal jurisdiction. The Court of Chancery deferred considering Schwager's motion to dismiss under 12(b)(6) until after the trial court could determine whether jurisdiction over Schwager existed, holding that additional jurisdictional discovery was required. View "Harris v. Harris" on Justia Law

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In this suit brought under the Racketeering Influence and Corrupt Organizations Act (RICO), the First Circuit remanded this matter for further review, holding that the district court erred in dismissing the complaint based on the doctrine of forum non conveniens.Medtronic Medical CR SRL, a Costa Rica limited liability company, brought suit under RICO alleging that Defendants, Puerto Rico residents, orchestrated fraudulent schemes. The district court granted Defendants' motion to dismiss based on the doctrine of forum non conveniens, concluding that Costa Rica was an adequate alternative forum. The First Circuit remanded the case, holding that intervening and developing circumstances required reconsideration of the most efficient, prudential path forward. View "Medtronic Medical CR SRL v. Feliciano-Soto" on Justia Law

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Palma worked for FCA starting in 2013 and allegedly participated in a scheme that manipulated FCA's new diesel engine’s function during testing to produce artificially impressive results with respect to features that FCA was targeting to customers, including fuel economy greater than 30 mpg and a frequency of fluid changes similar to that of gasoline-powered cars. When the vehicles were tested for emissions, the program activated Exhaust Gas Recirculation, sacrificing fuel economy. When the vehicles were tested for fuel economy, Recirculation was lowered, increasing emissions. Palma knew that these results were critical to receiving the “best-in-class” fuel economy ratings and that the vehicles did not meet EPA requirements. A sticker affixed to the cars stated they complied with regulations and provided detailed emissions information, as influenced by Palma's scheme. FCA sold more than 100,000 of these vehicles. Customers who purchased the vehicles said that the misleading representations were material to their purchase decisions.Palma was charged with 13 counts, including conspiracy to commit wire fraud, 18 U.S.C. 1349. The district court held that there was an insufficient causal nexus between Palma’s conduct and customers being induced to purchase vehicles and that Palma’s conduct was less a deprivation of consumer property and more a deception of regulators. The Seventh Circuit reversed the dismissal of that count, reasoning that Palma was only charged with conspiracy, not wire fraud itself, and the indictment alleges adequate facts tying Palma to a fraudulent scheme. View "United States v. Palma" on Justia Law

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The Supreme Court reversed the judgment of the court of appeals reversing the trial court's dismissal of the complaint and reinstated the judgment of the trial court dismissing all of Petitioner's claims against Respondents for breach of contract, fraud, and related torts, holding that the discovery rule did not defer accrual of Petitioner's cause of action until it knew that Respondents caused its injury.The trial court granted summary judgment in favor of Petitioner on the grounds that Respondents' claims were time-barred. The appellate court reversed, concluding that the discovery rule deferred accrual of Respondents' cause of action until it knew that Petitioner caused its injury. The Supreme Court reversed and reinstated the dismissal of all claims, holding that summary judgment was appropriate because, at the time of the breach of contract at issue, Respondent learned of facts that, if pursued, would have led to the discovery of Petitioner's alleged misrepresentations. View "Marcus & Millichap Real Estate Investment Services of Nev. v. Triex Texas Holdings, LLC" on Justia Law

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The case arises out of the insolvency of the Crescent Bank and Trust Company (“Crescent”) and the conduct of its customer lawyer, a manager of his law firm, Morris Hardwick Schneider, LLC (“Hardwick law firm”). In 2009, Crescent, a Georgia bank, made the lawyer a loan for $631,276.71. The lawyer, as his law firm’s manager, signed a security agreement that pledged, as collateral, his law firm’s certificate of time deposit (“CD”) for $631,276.71. When Crescent failed, the Federal Deposit Insurance Corporation (“FDIC”), as receiver, took over and sold the lawyer’s loan and CD collateral to Renasant Bank. The lawyer then made loan payments to Renasant, and Renasant held the CD collateral. Landcastle sued Renasant (as successor to the FDIC and Crescent), claiming Renasant was liable for $631,276.71, the CD amount. Landcastle’s lawsuit seeks to invalidate the Hardwick law firm’s security agreement.   The Eleventh Circuit reversed the district court’s ruling. The court explained that Landcastle’s lack-of-authority claims are barred under D’Oench because they rely on evidence that was outside Crescent’s records when the FDIC took over and sold the lawyer’s loan and CD collateral to Renasant. The court concluded that the lawyer’s acting outside the scope of his authority did not render the security agreement void but, at most, only voidable. A voidable interest is sufficient to pass the CD security agreement to the FDIC and to trigger the D’Oench shield View "Landcastle Acquisition Corp. v. Renasant Bank" on Justia Law

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The Court of Chancery denied Paul Petigrow's motion to dismiss the claims against him for aiding and abetting breaches of fiduciary duty in connection with a share withdrawal (Count IV) and tortiously interfering with a trust instrument (Count V), holding that Petigrow was not entitled to relief.Plaintiffs were three of the children of Dr. Robert M Harris, Sr. and Mary Ellen Harris. Plaintiffs alleged that Mary Ellen and her advisors scheme to seize control of a family-owned corporation as Dr. Harris's health was failing. Petigrow, one of Mary Ellen's advisors, asserted that the Court of Chancery could not exercise personal jurisdiction over him for purposes of a claim for tortious interference with a trust instrument. The Court of Chancery denied his motion to dismiss, holding (1) the exercise of personal jurisdiction for purposes of Count V was consistent with traditional notions of due process, and the claim stated a claim against Pedigrow; and (2) Pedigrow's motion to dismiss Count IV was moot. View "Harris v. Harris" on Justia Law

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Stillwater Mining Company filed suit against its directors’ and officers’ liability insurers to recover the expenses it incurred defending a Delaware stockholder appraisal action. The superior court granted the insurers’ motions to dismiss after it found that Delaware law applied to the dispute and the Delaware Supreme Court’s decision in In re Solera Ins. Coverage Appeals (“Solera II”) precluded coverage for losses incurred in a stockholder appraisal action under a similar D&O policy. The primary issue on appeal was whether Delaware or Montana law applied to the claims in Stillwater’s amended complaint. Stillwater argued that the superior court should have applied Montana law because Montana had the most significant relationship to the dispute and the parties. If Montana law applied, according to Stillwater, it could recover its defense costs because Montana recognized coverage by estoppel, meaning the insurers were estopped to deny coverage when they failed to defend Stillwater in the appraisal action. Before the Delaware Supreme Court issued Solera II, the Solera I court held that D&O insureds could recover losses incurred in a stockholder appraisal action. Taking advantage of that favorable ruling, Stillwater argued in its complaint that Delaware law applied to the interpretation of the policies. Then when Solera II was issued, Stillwater reversed position and claimed that Montana law applied to the policies. Its amended complaint dropped all indemnity claims for covered losses in favor of three contractual claims for the duty to advance defense costs and a statutory claim under Montana law. In the Supreme Court's view, Stillwater’s amended claims raised the same Delaware interests that Stillwater identified in its original complaint – applying one consistent body of law to insurance policies that cover comprehensively the insured’s directors’, officers’, and corporate liability across many jurisdictions. It then held the superior court did not abuse its discretion when it denied Stillwater's motions. View "Stillwater Mining Company v. National Union Fire Insurance Company of Pittsburgh, PA" on Justia Law

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Traders set up accounts with Trean, a Chicago Mercantile Exchange introducing broker, managing the customer side of the futures-trading business. Stone handled the trading side. The traders engaged in naked trading—speculating rather than hedging. Stone set a high margin accordingly. Stone was a principal in all trades and, with the clearing house bore, the immediate economic risk; Trean guaranteed Stone’s positions and shared in its commissions. The market did not cooperate. Trean learned that the traders had not met Stone’s margin call and were not cooperating with Stone. Trean told the traders that it would close their accounts but that they were free to deal directly with Stone. Stone thereafter prohibited any trades that would increase the holdings’ net risk. The traders liquidated. Of the $1,020,000 with which they began, they lost $548,000.The traders sued, contending that their contract with Trean did not allow it to cease dealing with them for the reason given and that Trean’s decision led Stone to impose unacceptable conditions. The Seventh Circuit affirmed summary judgment for Trean. Regardless of whether Trean was entitled to end its dealings with the traders, no reasonable jury could find that Trean injured them. Trean’s decision did not affect the value of their futures contracts; they did not have a greater loss than they would have by moving their accounts to a different introducing broker and retaining Stone. View "Daneshrad v. Trean Group, LLC" on Justia Law

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Plaintiff, an investor and venture capitalist and the CEO of InterOil Corporation (“InterOil”), developed a business relationship. Throughout that relationship, Plaintiff (and “entities controlled and beneficially owned by him”) provided loans, cash advances, and funds to the CEO and InterOil. Plaintiff and the CEO continued to have a business relationship until 2016, at which point the CEO’s actions and words made Plaintiff concerned he would not receive his shares back from the CEO. In late 2017, as part of a larger suit against the CEO, Plaintiff and Aster Panama sued the J.P. Morgan Defendants for (1) breach of trust and fiduciary duty, (2) negligence, and (3) conspiracy to commit theft. The district court granted summary judgment on all counts relating to the J.P. Morgan defendants and awarded them attorneys’ fees under the Texas Theft Liability Act (“TTLA”).   The Fifth Circuit affirmed. Under Texas law, the only question is whether the J.P. Morgan Defendants expressly accepted a duty to ensure the stocks were kept in trust for Plaintiff or Aster Panama. That could have been done by express agreement or by the bank’s acceptance of a deposit that contained writing that set forth “by clear direction what the bank is required to do.” Texas courts require a large amount of evidence to show that a bank has accepted such a duty. Here, no jury could find that the proffered statements and emails were sufficient evidence of intent from the J.P. Morgan Defendants to show an express agreement that they “owe[d] a duty to restrict the use of the funds for certain purposes.” View "Civelli v. J.P. Morgan Chase" on Justia Law

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The Supreme Court affirmed the decision of the court of appeals affirming the judgment of the district court dismissing certain defendants for lack of personal jurisdiction, holding that the defendants' contacts were too attenuated for them to have purposefully established minimum contacts within Nebraska.The out-of-state defendants at issue on appeal facilitated the sale of allegedly defective software installed by a local mechanic in four of Plaintiff's trucks. Plaintiff asserted against them claims for strict liability, negligence, and breach of implied warranties. The district court granted the defendants' motion to dismiss, concluding that Plaintiff failed to make a prima facie showing of jurisdiction. The Supreme Court affirmed, holding that the quality and nature of the defendants' activities related to this action did not support personal jurisdiction. View "Wheelbarger v. Detroit Diesel ECM, LLC" on Justia Law