Justia Business Law Opinion Summaries

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Gateway is a small business debtor in an active Chapter 11 bankruptcy proceeding seeking a loan under the Paycheck Protection Program (PPP). Gateway applied for a PPP loan and falsely stated that it was not in bankruptcy in order to be eligible for the program. When Gateway filed a motion for approval in the bankruptcy court, the SBA objected that Gateway was ineligible for a PPP loan because it was in bankruptcy. The bankruptcy court granted Gateway's motion anyway, concluding that the SBA's rule rendering bankruptcy debtors ineligible for PPP loans was an unreasonable interpretation of the statute, was arbitrary and capricious under the Administrative Procedure Act, and as a result was unlawful and unenforceable against Gateway.The Eleventh Circuit vacated the bankruptcy court's approval order, concluding that the SBA's rule is neither an unreasonable interpretation of the relevant statute nor arbitrary and capricious. The court concluded that the SBA did not exceed its authority in adopting the non-bankruptcy rule for PPP eligibility; the rule does not violate the CARES Act, is based on a reasonable interpretation of the Act, and the SBA did not act arbitrarily and capriciously in adopting the rule; and the bankruptcy court committed an error of law in concluding otherwise in its approval order and its preliminary injunction order. Accordingly, the court remanded for further proceedings. The court dismissed the appeal from the memorandum opinion for lack of jurisdiction. View "USF Federal Credit Union v. Gateway Radiology Consultants, P.A." on Justia Law

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This case arose from a dispute over the ownership of Treasure Valley Manufacturing & Recycling, Inc., (“TVM”). Daniel Weitz appealed a district court order granting summary judgment in favor of David Weitz and John Tavares and declaring them the exclusive owners of TVM. The district court granted summary judgment after determining that Daniel Weitz failed to produce any evidence demonstrating a genuine dispute of material fact and that they were entitled to judgment as a matter of law. Finding no reversible error, the Idaho Supreme Court affirmed the district court's judgement. View "Weitz v. Weitz" on Justia Law

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Three Aces Properties LLC appealed, and United Rentals (North America), Inc., cross-appealed a judgment and orders denying their motions to amend the judgment. In 2017, Three Aces sued United Rentals for breach of contract and waste. Three Aces claimed United Rentals breached the lease by failing to pay rent after it vacated the property, failing to maintain and repair the parking area, and failing to maintain and repair the premises. Three Aces alleged United Rentals’ use of the premises resulted in destruction of the asphalt parking area and damages to the building and other areas of the property. Three Aces claimed United Rentals attempted to repair the parking area by replacing the asphalt paving with scoria, the City of Williston notified the parties that replacement of the asphalt with scoria violated zoning ordinances, and the parties disagreed about which party had an obligation to repair the parking area. Three Aces argued the district court erred by failing to award it damages for its breach of contract claims. United Rentals argued the court erred in dismissing its breach of contract and constructive eviction claim. Finding no reversible error, the North Dakota Supreme Court affirmed the district court. View "Three Aces Properties v. United Rentals" on Justia Law

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Coast filed suit against Memorial, a medical group seeking to buy Coast, after negotiations between the parties failed and Memorial hired people who were already working for Coast. The trial court ultimately granted summary judgment against Coast.In regard to the two trade secret claims, the Court of Appeal concluded that the trial court properly disposed of the medical codes secret claim, but remanded as to the physician productivity secret claim because Coast succeeded in generating a genuine factual dispute in this case. In regard to the claims for tortious interference with economic relations, the court concluded that the trial court was correct to summarily dispose of both of Coast's interference claims, because Coast offered no proof Memorial had engaged in wrongful conduct. Finally, the court concluded that the trial court correctly granted Memorial summary relief from Coast's cause of action for unfair competition. Accordingly, the court reversed the trial court's grant of summary judgment; directed the summary adjudication of all claims in Memorial's favor, with the exception of the claim for misappropriation on the physician productivity secret. The court remanded that claim for further proceedings. View "Coast Hematology-Oncology Associates Medical Group, Inc. v. Long Beach Memorial Medical Center" on Justia Law

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The Supreme Court affirmed the order of the district court providing for the dissolution of the Johns Brothers Farms partnership, accounting of the partners' capital accounts, and settlement and distribution of partnership assets, holding that the district court did not err.Brothers Jerry Johns and Jule Nathan "Butch" Johns began farming together as a partnership in 1980. In 1994, the brothers each formed a corporation to hold their individual interests, and the corporations became the partners in Johns Brothers Farms. In 2013, the brothers agreed to dissolve the partnership and distribute the assets between the partners. The next year, Jerry commenced this action to dissolve Johns Brothers Farms, for settlement of capital accounts, and for distribution of partnership assets. In 2020, the district court issued its findings of fact, conclusions of law, and judgment. Butch appealed. The Supreme Court affirmed, holding that the district court (1) did not err by concluding that Jerry did not breach his fiduciary duty to Butch and the partnership; (2) did not err in its calculation of the capital account balances for Jerry and Butch; and (3) did not err by awarding Jerry the forty-acre parcel in its distribution of partnership assets. View "Jackpot Farms, Inc. v. Johns Farms, Inc." on Justia Law

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The Supreme Judicial Court affirmed the business and consumer docket's entry of final judgment reaffirming a partial summary judgment on the complaint filed by Michael Zelman and a counterclaim filed by Andrew and Zelman Family Business Holdings, LLC (ZFBH), holding that the business and consumer court had subject matter jurisdiction.Michael brought this action both individually and as personal representative of the Estate of Estelle Betty Zelman asking the superior court to dissolve and liquidate ZFBH. Andrew and ZFBH filed an answer and counterclaim. The court entered a final judgment concluding that Andrew was not a manager of ZFBH and that the sole remaining manager of ZFBH had died and declining to dissolve ZFBH. The Supreme Judicial Court affirmed, holding (1) the business and consumer court had subject matter jurisdiction and personal jurisdiction; and (2) the court correctly concluded that William did not have the authority to appoint Andrew as a manager of ZFBH. View "Zelman v. Zelman" on Justia Law

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The Court of Chancery issued a memorandum opinion in an action brought under Delaware's Corporation Law, section 220 (the "DGCL"). The opinion ordered AmerisourceBergen Corporation to produce certain books and records to Lebanon County Employees Retirement Fund and Teamsters Local 443 Health Services & Insurance Plan (“Plaintiffs”) and granting Plaintiffs leave to take a Rule 30(b)(6) deposition “to explore what types of books and records exist and who has them.” The Company claimed Plaintiffs’ inspection demand, which, among other things, was aimed at investigating possible breaches of fiduciary duty, mismanagement, and other wrongdoing, was fatally deficient because it did not disclose Plaintiffs’ ultimate objective, which was what they intended to do with the books and records in the event that they confirmed their suspicion of wrongdoing. The Company also contended the Court of Chancery erred by holding Plaintiffs were not required to establish a credible basis to suspect actionable wrongdoing. And finally, the Company argued the Court of Chancery erred as a matter of law when it allowed Plaintiffs to take a post-trial Rule 30(b)(6) deposition. After review, the Delaware Supreme Court held that when a Section 220 inspection demand stated a proper investigatory purpose, it did not need to identify the particular course of action the stockholder will take if the books and records confirm the stockholder’s suspicion of wrongdoing. In addition, the Court held that, although the actionability of wrongdoing can be a relevant factor for the Court of Chancery to consider when assessing the legitimacy of a stockholder’s stated purpose, an investigating stockholder was not required in all cases to establish the wrongdoing under investigation was actionable. Finally, the Court found the Court of Chancery’s allowance of the post-trial deposition was not an abuse of discretion. View "Amerisourcebergen Corp v. Lebanon County Employees' Retirement Fund" on Justia Law

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Plaintiffs-appellants were two of three founding owners, investors, and directors of Energy Efficient Equity, Inc. (“E3” or the “Corporation”), a Delaware corporation operating in the property-assessed, clean-energy financing industry. After a series of financing transactions with WR Capital Partners, LLC (“WR Capital”), plaintiffs filed suit against WR Capital and its representatives. Among other claims, plaintiffs alleged that defendants breached their fiduciary duties and were unjustly enriched when they negotiated and approved the financing transactions that allowed them to take control of E3 from the founders. During the litigation, plaintiffs entered into a settlement agreement and two stock repurchase agreements. Plaintiffs settled with some of the defendants in exchange for payments and the sale of the plaintiffs’ stock to E3. The Settlement Agreement contained a release, but carved out claims that the plaintiffs wanted to continue to pursue against the non-settling WR Capital and its representatives. An inconsistency between the agreements arose, however, because the Stock Repurchase Agreements transferred “all of Seller’s right, title, and interest” in E3 stock while only the Settlement Agreement contained a carve out for claims against the non-settling defendants (the “Release Carve Out”). After the partial settlement, the Court of Chancery granted defendants’ motion to dismiss, finding plaintiffs could not import the Settlement Agreement’s Release Carve Out into the Stock Repurchase Agreements; plaintiffs lost standing to pursue their direct breach of fiduciary duty claims when they sold their E3 stock; and plaintiffs’ unjust enrichment claims were duplicative of their breach of fiduciary duty claims and traveled with the sale of E3 stock. On appeal, plaintiffs argued the Court of Chancery should have found that the Stock Repurchase Agreements incorporated by reference the Settlement Agreement. If that was the case, plaintiffs claimed they could preserve their claims against the remaining defendants. In the alternative, plaintiffs fell back on the argument that their breach of fiduciary duty claims were personal and did not attach to the stock sold as part of the settlement. In addition, they argued the unjust enrichment claims were independent of the breach of fiduciary duty claims. The Delaware Supreme Court affirmed the Court of Chancery: while plaintiffs had an argument that the parties intended to treat the three agreements as a unitary transaction through incorporation by reference, the Settlement Agreement’s Release Carve Out confilcted with the complete transfer of all right, title, and interest in the plaintiffs’ E3 stock under the Stock Repurchase Agreements. In the event of a conflict, the Stock Repurchase Agreements plainly stated their terms controlled. Plaintiffs’ remaining claims were also part of the rights accompanying the E3 stock sale, and the unjust enrichment claim traveled with the E3 stock when repurchased by E3. View "Urdan v. WR Capital Partners, LLC" on Justia Law

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The Court of Chancery granted Defendants' motion to dismiss Harley Franco's action filed under 6 Del. C. 18-110 and 6 Del. C. 18-111 seeking a declaration that because Franco no longer agreed to Doug Houghton's continued service on the Avalon Freight Services LLC Board of Directors, Houghton must be removed from the Board, holding that section 3.1 of the Avalon LLC Agreement did not empower Franco to unilaterally remove Houghton from the Board.Franco interpreted section 3.1's requirement that the fifth director of the Avalon Board - Houghton - be mutually agreement upon and appointed by Franco and one other director to mean that if Franco no longer agreed to houghton's continued service, Houghton must be removed from the Board. The Court of Chancery dismissed the action, holding that that Franco may not unilaterally remove Houghton from the Avalon Board. View "Franco v. Avalon Freight Services LLC" on Justia Law

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The defendants sell shaker tubes in grocery stores across the country, with labels advertising “100% Grated Parmesan Cheese.” The products are not 100 percent cheese but contain four to nine percent added cellulose powder and potassium sorbate, as indicated on the ingredient list on the back of the package. Plaintiffs claim that these ingredient lists show that the prominent “100%” labeling is deceptive under state consumer-protection laws. The Judicial Panel on Multidistrict Litigation transferred numerous similar actions to the Northern District of Illinois for consolidated pretrial proceedings. That court ultimately dismissed the plaintiffs’ deceptive labeling claims (100% claims) with prejudice.The Seventh Circuit reversed in part. Plaintiffs have plausibly alleged that the prominent “100%” labeling deceives a substantial portion of reasonable consumers, and their claims are not preempted by federal law. An accurate fine-print list of ingredients does not foreclose as a matter of law a claim that an ambiguous front label deceives reasonable consumers. Many reasonable consumers do not instinctively parse every front label or read every back label before purchasing groceries. For reasons specific to multidistrict litigation, the court concluded that it lacked appellate jurisdiction to review the dismissal of the 100% claims in two complaints because the appeals were filed too late. View "Bell v. Albertson Companies, Inc." on Justia Law