Justia Commercial Law Opinion Summaries
Hinrichs v. DOW Chemical Co.
The Supreme Court affirmed the decision of the court of appeals affirming the circuit court's dismissal of Chris Hinrichs and Autovation Limited's (collectively, Hinrichs) common law misrepresentation claims against the DOW Chemical Company and reversing the circuit court's dismissal of Hinrichs' statutory claim under Wis. Stat. 100.18, holding that the court of appeals did not err. Specifically, the Supreme Court held that, with regard to Hinrichs' common law claims, neither the "fraud in the inducement" exception nor the "other property exception" to the economic loss doctrine applied to allow Hinrichs' common law claims to go forward. With regard to Hinrichs' statutory claims the Court held (1) the economic loss doctrine does not serve as a bar to claims made under section 100.18; (2) because one person can be "the public" for purposes of section 100.18(1), the court of appeals did not err in determining that dismissal for failure to meet "the public" factor of the section 100.18 claim was in error; and (3) the heightened pleading standard for claims of fraud does not apply to claims made under section 100.18 and that Hinrichs' complaint stated a claim under the general pleading standard. View "Hinrichs v. DOW Chemical Co." on Justia Law
Posted in: Antitrust & Trade Regulation, Commercial Law, Consumer Law, Contracts, Wisconsin Supreme Court
Wells Fargo, N.A. v. Bear Stearns & Co., Inc.
HomeBanc, in the residential mortgage loan business, obtained financing from Bear Stearns under 2005 repurchase agreements and transferred multiple securities to Bear Stearns. In 2007 HomeBanc failed to repurchase the securities or pay for an extension of the due date. Bear Stearns issued a notice of default. HomeBanc filed voluntary bankruptcy petitions. Bear Stearns, claiming outright ownership of the securities, auctioned them to determine their fair market value. After the auction closed, Bear Stearns’s finance desk determined that Bear Stearns’s mortgage trading desk had won. Bear Stearns allocated the $60.5 million bid across 36 securities. HomeBanc believed itself entitled to the August 2007 principal and interest payments from the securities. HomeBanc claimed conversion, breach of contract, and violation of the automatic bankruptcy stay. Following multiple rounds of litigation, the district court found that Bear Stearns acted reasonably and in good faith. The Third Circuit affirmed. A bankruptcy court’s determination of good faith regarding an obligatory post-default valuation of collateral subject to a repurchase agreement receives mixed review. Factual findings are reviewed for clear-error while the ultimate issue of good faith receives plenary review. Bear Stearns liquidated the securities at issue in good faith compliance with the Repurchasing Agreement. Bear Stearns never claimed damages; 11 U.S.C. 101(47)(A)(v) “damages,” which may trigger the requirements of 11 U.S.C. 562, require a non-breaching party to bring a legal claim for damages. The broader safe harbor protections of 11 U.S.C. 559 were relevant. View "Wells Fargo, N.A. v. Bear Stearns & Co., Inc." on Justia Law
In re: Avandia Marketing, Sales and Products Liability Litigation
Health benefit plans sued GSK, the manufacturer of the prescription drug Avandia, under state consumer-protection laws and the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. ch. 96 (RICO), based on GSK’s marketing of Avandia as having benefits to justify its price, which was higher than the price of other drugs used to treat type-2 diabetes. The district court granted GSK summary judgment, finding that the state-law consumer-protection claims were preempted by the Federal Food, Drug, and Cosmetic Act (FDCA), 21 U.S.C. ch. 9; the Plans had failed to identify a sufficient “enterprise” for purposes of RICO; and the Plans’ arguments related to GSK’s alleged attempts to market Avandia as providing cardiovascular “benefits” were “belated.” The Third Circuit reversed, applying the Supreme Court’s 2019 "Merck" decision. The state-law consumer-protection claims are not preempted by the FDCA. The Plans should have been given the opportunity to seek discovery before summary judgment on the RICO claims. Further, from the inception of this litigation, the Plans’ claims have centered on GSK’s marketing of Avandia as providing cardiovascular benefits as compared to other forms of treatment, so the district court’s refusal to consider the Plans’ “benefits” arguments was in error because those arguments were timely raised. View "In re: Avandia Marketing, Sales and Products Liability Litigation" on Justia Law
Posted in: Commercial Law, Consumer Law, Drugs & Biotech, Health Law, US Court of Appeals for the Third Circuit, White Collar Crime
ENA North Beach, Inc. v. 524 Union Street
Hong, the president of ENA, sought to open a restaurant with a license to serve beer and wine in a building owned by 524 Union, which had housed restaurants for many years. After leasing the premises, ENA was unable to open because the San Francisco Planning Department determined that an existing conditional use authorization for the property was no longer effective and a new one could not be granted. ENA sued the lessors, claiming false representations and failure to disclose material facts regarding the problems with the conditional use authorization. A jury awarded ENA compensatory and punitive damages. The court of appeal held that the jury’s verdict on liability, including liability for punitive damages, is supported by substantial evidence. Hong’s testimony was substantial evidence supporting the jury’s verdict. Additional support was provided by evidence of email correspondence around the time Hong entered the lease. The trial court employed an improper procedural mechanism in reducing the amount of the punitive damages award but the jury award was unsupported and Hong effectively stipulated to the reduced amount. View "ENA North Beach, Inc. v. 524 Union Street" on Justia Law
Kenworth of Indianapolis, Inc. v. Seventy-Seven Limited
In this litigation arising from a transaction in goods governed by the Uniform Commercial Code (UCC) the Supreme Court affirmed the trial court order denying summary judgment, holding that there remained genuine issues of material fact precluding summary judgment. An agreement governing the sale of forty dump trucks contained a warranty and a one-year limitations period for filing a breach of contract suit. Buyers sued for breach of warranty several years later. The Supreme Court held (1) under the express terms of their agreement, the parties contracted for a future-performance warranty, and any breach of warranty claims did not accrue until the buyers knew, or should have known, of the breach; (2) under the equitable estoppel doctrine, a party's conduct may toll a contractually agreed-upon limitations period; and (3) in the instant case, genuine issues of material fact remained relating to the above two issues, precluding summary judgment. View "Kenworth of Indianapolis, Inc. v. Seventy-Seven Limited" on Justia Law
FinServ Casualty Corp. v. Symetra Life Insurance Co.
Symetra appealed a jury verdict in favor of FinServ and A.M.Y. in an action involving structured settlement payments Symetra owed to two individuals. Both payments were subject to security interests held by FinServ and A.M.Y. in all of Rapid and RSL-3B's then-owned and after-acquired property. The Fifth Circuit held that filing a financing statement does not provide actual notice. Without an inquiry duty, the court held that Symetra's failure to find the financing statement was not "actual notice." Because the facts presented did not support the conclusion of actual notice, the court held that the district court should have granted judgment in favor of Symetra as a matter of law, since Symetra did not receive notice that the payments were assigned to FinServ and A.M.Y. until 2012, after its offset rights accrued. Therefore, Symetra's defenses were not subordinated to the security interests held by FinServ and A.M.Y. Accordingly, the court reversed and remanded, rendering judgment as a matter of law to Symetra. View "FinServ Casualty Corp. v. Symetra Life Insurance Co." on Justia Law
PMT Machinery Sales, Inc. v. Yama Seiki USA, Inc.
Yama Seiki, a California manufacturer of machine tools, sent PMT, a Wisconsin corporation, an exclusive letter of dealership, requiring sales of $1,000,000 or 15 machines in a year and stocking one machine on PMT’s showroom floor. PMT rejected the letter, believing it could not reach the sales requirements. Weeks later, PMT offered to take stock of two machines in exchange for an exclusive-dealer agreement. PMT responded with an application for dealership status and a proposal to negotiate further. Wang, a Yama Seiki manager with whom PMT had negotiated, did not address the offer but responded that he was “not sure if you are aware that you are in ‘exclusive’ status.” PMT never took stock of any machines, but it facilitated sales by soliciting customers, negotiating prices, and connecting customers with Yama Seiki,j who paid Yama Seiki under its usual sales terms. PMT was responsible for installation and warranty work. In 2015-2018, PMT derived 74% of its profits from Yama Seiki sales. More than a year after Wang's “exclusive status” statement, PMT discovered that others were selling Yama Seiki machines in Wisconsin. PMT sued, alleging violations of Wisconsin’s Fair Dealership Law. The Seventh Circuit affirmed summary judgment for Yama Seiki. PMT failed to show that it had any dealership agreement with Yama Seiki, much less an exclusive one. PMT never stocked any of its products, collected money for sales, or made more than de minimis use of Yama Seiki’s logos. View "PMT Machinery Sales, Inc. v. Yama Seiki USA, Inc." on Justia Law
Accettura v. Vacationland, Inc.
Plaintiffs purchased a recreational vehicle (RV) from Vacationland for $26,000.25. When it leaked during a rainstorm, they brought it in for repair. When it leaked again, causing extensive damage, they brought it back. A little more than two weeks after they dropped it off the second time and without a timetable for when the vehicle would be repaired, they told the seller that they no longer wanted the RV and asked for their money back. Plaintiffs sued, citing revocation of acceptance under the Magnuson-Moss Warranty-Federal Trade Commission Improvement Act, 15 U.S.C. 2310(d); breach of implied warranty of merchantability under the Magnuson-Moss Act; revocation of acceptance and cancellation of contract under Illinois’s adoption of the Uniform Commercial Code; and return of purchase price under the UCC. Defendant argued that plaintiffs’ failure to give it a reasonable opportunity to cure was fatal to their claims. The circuit court granted the defendant summary judgment. The appellate court affirmed. Plaintiffs sought review of the revocation of acceptance claim under the UCC (810 ILCS 5/2- 608(1)(b)). The Illinois Supreme Court reversed. The plain language of subsection 2-608(1)(b) does not require that the buyer give the seller an opportunity to cure a substantial nonconformity before revoking acceptance. View "Accettura v. Vacationland, Inc." on Justia Law
Cheema v. L.S. Trucking, Inc.
LS, a trucking company, also operates as a broker of construction trucking services. Under a 2009 oral agreement between LS and Cheema, Cheema purchased a Super Dump Truck, with the understanding that LS would purchase the truck’s detachable box from Cheema. As the box owner, LS would give priority to Cheema in dispatching assignments to Cheema as a subhauler. The parties entered a written “Subhauler and Trailer Rental Agreement” under which Cheema would submit to LS completed freight bills for all hauling that he performed for LS; LS would prepare statements showing the amount billed payable to Cheema, less a 7.5 percent brokerage fee and, if the work was performed with a box owned by LS, a 17.5 percent rental fee. Cheema began providing hauling services. Cheema claimed that because LS failed to pay him the $32,835.09 purchase price of the box, it remained his, and LS was not entitled to deduct rental fees from the payments due him. In June 2010, LS began paying Cheema $1,000 a month for nine months, noting on the checks that the payments were repayment of a “loan.” Cheema recovered damages from L.S. for having been underpaid and untimely payments. The court of appeal affirmed but remanded for calculation of prejudgment interest and penalty interest (Civil Code 3287, 3322.1), rejecting LS’s argument that the parties’ oral agreement for Cheema to sell it the box, justifying its deductions for rental, was enforceable. View "Cheema v. L.S. Trucking, Inc." on Justia Law
Sapa Extrusions, Inc. v. Liberty Mutual Insurance Co.
Sapa manufactures aluminum extruded profiles, pre-treats the metal and coats it with primer and topcoat. For decades, Sapa supplied “organically coated extruded aluminum profiles” to Marvin, which incorporated these extrusions with other materials to manufacture aluminum-clad windows and doors. This process was permanent, so if an extrusion was defective, it could not be swapped out; the whole window or door had to be replaced. In 2000-2010, Marvin bought about 28 million Sapa extrusions and incorporated them in about 8.5 million windows and doors. Marvin sometimes received complaints that the aluminum parts of its windows and doors would oxidize or corrode. The companies initially worked together to resolve the issues. In the mid-2000s, there was an increase in complaints, mostly from people who lived close to the ocean. In 2010, Marvin sued Sapa, alleging that Sapa had sold it extrusions that failed to meet Marvin’s specifications. In 2013, the companies settled their dispute for a large sum. Throughout the relevant period, Sapa maintained 28 commercial general liability insurance policies through eight carriers. Zurich accepted the defense under a reservation of rights, but the Insurers disclaimed coverage. Sapa sued them, asserting breach of contract. The district court held that Marvin’s claims were not an “occurrence” that triggered coverage. The Third Circuit vacated in part, citing Pennsylvania insurance law: whether a manufacturer may recover from its liability insurers the cost of settling a lawsuit alleging that the manufacturer’s product was defective turns on the language of the specific policies. Nineteen policies, containing an Accident Definition of “occurrence,” do not cover Marvin’s allegations, which are solely for faulty workmanship. Seven policies contain an Expected/Intended Definition that triggers a subjective-intent standard that must be considered on remand. Two policies with an Injurious Exposure Definition also include the Insured’s Intent Clause and require further consideration. View "Sapa Extrusions, Inc. v. Liberty Mutual Insurance Co." on Justia Law
Posted in: Business Law, Commercial Law, Contracts, Insurance Law, US Court of Appeals for the Third Circuit