Justia Business Law Opinion Summaries

The First Circuit affirmed the decision of the district court dismissing the complaint brought by the plan administrator of R&G Financial Corporation (Administrator) alleging that negligence and breach of fiduciary duties owed to R&G Financial (the Holding Company) caused the failure of R-G Premier Bank of Puerto Rico (the Bank) and the Holding Company's resultant loss of its investment in the Bank, holding that the complaint must be dismissed because the claims the Administrator asserted for the Holding Company were the Federal Deposit Insurance Corporation's (FDIC) under 12 U.S.C. 1821(d)(2)(A).R&G Financial entered Chapter 11 bankruptcy after the Bank, its primary subsidiary, failed. Previously, Puerto Rican regulators had closed the Bank and named the FDIC as the Bank's receiver. After the Bank failed, the Administrator filed this suit against six of the Holding Company's former directors and officers and their insurer. The FDIC intervened. The district court dismissed the complaint. The First Circuit affirmed on different grounds, holding that, under section 1821(d)(2)(A), the FDIC succeeded to the Administrator's claims. View "Zucker v. Rodriguez" on Justia Law

In this Lanham Act case, the Fifth Circuit held that the district court did not abuse its discretion in determining that neither disgorgement of profits nor further injunctive relief would be equitable in an action where the jury found that BD falsely advertised its products for years. In this case, RTI has presented no reason to conclude that the district court clearly erred in this determination or that it abused its discretion by denying further injunctive relief. Furthermore, the district court's denial of disgorgement of profits from RTI's competitor was made against the larger backdrop of its prosecution of a meritless antitrust claim against BD for conduct in the marketplace—during a time in which RTI nearly doubled its own sales and increased its share of the retractable syringe sub-market to two-thirds. View "Retractable Technologies, Inc. v. Becton Dickinson & Co." on Justia Law

In this negligence case, the Supreme Court affirmed the judgment of the superior court entering judgment for Feeley & Driscoll, P.C. (Feeley) on all claims by The Rhode Island Industrial-Recreational Building Authority (IRBA), holding that Feeley did not owe a duty of care to IRBA.The hearing justice concluded that, under the "Restatement Rule," Feeley, an accounting firm, did not owe a duty of care to IRBA as a third party with respect to what IRBA alleged was a negligently prepared report by Feeley that IRBA alleged it relied upon. The Supreme Court affirmed, holding (1) the Restatement Rule is the most sensible approach to the question of the extent of potential liability to third parties to which an accountant/auditor should be exposed for alleged negligence on his or her part, and thus the moderate approach provided for in the Restatement Rule is hereby adopted; and (2) when the Restatement Rule is applied to the instant case, the hearing justice did not err in holding that Feeley did not err in holding that Feeley owed no duty to IRBA. View "Rhode Island Industrial-Recreational Building Authority v. Capco Endurance, LLC" on Justia Law

A participant in an Employee Stock Ownership Program (ESOP) filed suit after owners of a closely held corporation sold the company to its ESOP. The participant contended that the trustee chosen for the ESOP by the corporation breached its fiduciary duties to the ESOP and overpaid for the stock — improperly enriching the corporation's owners at the expense of its employees.The Fourth Circuit affirmed the district court's careful findings of fact concluding that the trustee had breached its fiduciary duties. In regard to liability, the district court found four major failures involving SRR's report; that the trustee failed to act as a prudent fiduciary solely on behalf of the ESOP participants; that the value of Stock Appreciation Rights (SARs) issued in connection with the ESOP's purchase of Constellis should have been deducted from Constellis's equity value for purposes of SRR’s valuation; and that the ACADEMI sale did not constitute a meaningful comparator. Furthermore, the court found no error in the district court's damages award and fee award. View "Tim Brundle v. Wilmington Trust, N.A." on Justia Law

Johnson Electric sued Robinson Electric Supply for numerous claims, including breach of contract, fraud, and a variety of other torts. Johnson asserted that Robinson Electric Supply carried out a fraudulent scheme to overcharge Johnson. Robinson Electric Supply counterclaimed for balances due on Johnson’s accounts. Both parties requested an accounting. The chancellor appointed a special master to hear the case due to its complexity and size of the amount in controversy. The chancellor stayed discovery until the special master could release her findings; however, the chancellor also ordered Robinson to release numerous business records sought by Johnson. Before the accounting was concluded by the special master, Johnson Electric was administratively dissolved, and as a result, the chancellor dismissed the claims brought on behalf of the corporation. After the special master released her recommendations and a supplemental report, the chancellor agreed with the special master’s findings and adopted the report. On appeal, Johnson challenged the chancellor’s decision to dismiss Johnson Electric from the lawsuit, the chancellor’s adoption of the special master’s report, and the chancellor’s decision to stay discovery until an accounting could be conducted by the special master. The Mississippi Supreme Court found that because Johnson Electric was administratively dissolved, it could not "maintain" a claim as a corporation under Mississippi law. Furthermore, the Court determined neither the chancellor's acceptance of the special master's report nor the chancellor's discovery rulings were an abuse of discretion. View "Wayne Johnson Electric Inc. v. Robinson Electric Supply Company, Inc." on Justia Law

Encompass filed suit against Blue Cross for violations of the Employee Retirement Income Security Act (ERISA), breach of contract, defamation, and tortious interference with business relations. After Blue Cross largely prevailed at trial, the district court granted a new trial because of error in the jury charge. At the second trial, Encompass prevailed on all claims.The Fifth Circuit held that charging the jury with an incorrect standard of liability supported granting a new trial, and thus the district court did not abuse its discretion by granting Encompass a new trial on the breach of contract claims. The court also held that the district court did not abuse its discretion by granting a new trial on the tort claims considering the interdependence of the tort and contract issues. Finally, the court held that the application of contra non valentem was not wrong as a matter of law, and Blue Cross abused its discretion by arbitrarily denying Encompass's claims for covered services under ERISA. View "Encompass Off Solutions, Inc. v. Louisiana Health Service & Indemnity Co." on Justia Law

Jarvis Properties, a limited partnership, owns a parcel of land. Its general partners, Todd and James (brothers), each own a 50 percent interest in the partnership, which is less than the majority consent required to act on behalf of the partnership (Corp. Code, 15904.06(a)). The brothers cannot agree on what to do about the parcel. Their partnership agreement does not address decision-making deadlocks. James sought partition by sale, naming Todd and Jarvis Properties as defendants. Todd hired his own lawyer and hired a separate lawyer, Roscoe, to represent the partnership. James objected to having Roscoe represent the partnership and moved to disqualify Roscoe. James argued that Roscoe was not authorized to act by the requisite majority of the general partners and that Roscoe, who took the position that he was not subject to the direction of either partner and was being paid by Todd, was not acting in the best interests of the partnership and would run up unnecessary litigation costs and deplete the partnership’s limited assets. The court of appeal affirmed an order disqualifying Roscoe. James had a sufficient interest to challenge Roscoe’s authority, having demonstrated a risk that Roscoe's representation may advance Todd’s interests and may not be in the Partnership's best interests. On remand, the court may wish to explore options for resolving deadlock at the entity level and consider appointing a receiver or other neutral. View "Jarvis v. Jarvis" on Justia Law

The Court of Chancery granted Defendant’s motion to dismiss Plaintiff’s complaint to vacate or modify an arbitration award for failure to state a claim, holding that there was no reasonably conceivable evident material miscalculation or evident material mistake in the arbitrator’s report.In 2017, Plaintiff and Company entered into a Securities Purchase Agreement. In 2018, under the dispute resolution provision of the agreement, Plaintiff and the Company engaged in mandatory, binding arbitration regarding the Company’s total accounts receivable reserve (the Total AR Reserve). The arbitrator issued a report determining the Total AR Reserve was $661,165. Plaintiff then filed a complaint to vacate or modify the arbitration award, arguing that the arbitrator made an evident material miscalculation or evident material mistake in his determination of the Total AR Reserve. The Court of Chancery disagreed and granted Defendant’s motion to dismiss. View "CLP Toxicology, Inc. v. Casla Bio Holdings LLC" on Justia Law

The Supreme Court reversed the order of the circuit court certifying as final the prior orders that granted summary judgment to Respondents in this civil action arising out of the modification of covenants pertaining to a residential subdivision developed by RJM Holdings, LLC, holding that the genuine issues of material fact precluded summary judgment.On appeal, Petitioners argued that the circuit court erred by granting summary judgment because genuine issues of material fact existed regarding whether Respondents were engaged in a joint venture with RJM to develop the subdivision and whether the corporate veils of the respondent businesses should be pierced to hold certain individuals personally liable. The Supreme Court agreed and reversed, holding that genuine issues of material fact existed with respect to the conduct of Respondents and the use of the various business entities to develop the subdivision. View "Dailey v. RJM Holdings, LLC" on Justia Law

At the summary judgment stage, the district court found that an employee of Greenwald Neurosurgical, P.C. caused over $100,000 in losses to the P.C., while he was acting in the ordinary course of the P.C.’s business. The district court then issued a judgment to the P.C. for the policy amount of $100,000 pursuant to a Dishonesty Bond issued by Western Surety Company. Western appealed the district court’s determinations that the employee caused the loss while acting in the ordinary course of business and that the P.C. actually suffered the loss. The P.C. cross-appealed the district court’s findings that it was the only entity insured under the bond and argued it was awarded too little by way of attorney’s fees. The Idaho Supreme Court determined: (1) the district court correctly concluded that only the P.C. was an insured and the only entity that could recover under the bond; (2) whether the employee was acting the “ordinary course of [the P.C.’s] business” was a jury question; (3) a genuine issue of fact existed regarding the amount of losses the P.C. sustained; and (4) the district court erred in awarding attorney’s fees to the P.C. The Supreme Court therefore vacated summary judgment, and remanded for further proceedings. View "Greenwald v. Western Surety" on Justia Law