Justia Business Law Opinion Summaries

In this case, Louisiana Pellets (LAP) built a wood processing facility but encountered financial issues that led to bankruptcy. LAP pursued Chapter 11 bankruptcy and a bankruptcy judge confirmed a Chapter 11 plan along with a liquidating trust agreement. Under the agreement, LAP transferred its remaining assets and causes of actions to the trust. More than a year after the creation of the trust, third parties assigned certain legal claims to the trust that the trustee, Craig Jalbert, pursued in state court. The claims involved misstatements made by Raymond James & Associates in its efforts to raise funds to construct LAP's facility. In response to Jalbert's filing, Raymond James asserted affirmative defenses, citing a pre-bankruptcy indemnity agreement it made with LAP.The United States Court of Appeals for the Fifth Circuit held that Raymond James could not maintain those defenses against the assigned claims. The court reasoned that the express language of the confirmation plan enjoined Raymond James's defensive maneuver. Also, the post-confirmation trust is not the appropriate entity against whom to invoke LAP's indemnity obligation. The court affirmed the bankruptcy court's ruling. View "Raymond James & Assoc v. Jalbert" on Justia Law

In this case from the Supreme Court of Wyoming, LFP Consulting, LLC (LFP), a financial advisory company, sued former employee David Edward Leighton for breach of contract and various torts after his resignation. The key issue was a clause in the parties' contract that selected Minnesota as the forum for disputes (a forum selection clause). LFP had filed the lawsuit in Wyoming and attached a waiver of the forum selection clause. However, the Wyoming chancery court dismissed LFP’s complaint for improper venue, concluding that LFP did not have the right to unilaterally waive the forum selection clause. The Supreme Court of Wyoming disagreed with the lower court, ruling that LFP, as the assignee of the contract, had the right to unilaterally waive the forum selection clause because it was included in the contract for the sole benefit of Ameriprise Financial, the original party to the contract with Leighton. The court also noted that Leighton had no relationship with Minnesota, which further supported the decision to allow LFP to waive the forum selection clause. The court reversed the decision of the chancery court and remanded the case for further proceedings. View "LFP Consulting, LLC v. Leighton" on Justia Law

In this case, the plaintiff, Andre Howell, acting as the treasurer of the Urban League of Rhode Island, Inc., initiated a receivership proceeding for the Urban League. Julie Longtin, the appellant, filed a proof of claim in the receivership proceeding, stating that she was claiming for the amount due to her former company, Antari Properties, LLC. However, the Superior Court denied her proof of claim on the grounds that she lacked standing. Longtin then filed a motion under Rule 60(b) of the Superior Court Rules of Civil Procedure, seeking relief from the order that denied her proof of claim. However, the Superior Court also denied her Rule 60(b) motion.Upon appeal, the Supreme Court of Rhode Island affirmed the order of the Superior Court. The Supreme Court noted that its review of a Rule 60(b) motion is limited to examining the correctness of the order granting or denying the motion, not the correctness of the original judgment. The Court found that Longtin had not demonstrated excusable neglect or pointed to new evidence that would warrant relief under Rule 60(b). The Court also noted that the hearing justice did not abuse his discretion in denying the Rule 60(b) motion. Thus, the denial of Longtin's Rule 60(b) motion by the Superior Court was upheld. View "Howell v. Urban League of Rhode Island, Inc." on Justia Law

In the State of Delaware, a lawsuit was brought by two non-profit organizations against multiple public officials, including tax collectors in Delaware's three counties. The organizations sought increased funding for Delaware’s public schools. The Court of Chancery held that the organizations were entitled to attorneys’ fees and expenses. On appeal, the Supreme Court of Delaware held that the Court of Chancery erred in its application of the "common benefit doctrine" and its expansion of a precedent case, Korn v. New Castle County, beyond taxpayer suits. The Supreme Court affirmed the Chancery Court's award of expenses, but reversed the award of attorneys' fees. The Supreme Court held that the litigation brought by the organizations was to compel the defendant county governments to comply with the law, a benefit that did not warrant an exception to the "American Rule" which states that each party bears its own attorneys' fees, absent certain exceptions. The Court also held that, even if this case were a taxpayer suit, it does not meet the standard set forth in Korn because there was not a quantifiable, non-speculative monetary benefit for all taxpayers. View "In re Delaware Public Schools Litigation" on Justia Law

In the case before the Supreme Court of the State of Delaware, Cantor Fitzgerald, L.P., a global financial services company, appealed a decision by the Court of Chancery. The case involved the company's contractual provisions that allowed it to withhold distributions otherwise owed to a partner who leaves the partnership and then competes with the partnership. The plaintiffs were six former partners who had their distributions, ranging from under $100,000 to over $5 million, withheld after they left Cantor Fitzgerald and joined competing businesses.The lower court held that these "forfeiture for competition" provisions were unenforceable, ruling they were unreasonable restraints on trade. However, the Supreme Court reversed this decision. It ruled that, under Delaware law, courts should enforce such agreements absent unconscionability, bad faith, or other extraordinary circumstances. The court emphasized the importance of freedom of contract, particularly in the context of sophisticated parties entering into a limited partnership agreement. It argued that public policy considerations favored enforcing the agreement, particularly as the parties had voluntarily agreed to the terms. As such, it held that Cantor Fitzgerald was within its rights to withhold the distributions based on the plaintiffs' competitive activities. The case was remanded to the lower court for further proceedings consistent with the Supreme Court's opinion. View "Cantor Fitzgerald, L.P. v. Ainslie" on Justia Law

In 2022, Fox Corporation and Snap Inc. amended their corporate charters to exculpate their officers from damages liability for breaches of the duty of care. The amendments were authorized by recent Delaware legislation. The companies' Class A non-voting common stockholders claimed that these amendments deprived them of their power to sue officers for damages for duty of care violations and, thus, a separate class vote was required to approve the amendments. However, the Supreme Court of the State of Delaware affirmed the Court of Chancery's decision that a separate class vote was not required. The court held that the ability to sue directors or officers for duty of care violations was a general right of the stockholders, not a class-based power stated in the corporate charter. Therefore, it was not a "power, preference, or special right" of the Class A common stock under Section 242(b)(2) of the Delaware General Corporation Law, which requires a separate class stockholder vote to amend a corporate charter if the amendment would adversely affect the powers, preferences, or special rights of the shares of such class. The holding was based on long-standing precedent and the court's interpretation of related sections of the Delaware General Corporation Law. View "In re Fox Corporation/Snap Inc. Section 242 Litigation" on Justia Law

In this case, three chiropractors and their respective business entities sued Wellmark, Iowa’s largest health insurer and claims administrator, alleging that the company violated Iowa antitrust laws through its Administrative Service Agreements with over 400 Iowa employers who self-fund healthcare benefits for their employees. The chiropractors argued that without these agreements, the self-funded employers would compete independently for chiropractic services, resulting in higher profits for chiropractors. The chiropractors filed a motion to certify a class of approximately 1,300 Iowa chiropractors. However, the Supreme Court of Iowa affirmed the district court's decision to deny class certification, concluding that the chiropractors failed to meet the predominance requirement for class certification as they could not prove the threshold issue of antitrust injury on a classwide basis. The court found that proving whether individual chiropractors would be better or worse off without Wellmark’s agreements would require numerous mini-trials, and thus, individual questions predominated over common questions. Additionally, the court applied the doctrine of judicial estoppel to prevent the chiropractors from belatedly reviving a different liability theory that they had previously abandoned to avoid a motion to dismiss. View "Chicoine v. Wellmark, Inc." on Justia Law

In the case before the Supreme Court of Mississippi, Vince Hardaway brought an action against his employer, Howard Industries, Inc., claiming bad faith denial of his workers’ compensation benefits for temporary partial disability due to carpal tunnel syndrome. Howard Industries had contracted CorVel Enterprise, a third-party claims administrator, to manage workers’ compensation claims. The trial court granted summary judgment in favor of Howard Industries, finding that the company's conduct did not constitute gross negligence or an independent tort.On appeal, the Supreme Court of Mississippi affirmed the trial court's decision. The court found that under Mississippi Code Section 71-3-125(1), Howard Industries was permitted to delegate its duty to administer employee workers’ compensation claims to CorVel. The Court also determined that Hardaway failed to provide sufficient evidence that Howard Industries acted with actual malice or gross negligence in denying his benefits. Therefore, his claims did not survive summary judgment. The court held that any failure to pay benefits by Howard Industries under these circumstances did not amount to gross negligence. View "Hardaway v. Howard Industries, Inc." on Justia Law

The case in question arose from a multi-million-dollar loss suffered by Westlake Chemical Corporation and Axiall Corporation (the respondents) at their chlorine manufacturing plant in Natrium, West Virginia. The loss occurred when 90 tons of liquid chlorine leaked from a rupture in a railroad tanker car that had been recently repaired by third-party contractors. The liquid chlorine vaporized into a cloud or plume that caused corrosion damage to the equipment at the plant. The respondents claimed the damage costs from their insurance companies (the petitioners). However, the insurance companies denied coverage based on three exclusions in the insurance policies relating to corrosion, faulty workmanship, and contamination. The case reached the Supreme Court of Appeals of West Virginia, which was asked to review three orders of the Circuit Court of Marshall County, West Virginia, Business Court Division. The lower court had granted partial summary judgment to the respondents, finding that none of the three exclusions barred the respondents’ coverage claims. The Supreme Court of Appeals of West Virginia concluded that the lower court's orders were not final orders subject to appeal at this stage of the proceedings. This was due to unresolved issues of causation and damages, and because the orders did not conclusively determine the disputed controversy, resolve an important issue completely separate from the merits of the action, or were effectively unreviewable on appeal from a final judgment. Therefore, the court dismissed the appeal, without prejudice. View "NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA. v. WESTLAKE CHEMICAL CORPORATION" on Justia Law

Contitech USA, Inc., a division of tire manufacturer Continental AG, contracted with a trucking company, McLaughlin Freight Services, Inc., and its owner, Dan McLaughlin, to deliver rubber between two of its facilities. The fee schedule included a base rate and a higher "rounder" rate, which required pre-approval from Contitech. Over three years, McLaughlin submitted 645 unapproved "rounder" bills to the third-party payments administrator, using fraudulent emails that purported to show pre-approval from Contitech. Contitech discovered the scheme and sued for fraud, unjust enrichment, and breach of contract.The United States Court of Appeals for the Eighth Circuit affirmed the district court's decision. The court found that there was sufficient evidence for a reasonable jury to find for Contitech on the fraud and unjust-enrichment counts. The court rejected McLaughlin's argument that Contitech failed to prove proximate cause and damages, noting that under Iowa law, a defrauding defendant cannot claim that its misrepresentations did not cause any damages to the plaintiff. Furthermore, McLaughlin was contractually obligated not to charge rounder rates without pre-approval from Contitech. Thus, a reasonable jury could have found that the difference between the contractual base rate and the actual billed amount was the amount of money McLaughlin received, which in equity and good conscience belonged to Contitech.The court also affirmed the district court's decision to remit Contitech's unjust-enrichment award to $0 and to remit McLaughlin’s damages award to prevent double recovery. The court reasoned that while a party is entitled to proceed on various theories of recovery, it is not entitled to collect multiple awards for the same injury. Furthermore, the court held that the district court did not abuse its discretion in granting pre-judgment interest to Contitech, and that postjudgment interest is mandatory under 28 U.S.C. § 1961 and should be awarded regardless of whether the district court orders it. View "Contitech USA, Inc. v. McLaughlin Freight Services, Inc." on Justia Law