Justia Business Law Opinion Summaries

Plaintiffs, ParaFi Digital Opportunities LP, Framework Ventures, L.P., and 1kx LP, invested in Curve, a decentralized cryptocurrency trading platform developed by Mikhail Egorov. They allege that Egorov fraudulently induced them to invest by making false promises about their stake in Curve and then canceled their investment, leading to claims of fraud, conversion, and statutory violations. Egorov, who developed Curve while living in Washington and later moved to Switzerland, formed Swiss Stake GmbH to manage Curve. The investment agreements included Swiss law and forum selection clauses.The San Francisco County Superior Court granted Egorov’s motion to quash for lack of personal jurisdiction, finding that Egorov did not purposefully avail himself of California’s benefits. The court noted that the plaintiffs initiated contact and negotiations, and the agreements specified Swiss jurisdiction. The court also denied plaintiffs’ request for jurisdictional discovery, concluding that plaintiffs did not demonstrate that discovery would likely produce evidence establishing jurisdiction.The California Court of Appeal, First Appellate District, Division Two, affirmed the lower court’s decision. The appellate court agreed that Egorov’s contacts with California were insufficient to establish specific jurisdiction, as the plaintiffs had solicited the investment and Egorov had not directed any activities toward California. The court emphasized that the plaintiffs’ unilateral actions could not establish jurisdiction and that the agreements’ Swiss law and forum selection clauses further supported the lack of jurisdiction. The court also upheld the denial of jurisdictional discovery, finding no abuse of discretion by the trial court. View "ParaFi Digital Opportunities v. Egorov" on Justia Law

Innovative Waste Management (IWM) entered into a joint venture with Dunhill Products in 2009 and 2010, which led to allegations of breach of contract, fraud, and misappropriation of trade secrets. IWM accused Dunhill Products, Crest Energy Partners, and Henry Wuertz of stealing trade secrets, interfering with business relationships, and theft of petroleum products. IWM sought $12 million in economic damages and punitive damages. The defendants responded with affirmative defenses and counterclaims. IWM served discovery requests in 2012, but the defendants failed to comply, leading to multiple motions to compel and sanctions.The Circuit Court of Dorchester County found the defendants in contempt for violating discovery orders and sanctioned them by striking their answer and counterclaims. The defendants appealed to the South Carolina Court of Appeals, which affirmed the circuit court's decision in an unpublished opinion. The defendants then sought review by the South Carolina Supreme Court.The South Carolina Supreme Court reviewed whether the Court of Appeals erred in finding that the defendants waived review of the trial court's interlocutory discovery orders and whether the circuit court abused its discretion by striking the defendants' pleadings. The Supreme Court agreed with the Court of Appeals, holding that the defendants waived their right to review the discovery orders by not complying with them and that the circuit court did not abuse its discretion in striking the pleadings due to the defendants' deliberate pattern of discovery abuse. The Supreme Court affirmed the decision of the Court of Appeals. View "Innovative Waste Management, Inc. v. Crest Energy Partners GP, LLC" on Justia Law

Frank Harmon Black and his securities investment firm, Southeast Investments, N.C., Inc., are involved in an ongoing disciplinary proceeding initiated by the Financial Industry Regulatory Authority, Inc. (FINRA) in September 2015. The proceedings were based on allegations that Black and Southeast failed to establish and maintain an adequate broker supervisory system, failed to preserve business-related electronic correspondence, and submitted false documents and testimony to FINRA examiners, violating FINRA rules and federal securities laws. In March 2017, a FINRA hearing panel found Black and Southeast in violation of these rules and imposed fines and sanctions, including barring Black from associating with other FINRA member firms.Black and Southeast appealed the FINRA decision to the National Adjudicatory Council (NAC), which affirmed the findings but reduced the fines in May 2019. They then petitioned the Securities and Exchange Commission (SEC) for review. On December 7, 2023, the SEC affirmed the NAC's decision regarding the supervisory and record retention violations but remanded the false testimony and fabricated documents issues to FINRA for further proceedings, determining that FINRA's failure to produce certain investigatory notes was not a harmless error.The United States Court of Appeals for the Fourth Circuit reviewed the SEC's decision. The court concluded that the SEC's decision was not a final order because it remanded part of the case to FINRA for further proceedings. As a result, the court determined that it lacked jurisdiction to review the petition and dismissed it. The court emphasized that a final order must mark the consummation of the agency's decision-making process and result in legal consequences, which was not the case here. View "Black v. Securities and Exchange Commission" on Justia Law

The plaintiffs, City of Warren Police and Fire Retirement System and David Freundlich, filed a consolidated securities action against CVS Health Corporation. They alleged that CVS's offering documents related to its 2018 merger with Aetna contained false statements and omissions, violating sections 11, 12(a)(2), and 15 of the Securities Act of 1933. The plaintiffs claimed that CVS overstated the value of its goodwill and failed to disclose significant issues with its Long Term Care (LTC) business, which it acquired through Omnicare, Inc. in 2015.The Superior Court of Rhode Island dismissed the plaintiffs' Revised Amended Consolidated Complaint (RACC), finding that the plaintiffs failed to state a claim under the Securities Act. The court also noted that similar claims had been dismissed in related cases in New York and the First Circuit. The plaintiffs appealed the dismissal, arguing that the Superior Court improperly applied collateral estoppel and failed to consider the merits of their claims.The Rhode Island Supreme Court reviewed the case and affirmed the Superior Court's dismissal. The Supreme Court held that the plaintiffs waived their right to challenge the merits of the dismissal by not adequately addressing it in their initial brief. The court also found that the Superior Court's decision to dismiss the case was supported by principles of judicial economy and comity, given the similar rulings in related cases. The Supreme Court concluded that the plaintiffs' appeal was without merit and upheld the lower court's judgment. View "In re CVS Health Corporation Securities Litigation" on Justia Law

The case involves a dispute between partners in a limited partnership formed to develop and operate an affordable housing project in Boston. The financing and structure of the project were driven by the Low Income Housing Tax Credit (LIHTC) program, which incentivizes private investment in affordable housing through tax credits. The partnership agreement included a right of first refusal (ROR) for the nonprofit general partner to purchase the property at a below-market price after the compliance period.In the Superior Court, the judge ruled on cross motions for summary judgment, concluding that the investor limited partner, AMTAX, did not have a consent right over a sale to the nonprofit general partner under the ROR agreement. However, the judge also ruled that the purchase price under the ROR agreement must include the limited partners' exit tax liability. The judge dismissed the remaining claims and counterclaims due to lack of evidentiary support or as a consequence of these rulings.The Supreme Judicial Court of Massachusetts reviewed the case. The court affirmed the lower court's decision, holding that AMTAX's consent was not required for the preliminary steps leading to a sale under the ROR agreement. The court also held that the limited partners' exit taxes were "attributable to" the sale of the property and must be included in the purchase price. The court found that the notice of consent rights recorded by AMTAX was accurate and did not constitute slander of title or tortious interference. Consequently, the plaintiffs' claims for breach of contract, breach of the implied covenant of good faith and fair dealing, tortious interference, slander of title, and violation of G. L. c. 93A were dismissed. The judgment was affirmed. View "Tenants' Development Corporation v. Amtax Holdings 227, LLC" on Justia Law

Mark Nelson, operating North Country Weatherization Technologies, provided ice removal services to Pine View First Addition Association, a Minnesota non-profit homeowners' association, in spring 2023. Pine View's property manager, a North Dakota LLC, contacted Nelson for urgent ice removal due to water damage. Nelson completed the work and invoiced Pine View, but payment was delayed, allegedly due to Pine View's attempt to have insurance cover the costs. Nelson filed a lawsuit in North Dakota for breach of contract and unjust enrichment, seeking $79,695 plus interest and attorney’s fees.The District Court of Cass County, East Central Judicial District, granted Pine View's motion to dismiss for lack of personal jurisdiction, concluding that North Dakota did not have jurisdiction over Pine View, as it is a Minnesota entity and the services were performed in Minnesota. The court also denied Pine View's motion for Rule 11 sanctions against Nelson and his attorney, as well as Nelson's request for prevailing party attorney’s fees.The Supreme Court of North Dakota reviewed the case and reversed the district court's decision. The Supreme Court held that North Dakota has specific personal jurisdiction over Pine View because Pine View, through its North Dakota-based property manager, initiated contact with Nelson for the ice removal services. The court found that Pine View's contacts with North Dakota were sufficient to satisfy the state's long-arm provision and due process requirements. The Supreme Court also determined that the district court abused its discretion in denying Nelson's request for prevailing party attorney’s fees under Rule 11(c)(2), as Pine View's motion for sanctions against Nelson violated Rule 11(c)(5)(A). The case was remanded for further proceedings and to determine the amount of attorney’s fees Nelson is owed. View "Nelson v. Pine View First Addition Association" on Justia Law

Coinbase Global, Inc., a trading platform for digital assets, petitioned the Securities and Exchange Commission (SEC) to create rules clarifying the application of federal securities laws to digital assets like cryptocurrencies and tokens. Coinbase argued that the current securities-law framework does not account for the unique attributes of digital assets, making compliance economically and technically infeasible. The SEC denied Coinbase’s rulemaking petition, stating that it disagreed with the petition’s concerns and had higher-priority agenda items. Coinbase’s U.S. subsidiary, Coinbase, Inc., then petitioned the United States Court of Appeals for the Third Circuit to review the SEC’s denial.The SEC’s denial of Coinbase’s petition was challenged on the grounds that it was arbitrary and capricious. Coinbase argued that the SEC’s decision to apply securities laws to digital assets through enforcement actions constituted a significant policy change that required rulemaking. Coinbase also contended that the emergence of digital assets represented a fundamental change in the factual premises underlying existing securities regulations, necessitating new rules. Additionally, Coinbase claimed that the SEC’s explanation for its decision was conclusory and insufficiently reasoned.The United States Court of Appeals for the Third Circuit reviewed the case and found that the SEC’s order was conclusory and insufficiently reasoned, making it arbitrary and capricious. The court granted Coinbase’s petition in part and remanded the case to the SEC for a more complete explanation. However, the court declined to order the SEC to institute rulemaking proceedings at this stage. The court emphasized that the SEC must provide a reasoned explanation for its decision, considering all relevant factors and providing a discernible path for judicial review. View "Coinbase Inc v. Securities and Exchange Commission" on Justia Law

Payroll Management, Inc. filed for chapter 11 bankruptcy and received $1,070,330.23 from British Petroleum, Inc. for economic losses due to the Deepwater Horizon Oil Spill. Sunz Insurance Company claimed a first-priority security interest in these funds, asserting that its security interest attached and perfected before any other creditor. The Internal Revenue Service (IRS) contended that its federal tax lien had first priority as it attached and perfected first. Both parties filed cross motions for summary judgment.The bankruptcy court granted summary judgment in favor of the IRS, determining that Payroll’s BP claim was a commercial tort claim when the IRS filed its tax lien notice. The court found that the IRS’s tax lien attached and perfected first, while Sunz’s security interest did not attach to commercial tort claims. The district court affirmed this decision.The United States Court of Appeals for the Eleventh Circuit reviewed the case and affirmed the lower courts' decisions. The court held that Payroll’s BP claim remained a commercial tort claim in March 2017 when the IRS filed its tax lien notice. The settlement agreement did not automatically convert the tort claim into a contract, as it did not create an automatic obligation for BP to pay Payroll a certain amount. Therefore, the IRS’s tax lien, which attached and perfected first, took priority over Sunz’s security interest. The court concluded that the IRS was entitled to the $1,070,330.23 payment. View "Sunz Insurance Company v. Treasury Department" on Justia Law

A non-medical entrepreneur, Randhir Tuli, helped form a medical business with Dr. Andrew Brooks, creating a group of surgery centers. Tuli, who was initially active, later became inactive but continued to take profits. His colleagues, frustrated by his inactivity, sought to buy him out, but Tuli refused. Tuli then sent a threatening letter to potential investors, suggesting criminal liability, without a good faith basis. In response, the company warned Tuli to rectify the situation within 30 days or face ejection without compensation. Tuli did not comply, and the company ejected him, paying him nothing. Tuli then initiated a decade-long litigation against his former colleagues.The Superior Court of Los Angeles County rejected all of Tuli’s claims. Tuli appealed, and the case was reviewed by the Court of Appeal of the State of California, Second Appellate District, Division Eight. The trial court had granted summary judgment in favor of the defendants, finding that the business judgment rule protected the company’s decision to eject Tuli. The court found that the company acted rationally to protect its interests and that Tuli’s letter was disruptive and baseless.The Court of Appeal affirmed the lower court’s decision. It held that the business judgment rule applied, as the company’s actions were rational and in the best interest of the business. The court found no conflict of interest, bad faith, or improper investigation by the company. It also ruled that Tuli’s claims for declaratory relief, unfair competition, breach of fiduciary duty, and breach of the covenant of good faith and fair dealing were without merit. The court concluded that Tuli’s ejection and the zero-dollar redemption of his shares were not an illegal forfeiture, as Tuli had already received substantial returns on his investment and had disrupted the business. View "Tuli v. Specialty Surgical Center of Thousand Oaks, LLC" on Justia Law

The case involves a failed business venture between longtime friends, resulting in a $20 million judgment against Stanley N. Cohen for negligent misrepresentation. Cohen, a professor at Stanford University, and his colleague discovered a genetic mutation related to Huntington’s disease and formed a company, Nuredis, with Moshe and Chris Alafi, who invested $20 million. The FDA later rejected Nuredis’s request to conduct human clinical trials for the drug HD106 due to its toxicity. The Alafis sued Cohen and his colleague for negligent misrepresentation and other related causes, alleging they failed to disclose the drug’s history of being withdrawn from the market due to toxicity.The Santa Clara County Superior Court held a bench trial and found in favor of the plaintiffs on the negligent misrepresentation claim against Cohen, awarding $20 million in damages. The court did not reach the other causes of action. Cohen appealed, arguing that the claim failed as a matter of law and that the trial court committed prejudicial error by not issuing a statement of decision upon his request.The California Court of Appeal, Sixth Appellate District, found that the trial court’s failure to issue the requested statement of decision was prejudicial error, as it prevented effective appellate review of the trial court’s factual and legal findings. Consequently, the appellate court did not address Cohen’s arguments on the merits and reversed and remanded the case for the trial court to issue the statement of decision. View "Alafi v. Cohen" on Justia Law