Justia Business Law Opinion Summaries

In 2006, David and Jill Landrum, along with Michael and Marna Sharpe, purchased land in Madison County to develop a mixed-use project called the Town of Livingston. The project stalled due to the 2008 financial crisis and legal issues. In 2010, Jill and Marna formed Livingston Holdings, LLC, which owned the development properties. Marna contributed more financially than Jill, leading to a disparity in ownership interests. In 2014, Marna sold her interest to B&S Mississippi Holdings, LLC, managed by Michael Bollenbacher. Jill stopped making her required monthly contributions in December 2018.The Madison County Chancery Court disqualified Jill as a derivative plaintiff, realigned Livingston Holdings as a defendant, and dismissed several claims. The court found that Jill did not fairly and adequately represent the interests of the company due to personal interests and economic antagonisms. The court also granted summary judgment in favor of several defendants and denied the Landrums' remaining claims after a bench trial.The Supreme Court of Mississippi reviewed the case and affirmed the lower court's decision to disqualify Jill as a derivative plaintiff and exclude the Landrums' expert witness. The court found that Jill's personal interests and actions, such as failing to make required contributions and attempting to gain control of the company, justified her disqualification. The court also affirmed the dismissal of claims for negligent omission, misstatement of material facts, civil conspiracy, fraud, and fraudulent concealment due to the Landrums' failure to cite legal authority.However, the Supreme Court reversed and remanded the case on the issues of remedies and attorneys' fees under the Second Memorandum of Understanding (MOU) and the alleged breach of fiduciary duty between B&S and Jill. The court found that the chancellor erred in interpreting the Second MOU as providing an exclusive remedy and remanded for further proceedings to determine if Livingston is entitled to additional remedies and attorneys' fees. The court also remanded for factual findings on whether B&S breached its fiduciary duty to Jill regarding property distribution and tax loss allocation. View "Landrum v. Livingston Holdings, LLC" on Justia Law

Petitioners opened brokerage accounts with Stifel, Nicolaus & Company, managed by Coleman Devlin. Dissatisfied with Devlin's performance, they filed for arbitration with the Financial Industry Regulatory Authority (FINRA), alleging negligence, breach of contract, breach of fiduciary duty, negligent supervision, and violations of state and federal securities laws. After nearly two years of hearings, the arbitration panel ruled in favor of Stifel and Devlin without providing a detailed explanation, as the parties did not request an "explained decision."Petitioners moved to vacate the arbitration award in the United States District Court for the District of Maryland, arguing that the arbitration panel manifestly disregarded the law, including federal securities law. The district court denied the motion, stating that the petitioners failed to meet the high standard required to prove manifest disregard of the law. The court noted that the petitioners were essentially rearguing their case from the arbitration.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court noted that the Supreme Court's decision in Badgerow v. Walters requires an independent jurisdictional basis beyond the Federal Arbitration Act (FAA) itself for federal courts to have jurisdiction over petitions to vacate arbitration awards. Since the petitioners did not provide such a basis, the Fourth Circuit vacated the district court's judgment and remanded the case with instructions to dismiss the petition for lack of jurisdiction. The court emphasized that claims of manifest disregard of federal law do not confer federal-question jurisdiction. View "Friedler v. Stifel, Nicolaus, & Company, Inc." on Justia Law

The case involves a 2009 loan transaction between TNE Limited Partnership (TNE) and the Muir Second Family Limited Partnership (the Muir Partnership) at a time when the Muir Partnership was dissolved. The plaintiffs, including the Muir Partnership, Dorothy Jeanne Muir, and Wittingham, LLC, sought to void the transaction. After a seven-day bench trial, the district court ruled in favor of the plaintiffs, declaring the transaction void and denying their request for attorney fees.TNE appealed, arguing that the transaction was voidable, not void, and the plaintiffs cross-appealed the denial of attorney fees. The Utah Supreme Court, in Wittingham III, agreed with TNE that the transaction was voidable and remanded the case to the district court to determine whether the transaction bound the dissolved Muir Partnership and whether TNE was entitled to legal or equitable remedies. The court also instructed the district court to reconsider the attorney fees issue if plaintiffs renewed it on remand.On remand, the district court concluded that Nick Muir, who executed the transaction on behalf of the Muir Partnership, lacked both actual and apparent authority to bind the Partnership. The court also found that the plaintiffs were injured by the transaction and could void it. However, the court again denied the plaintiffs' request for attorney fees, interpreting the trust deed's fee provision as not applicable to the plaintiffs' action to invalidate the transaction. TNE's subsequent rule 60(b) motion, arguing that new authority from the Utah Supreme Court changed the controlling law on apparent authority, was denied.The Utah Supreme Court affirmed the district court's rulings. It held that TNE failed to show any manifestation of the Muir Partnership’s consent to Nick’s authority, either direct or indirect. The court also found that the district court did not err in allowing the Muir Partnership to void the transaction and that the plaintiffs were not entitled to attorney fees under the trust deed. View "Wittingham v. TNE Limited Partnership" on Justia Law

The case involves two nonprofit organizations, the National Federation of the Blind of Texas and Arms of Hope, which use donation boxes to collect items for fundraising. The City of Arlington, Texas, enacted an ordinance regulating the placement and maintenance of these donation boxes, including zoning restrictions and setback requirements. The nonprofits challenged the ordinance, claiming it violated the First Amendment by restricting their ability to place donation boxes in certain areas of the city.The United States District Court for the Northern District of Texas reviewed the case. The court granted summary judgment in favor of Arlington on several counts, including the constitutionality of the setback requirement and the ordinance not being overbroad or a prior restraint. However, the court ruled in favor of the nonprofits on the zoning provision, finding it was not narrowly tailored and thus violated the First Amendment. The court enjoined Arlington from enforcing the zoning provision against the nonprofits.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court held that the ordinance was content-neutral and subject to intermediate scrutiny. It found that the zoning provision, which limited donation boxes to three of the city's 28 zoning districts, was narrowly tailored to serve Arlington's significant interests in public health, safety, welfare, and community aesthetics. The court also upheld the setback requirement, finding it did not burden more speech than necessary and left ample alternative channels of communication. The court concluded that the ordinance's permitting provisions did not constitute an unconstitutional prior restraint.The Fifth Circuit vacated the district court's judgment regarding the zoning provision and rendered judgment in favor of Arlington on that part. The rest of the district court's judgment was affirmed. View "National Federation of the Blind of Texas, Incorporated v. City of Arlington" on Justia Law

In 2017, the SEC filed a lawsuit against investment advisers Louis Navellier and Navellier & Associates, Inc. (NAI), alleging violations of sections 206(1) and 206(2) of the Investment Advisers Act. The SEC claimed that the defendants made materially false and misleading statements about the performance track record of their investment strategies. The United States District Court for the District of Massachusetts granted summary judgment in favor of the SEC, ordering disgorgement exceeding $22 million. The defendants appealed, challenging the summary judgment, the denial of their motion to stay pending appeal, and the denial of their motion to reduce the supersedeas bond.The district court found that the defendants had violated sections 206(1) and 206(2) by making false statements about the inception date and performance of the AlphaSector strategy, which they marketed as having been live-traded since 2001. The court determined that these statements were material and that the defendants acted with scienter (intent to defraud) or, at the very least, negligence. The court also rejected the defendants' selective enforcement defense, concluding that they were not similarly situated to other firms that were not prosecuted.The United States Court of Appeals for the First Circuit reviewed the case and affirmed the district court's decisions. The appellate court agreed that the defendants' statements were false and material, and that they acted with a high degree of recklessness, satisfying the scienter requirement. The court also upheld the disgorgement order, finding it to be a reasonable approximation of the profits causally connected to the violations. The court rejected the defendants' argument that disgorgement was inappropriate because their clients did not suffer pecuniary harm, emphasizing that disgorgement is meant to deprive wrongdoers of their ill-gotten gains. Finally, the court found no abuse of discretion in the district court's decision not to reduce the supersedeas bond amount. View "SEC v. Navellier & Associates, Inc." on Justia Law

Tegra Corporation, a minority interest holder in Lite-Form Technologies, LLC, filed a derivative action against Patrick Boeshart, the LLC’s manager and president, and Sandra Boeshart, the LLC’s bookkeeper and office manager. Tegra alleged that the Boesharts used their positions to enrich themselves at the expense of the LLC. Specific allegations included engaging the LLC in above-market leases with entities they controlled, paying themselves excessive salaries and bonuses, and mismanaging LLC funds by charging personal expenses to the LLC.The District Court for Dakota County dismissed the derivative claims, concluding that a special litigation committee (SLC) appointed under Neb. Rev. Stat. § 21-168 had conducted its investigation and made its recommendation in good faith, independently, and with reasonable care. The SLC, led by Cody Carse, recommended that the claims be settled through a member meeting rather than litigation. Tegra appealed, arguing that the SLC did not act with reasonable care.The Nebraska Supreme Court reviewed the case de novo and found that the SLC did not exercise reasonable care in its investigation. The court noted that Carse failed to consider the legal elements of Tegra’s claims, did not conduct a cost-benefit analysis, and improperly delegated his duties to the LLC’s members. The court emphasized that Carse’s investigation lacked thoroughness and that he did not adequately assess the potential recovery for the LLC. Consequently, the court reversed the district court’s dismissal of the derivative claims and remanded the case for further proceedings, instructing the district court to dissolve any stay of discovery and allow the action to proceed under Tegra’s direction. The dismissal of Tegra’s individual claims was affirmed. View "Tegra Corp. v. Boeshart" on Justia Law

Plaintiffs-Appellants, a group of produce suppliers, sold produce to Lonestar Produce Express, LLC, a produce broker started by Leonidez Fernandez III and Eric Fernandez. Their father, Leonidez Fernandez Jr., frequently assisted them. By mid-2019, Lonestar owed approximately $221,000 to Plaintiffs-Appellants for unpaid produce invoices. Plaintiffs-Appellants sought relief under the Perishable Agricultural Commodities Act (PACA), which requires produce buyers to hold produce or proceeds from its sale in trust for unpaid suppliers until full payment is made. If the merchant's assets are insufficient, others who had a role in causing the breach of trust may be held secondarily liable.The United States District Court for the Western District of Texas held a bench trial to determine whether Leonidez Fernandez Jr. could be held individually liable under PACA. The court found that Leonidez Jr. was not a member, manager, or employee of Lonestar and did not have control over its financial operations. Consequently, the district court concluded that Leonidez Jr. did not owe a fiduciary duty under PACA and was not liable for Lonestar's debts.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court held that individuals who are not members of an LLC can still be held secondarily liable under PACA if they have control over the trust assets. However, the court found that Leonidez Jr. did not have the requisite control over Lonestar's PACA trust assets. He was not authorized to direct payments, was not a signatory on the bank account, and did not contribute financially to Lonestar. Therefore, the Fifth Circuit affirmed the district court's decision, concluding that Leonidez Jr. was not liable under PACA. View "A & A Concepts v. Fernandez" on Justia Law

WasteXperts, Inc. (WasteXperts) filed a complaint against Arakelian Enterprises, Inc. dba Athens Services (Athens) and the City of Los Angeles (City) in June 2022. WasteXperts alleged that Athens, which holds a waste collection franchise from the City, sent a cease and desist letter to WasteXperts, arguing that WasteXperts was not legally permitted to handle Athens’s bins. WasteXperts sought judicial declarations regarding the City’s authority and Athens’s franchise rights, and also asserted tort claims against Athens for interference with contract, interference with prospective economic advantage, unfair competition, and trade libel.The Superior Court of Los Angeles County granted Athens’s anti-SLAPP motion to strike the entire complaint, finding that the claims were based on Athens’s communications, which anticipated litigation and were therefore protected activity. The court also held that the commercial speech exemption did not apply and that WasteXperts had no probability of prevailing on the merits of its claims. WasteXperts’s request for limited discovery was denied.The California Court of Appeal, Second Appellate District, Division Four, reversed the trial court’s order. The appellate court concluded that the declaratory relief claim did not arise from protected activity, as it was based on an existing dispute over the right to move waste collection bins, not on the prelitigation communications. The court also found that the commercial speech exemption applied to Athens’s communications with WasteXperts’s clients, removing those communications from the protection of the anti-SLAPP statute. Consequently, the tort claims did not arise from protected activity. The appellate court did not address the probability of WasteXperts prevailing on the merits or the request for limited discovery. View "Wastexperts, Inc. v. Arakelian Enterprises, Inc." on Justia Law

A group of AIM ImmunoTech, Inc. stockholders believed the board was mismanaging the company and initiated a campaign to elect new directors. This effort included two felons convicted of financial crimes. The board rejected two nomination attempts under its bylaws, leading to a lawsuit. The Court of Chancery denied the insurgents' request for a preliminary injunction, citing factual disputes. The insurgents, led by Ted D. Kellner, made a third attempt to nominate directors. The board amended its bylaws to include new advance notice provisions and rejected Kellner's nominations for non-compliance. Kellner filed suit.The Court of Chancery invalidated four of the six main advance notice bylaws and reinstated a 2016 bylaw. The court upheld the board's rejection of Kellner's nominations for failing to comply with the remaining bylaws, including the reinstated 2016 provision. Kellner argued that the court improperly used the 2016 bylaw and that the amended bylaws were preclusive and adopted for an improper purpose. The defendants contended that the court erred in invalidating the bylaws and that they withstood enhanced scrutiny.The Delaware Supreme Court reviewed the case. It found that the AIM board identified a legitimate threat to its information-gathering function but acted inequitably by adopting unreasonable bylaws to thwart Kellner's proxy contest. The court held that the board's primary purpose was to interfere with Kellner's nominations and maintain control. Consequently, the court declared the amended bylaws unenforceable. The judgment of the Court of Chancery was affirmed in part and reversed in part, closing the case. View "Kellner v. AIM ImmunoTech Inc." on Justia Law

Dr. Igor DeCastro, a neurosurgeon, worked at the Hot Springs Neurosurgery Clinic for seven years. He claimed that after his initial 18-month salary period, he was supposed to receive compensation based on the net proceeds of his production, less 33% of the clinic's overhead. However, he alleged that he never received more than his base salary because Dr. James Arthur, the clinic's owner, diverted the funds into a "secret account." DeCastro also sued Bank OZK, where the account was held, leading the bank to request the court to determine the rightful owner of the funds.The United States District Court for the Western District of Arkansas dismissed DeCastro's amended complaint for failing to include essential facts, such as specific amounts received, production details, and overhead costs. The court also disbursed the funds to Arthur and denied DeCastro's motions for reconsideration, discovery, and leave to file a second amended complaint. DeCastro's subsequent attempts to revive the case, including a counterclaim in an unrelated contribution action, were dismissed based on res judicata.The United States Court of Appeals for the Eighth Circuit reviewed the case and affirmed the district court's decision. The appellate court agreed that DeCastro's amended complaint lacked sufficient factual matter to state a plausible claim for relief. The court noted that the complaint was filled with legal conclusions rather than specific facts about the alleged breach. Additionally, the court found no abuse of discretion in the district court's denial of DeCastro's post-dismissal motions, as the employment agreement he later produced did not support his original claims. The court also upheld the dismissal of DeCastro's counterclaim based on res judicata, as it was identical to the previously adjudicated claims. View "DeCastro v. Arthur" on Justia Law