Justia Commercial Law Opinion Summaries

Tina McPherson purchased a car from Suburban Ann Arbor, a Michigan car dealership, in July 2020. She was misled into believing she had been approved for financing, paid a $2,000 down payment, and drove the car home. Later, she was informed that the financing had fallen through and was given the option to sign a new contract with worse terms or return the car. McPherson refused the new terms, and Suburban repossessed the car and kept her down payment and fees. McPherson sued Suburban, alleging violations of state and federal consumer protection laws.A federal jury found Suburban liable for statutory conversion under Michigan law and violations of the Michigan Regulation of Collection Practices Act, among other claims. The jury awarded McPherson $15,000 in actual damages, $23,000 for the value of the converted property, and $350,000 in punitive damages. The district court denied McPherson's request for treble damages but awarded her $418,995 in attorney’s fees, $11,212.61 in costs, and $6,433.65 in prejudgment interest, totaling $824,641.26. McPherson appealed the denial of treble damages and the amount of attorney’s fees awarded, while Suburban cross-appealed the fee award as excessive.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court held that the district court did not abuse its discretion in denying treble damages, as the $350,000 punitive damages already served to punish and deter Suburban's conduct. The court also found that the district court properly calculated the attorney’s fees, considering the market rates and the skill of McPherson’s attorneys. The court affirmed the district court’s judgment in all respects. View "McPherson v. Suburban Ann Arbor, LLC" on Justia Law

Plaintiffs alleged that an automobile manufacturer designed, manufactured, and sold defective vehicles, specifically Dodge "muscle" cars with defective rear differentials. They filed a complaint asserting state and federal causes of action based on fraud and breach of warranty. The District Court dismissed the fraud counts and some warranty counts, allowing plaintiffs to amend their complaint. After amending, the District Court dismissed the fraud counts again and some warranty counts, but allowed two warranty counts to proceed.The United States District Court for the District of Delaware initially dismissed the complaint without prejudice, allowing plaintiffs to amend it. After the plaintiffs amended their complaint, the District Court dismissed the fraud counts and some warranty counts with prejudice, but allowed two warranty counts to proceed. The plaintiffs then moved to certify the dismissal of their fraud counts for appeal under 28 U.S.C. § 1292(b) or for final judgment under Rule 54(b). The District Court denied the request for certification under § 1292(b) but granted the request for final judgment under Rule 54(b) for the fraud counts.The United States Court of Appeals for the Third Circuit reviewed the case and determined that the District Court's Rule 54(b) judgment was not final. The Court of Appeals held that the fraud and warranty counts constituted a single claim for purposes of Rule 54(b) because they were alternative theories of recovery based on the same factual situation. As a result, the judgment did not dispose of all the rights or liabilities of one or more of the parties. Consequently, the Court of Appeals dismissed the appeal for lack of jurisdiction and instructed the District Court to vacate its order directing the entry of a partial final judgment. View "Diaz v. FCA US LLC" on Justia Law

Overhead Door Company of Indianapolis contracted with Blue Giant Equipment Corporation, a Canadian company, for the purchase of multiple dock levelers. After installation, Overhead experienced issues with the levelers and sued Blue Giant in federal court under diversity jurisdiction for breach of contract and warranty. Blue Giant moved to dismiss, citing a provision in its standard terms requiring arbitration in Ontario, Canada. The district court denied the motion, concluding that the standard terms were not incorporated into the parties' contract.The United States District Court for the Southern District of Indiana reviewed the case and denied Blue Giant's motion to dismiss. The court found that the mere reference to standard terms on a website was insufficient to incorporate those terms into the contract between Overhead and Blue Giant. Blue Giant appealed the decision.The United States Court of Appeals for the Seventh Circuit reviewed the case and reversed the district court's decision. The appellate court held that Blue Giant's reference to its Terms and Conditions on its website was sufficient to incorporate those terms into the contract. The court noted that the reference was conspicuous and provided Overhead with reasonable opportunity to take notice of the terms. The court concluded that the parties were obligated to resolve their dispute through arbitration in Ontario, Canada, as specified in the incorporated terms. The case was reversed and remanded for further proceedings consistent with this opinion. View "Garage Door Systems, LLC v Blue Giant Equipment Corp." on Justia Law

Zyla Life Sciences, LLC (Zyla) sells FDA-approved indomethacin suppositories, while Wells Pharma of Houston, LLC (Wells Pharma) sells compounded indomethacin suppositories that are not FDA-approved but are produced in a registered compounding facility. Zyla filed suit against Wells Pharma under the unfair-competition laws of six states, arguing that Wells Pharma's sales violated state laws that mirror the Federal Food, Drug, and Cosmetic Act (FDCA) by requiring FDA approval for new drugs.The United States District Court for the Southern District of Texas granted Wells Pharma's motion to dismiss, holding that the state laws were preempted by federal law. Zyla appealed the decision.The United States Court of Appeals for the Fifth Circuit reviewed the case and reversed the district court's decision. The Fifth Circuit held that state laws mirroring federal requirements are not preempted by the FDCA. The court relied on the Supreme Court's decision in California v. Zook, which established that state laws incorporating federal law do not create a conflict and are not preempted. The court also distinguished this case from Buckman Co. v. Plaintiffs’ Legal Committee, noting that Buckman involved state-law claims of fraud on a federal agency, which is a uniquely federal concern, unlike the parallel state regulations at issue here.The Fifth Circuit concluded that the state laws in question do not conflict with the FDCA and do not interfere with federal enforcement discretion. Therefore, the district court's order granting Wells Pharma's motion to dismiss was reversed, Wells Pharma's cross-appeal for attorney's fees was dismissed as moot, and the district court's order denying Zyla's motion for leave to amend was vacated. The case was remanded for further proceedings. View "Zyla Life Sciences v. Wells Pharma" on Justia Law

Kenneth Tilley sought financing from Malvern National Bank (MNB) for a real estate development project in 2009 and 2010, totaling $350,000. Tilley claimed MNB engaged in unfair dealings and sued for breach of contract, promissory estoppel, violations of the Arkansas Deceptive Trade Practices Act (ADTPA), tortious interference, negligence, and fraud. The case has been appealed multiple times, with the Arkansas Supreme Court previously reversing decisions related to Tilley's right to a jury trial.Initially, the Garland County Circuit Court struck Tilley's jury demand, which was reversed by the Arkansas Supreme Court. After remand, the circuit court reinstated a bench trial verdict, citing Act 13 of 2018, which was again reversed by the Supreme Court. On the third remand, MNB moved for summary judgment on all claims. The circuit court granted summary judgment, citing Tilley's reduction of collateral as a material alteration of the agreement, a rationale not argued by MNB. Tilley appealed this decision.The Arkansas Supreme Court reviewed the case and held that the circuit court did not violate the mandate by considering summary judgment. However, it was reversible error for the circuit court to grant summary judgment based on an unargued rationale. The Supreme Court affirmed summary judgment on Tilley's ADTPA, tortious interference, and negligence claims, finding no genuine issues of material fact. However, it reversed and remanded the summary judgment on Tilley's breach of contract, promissory estoppel, and fraud claims, determining that there were disputed material facts that required a jury trial. The case was remanded for further proceedings consistent with this opinion. View "Tilley v. Malvern National Bank" on Justia Law

Badlia Brothers, LLC, a check-cashing business, cashed 15 checks issued by the State of Maryland. These checks had already been paid by the State before Badlia presented them for payment. Some checks were deposited using a mobile app, creating "substitute checks," and were then fraudulently or negligently presented to Badlia. Others were reported lost or stolen, leading the State to issue stop payment orders and replacement checks, which were also cashed by Badlia. Badlia accepted the checks without knowledge of prior payments and sought payment from the State, which refused.Badlia filed complaints in the District Court of Maryland, claiming the right to enforce the checks as a holder in due course. The court consolidated the cases, ruled that the State enjoyed qualified immunity, and dismissed the cases. The Circuit Court for Baltimore City reversed, holding that a check is a contract, and thus, the State had waived sovereign immunity. On remand, the District Court found that Badlia was a holder in due course entitled to enforce the checks. The Circuit Court affirmed, and the State petitioned for certiorari.The Supreme Court of Maryland reviewed the case and held that a check is a contract for purposes of the State’s waiver of sovereign immunity under § 12-201(a) of the State Government Article. The court affirmed the Circuit Court's decision, concluding that the State has waived sovereign immunity for claims by a holder in due course seeking payment on an authorized State-issued check. View "Comptroller v. Badlia Brothers, LLC" on Justia Law

Charter Oak Production Co., LLC paid to settle a property damage claim after a pipeline installed on its easement ruptured, causing a saltwater spill on the property of Jason and Melissa Mills. Charter Oak sought indemnity from JM Eagle, Inc., the manufacturer, and Rainmaker Sales, Inc., the distributor, alleging the pipe was defective. The district court granted summary judgment in favor of JM Eagle and Rainmaker, finding that Charter Oak lacked the necessary legal relationship to assert an indemnity claim and that the claim was barred by the economic loss rule.The Oklahoma Court of Civil Appeals, Division IV, reversed the district court's decision. It found that Charter Oak's non-delegable duty to the Millses created the legal relationship necessary to support an indemnity claim against JM Eagle and Rainmaker. Additionally, it held that Charter Oak's claim was not barred by the economic loss rule.The Supreme Court of the State of Oklahoma reviewed the case. It held that Charter Oak's non-delegable duty as the dominant tenant of the easement established the legal relationship necessary to seek indemnity from JM Eagle and Rainmaker. The court also held that the economic loss rule did not bar Charter Oak's indemnity claim, as it sought reimbursement for damage to property other than the defective product itself. Consequently, the Supreme Court vacated the Court of Civil Appeals' decision, reversed the district court's order, and remanded the case for further proceedings consistent with its opinion. View "Mills v. J-M Mfg. Co., Inc." on Justia Law

Studco Building Systems US, LLC, a metal fabricator, regularly purchased steel from Olympic Steel, Inc. and paid invoices via ACH payments. In October 2018, Studco received a fraudulent email, purportedly from Olympic, instructing it to redirect payments to a new account at 1st Advantage Federal Credit Union. Studco complied, transferring over $550,000 to the scammers' account. The scammers were never identified, and Studco bore the loss.The United States District Court for the Eastern District of Virginia held a bench trial and ruled in favor of Studco, awarding it $558,868.71 plus attorney fees and costs. The court found 1st Advantage liable under Virginia Code § 8.4A-207 for failing to act in a commercially reasonable manner and for breach of bailment. The court concluded that 1st Advantage should have detected the misdescription of the account name and number.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court reversed the district court's judgment on the misdescription claim, holding that under Virginia Code § 8.4A-207, a bank is not liable for depositing funds into an account based on the account number provided, unless it has actual knowledge of a misdescription. The court found no evidence that 1st Advantage had actual knowledge of the misdescription. The court also reversed the judgment on the bailment claim, stating that a general deposit in a bank does not create a bailment under Virginia law. The court affirmed the district court's denial of punitive damages to Studco.The Fourth Circuit's main holding was that 1st Advantage was not liable under § 8.4A-207 because it lacked actual knowledge of the misdescription, and no bailment was created by the ACH deposits. The case was remanded with instructions to enter judgment in favor of 1st Advantage. View "Studco Building Systems US, LLC v. 1st Advantage Federal Credit Union" on Justia Law

Island Girl Outfitters, LLC (IGO) operated a store called Hippie Gurlz at Eastern Shore Centre, an outdoor shopping mall owned by Allied Development of Alabama, LLC. IGO signed a five-year lease in late 2020 but closed the store after the first year due to slow sales. Allied Development filed a complaint in Baldwin Circuit Court seeking rent and other damages under the lease. The trial court entered a $94,350 judgment in favor of Allied Development against IGO and its owner, Anthony S. Carver, who had personally guaranteed the lease.The Baldwin Circuit Court granted partial summary judgment in favor of Allied Development, finding no genuine issues of material fact regarding IGO's liability for breaching the lease. The court then held a hearing to determine damages, ultimately awarding Allied Development $94,350. IGO and Carver appealed, arguing that Allied Development failed to market and maintain the mall adequately and that they should not be liable for future rent since the storefront was relet shortly after they vacated.The Supreme Court of Alabama reviewed the case de novo regarding the liability determination and under the ore tenus rule for the damages award. The court found that IGO and Carver failed to show that Allied Development had a contractual duty to market and maintain the mall in a specific manner. Therefore, the trial court's summary judgment on liability was affirmed. Regarding damages, the absence of a transcript from the damages hearing meant the court had to presume the trial court's findings were correct. Consequently, the $94,350 judgment was affirmed. View "Island Girl Outfitters, LLC v. Allied Development of Alabama, LLC" on Justia Law

Stewart Dubose took over Radco Fishing and Rental Tools, Inc. from his father, John Dubose Sr., and sought to increase the company's cash flow by engaging Commercial Resources, Inc. for an accounts receivable line of credit. Stewart personally guaranteed the debt. Commercial Resources advanced over two million dollars to Radco, but payments ceased in 2015. John Dubose later took control of Radco and began liquidating its assets. Stewart and John settled a separate dispute, agreeing to sell Radco to Dynasty Energy Services, LLC, which assumed Radco's liabilities.Commercial Resources filed a lawsuit against Radco, Stewart, and Dynasty for the outstanding debt. Radco and Dynasty counterclaimed, alleging various defenses and claims against Commercial Resources. The case proceeded to trial, where the court granted a directed verdict against Radco and Stewart, finding them liable for the debt. The jury found Dynasty liable for $448,528.60 but awarded zero damages against Radco and Stewart. The trial court later amended the judgment to hold Radco, Stewart, and Dynasty jointly liable for the debt.The Supreme Court of Mississippi reviewed the case and affirmed the trial court's decisions. The court found no error in the trial court's grant of partial summary judgment dismissing Radco and Dynasty's affirmative defenses due to their delay in pursuing them. The court also upheld the trial court's decision to admit parol evidence, finding the Purchase Agreement ambiguous. The court affirmed the directed verdict against Radco and Stewart, agreeing that Stewart had authority to enter the agreement and that Radco ratified it. The court found no error in the jury instructions or the trial court's denial of post-trial motions. The court also upheld the trial court's award of attorneys' fees to Commercial Resources, finding it appropriate under the contractual provisions. View "Radco Fishing and Rental Tools, Inc. v. Commercial Resources, Inc." on Justia Law