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In this case arising out of a secured transaction between Debtor and the predecessor to Plaintiff, Bank, both the trial court and the court of appeals erred in their respective applications of the statutory “rebuttable presumption rule” under Article 9 of the Uniform Commercial Code, as codified at Tenn. Code Ann. 47-9-626. Debtor borrowed more than $2.3 million from Bank’s predecessor for the purchase of an aircraft, which secured the loan. The trial court later found that Debtor had defaulted on the loan agreement, that Bank had disposed of the aircraft in a commercial reasonable manner, and that Bank was entitled to recover a judgment for a deficiency of over $1.6 million. The court of appeals vacated the deficiency judgment, concluding that Bank’s sale of the aircraft had not been commercially reasonable. On remand, the trial court concluded that Bank had met its burden to rebut the presumption under section 47-9-626 and that Bank was entitled to recover a deficiency in the amount of $1.2 million. The court of appeals reversed, concluding that Bank had not rebutted the statutory presumption and was thus not entitled to a deficiency. The Supreme Court reversed the court of appeals, vacated the trial court’s judgment and remanded, holding that Bank sufficiently rebutted the statutory rebuttable presumption. View "Regions Bank v. Thomas" on Justia Law

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The Supreme Court affirmed the judgment of the circuit court granting summary judgment for certain Internet sellers (Sellers) and enjoining the State from enforcing 2016 legislation extending the obligation to collect and remit sales tax to sellers with no physical presence in the state. Pursuant to the legislation, the State brought this declaratory judgment action seeking a declaration that Sellers, who had no physical presence in the state, must comply with the requirements of the 2016 legislation. The circuit court enjoined the State from enforcing the obligation to collect and remit sales tax against Sellers, observing its obligation to adhere to Supreme Court precedent prohibiting the imposition of an obligation to collect and remit sales tax on sellers with no physical presence in the State. The Supreme Court affirmed, holding that the circuit court correctly applied the law when it granted Sellers’ motion for summary judgment. View "State v. Wayfair Inc." on Justia Law

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If a municipality imposes a sales tax, the State Board of Equalization (now the California Department of Tax and Fee Administration) has the authority to collect and then remit the tax back to the municipality under the Bradley-Burns Uniform Local Sales and Use Tax Law (Stats. 1955, ch. 1311; 7200 et seq.). The Board is authorized to determine where sales of personal property occur and to designate the municipality that will receive the local sales tax it collects. After an internal reorganization of an existing seller, the Board decided that local sales tax which had been remitted to Fontana and Lathrop, where the seller had warehouses, would be “reallocated” to Ontario, the site of the seller’s new marketing operation. The trial court set aside that decision. The court of appeal reversed, finding that the Board’s decision was supported by substantial evidence. The manner in which the Board determined where the taxable event occurred was well within its administrative expertise and its discretionary authority to make such a determination. Customers believed they were ordering goods from the Ontario facility, which became the retailer when it purchased goods for shipment to customers. View "City of Fontana v. California Department of Tax and Fee Administration" on Justia Law

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The Supreme Court affirmed the district court’s order dismissing with prejudice Plaintiff’s complaint for failure to state a claim upon which relief could be granted. Plaintiff, which operated commercial grain warehouses and elevators and owned trading businesses through Nebraska, filed a complaint alleging that several defendants engaged in a pattern of behavior with the intent to deprive it of information, an opportunity to be heard, and due process of law. The district court concluded that Defendants were entitled to immunity under Nebraska’s Consumer Protection Act and the Noerr-Pennington doctrine and that Plaintiff’s claims of conspiracy and aiding and abetting required an underlying tort to be actionable. The Supreme Court affirmed, holding (1) Plaintiff failed to state a claim upon which relief could be granted because Defendants were entitled to immunity under the Noerr-Pennington doctrine and Plaintiff alleged only underlying statutory violations; and (2) any amendment to Plaintiff’s petition would be futile. View "Salem Grain Co. v. Consolidated Grain & Barge Co." on Justia Law

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In 2004, Baker Lofts purchased an abandoned building for renovation. Loans of more than $5 million from Huntington were secured by two mortgages on the building and by personal property, including a tax-increment-financing agreement, rental income, and Baker’s liquor license. Baker defaulted in 2011. Huntington assigned the 2005 mortgage to its subsidiary, Fourteen, which foreclosed by public auction. The Notice stated that “[t]he balance owing on the Mortgage is $5,254,435.04,” but did not mention the senior 2004 mortgage, which Huntington retained. Fourteen, the only bidder, purchased the property for $1,856,250. Huntington released the 2004 mortgage. Fourteen sold the property for $2,355,000. Huntington thought that Baker still owed $3.5 million and invoked its security interests in the remaining collateral. At a public sale, Huntington bought the rights to Baker's tax-increment-financing agreement for $1,107,000; began collecting rents; and asserted its security interest in the liquor license, which Baker had sold before it declared bankruptcy. Assignees of Baker's legal claims sought a declaratory judgment that the sale of the building extinguished all of Baker’s debt. They also raised conversion and tortious interference claims and a claim under Michigan’s secured transactions statute. The Sixth CIrcuit affirmed Huntington's judgment. The district court correctly concluded that Baker’s debt exceeded the value of the foreclosed building and that excess permitted Huntington to take possession of the other property securing its loans. View "DAGS II, LLC v. Huntington National Bank" on Justia Law

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McNeil opened a business checking account with Defendant. A “Master Services Agreement,” stated: [W]e have available certain products designed to discover or prevent unauthorized transactions, …. You agree that if your account is eligible for those products and you choose not to avail yourself of them, then we will have no liability for any transaction that occurs on your account that those products were designed to discover or prevent. McNeil was not given a signed copy of the Agreement, nor was he advised of its details. McNeil ordered hologram checks from a third party to avoid fraudulent activity. McNeil later noticed unauthorized checks totaling $3,973.96. The checks did not contain the hologram and their numbers were duplicative of checks that Defendant had properly paid. Defendant refused to reimburse McNeil, stating that “reasonable care was not used in declining to use our ... services, which substantially contributed to the making of the forged item(s).” Government agencies indicated that they would not intervene in a private dispute involving the interpretation of a contract. Plaintiff filed a putative class action, citing Uniform Commercial Code 4-401 and 4-103(a), The district court dismissed, holding that the Agreement did not violate the UCC and shifted liability to Plaintiff. The Sixth Circuit reversed. Plaintiff stated a plausible claim that the provision unreasonably disclaims all liability under these circumstances; the UCC forbids a bank from disclaiming all of its liability to exercise ordinary care and good faith. View "Majestic Building Maintenance, Inc. v. Huntington Bancshares, Inc." on Justia Law

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SemGroup purchased oil from producers and resold it to downstream purchasers. It also traded financial options contracts for the right to buy or sell oil at a fixed price on a future date. At the end of the fiscal year preceding bankruptcy, SemGroup’s revenues were $13.2 billion. SemGroup’s operating companies purchased oil from thousands of wells in several states and from thousands of oil producers, including from Appellants, producers in Texas, Kansas, and Oklahoma. The producers took no actions to protect themselves in case 11 of SemGroup’s insolvency. The downstream purchasers did; in the case of default, they could set off the amount they owed SemGroup for oil by the amount SemGroup would owe them for the value of the outstanding futures trades. When SemGroup filed for bankruptcy, the downstream purchasers were paid in full while the oil producers were paid only in part. The producers argued that local laws gave them automatically perfected security interests or trust rights in the oil that ended up in the hands of the downstream purchasers. The Third Circuit affirmed summary judgment in favor of the downstream purchasers; parties who took precautions against insolvency do not act as insurers to those who took none. View "In re: SemCrude LP" on Justia Law

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Philip White obtained a judgment for $100,000 in compensatory damages and moved for an award of prejudgment interest. The district court denied the motion, viewing the bulk of the award as compensation for noneconomic damages. White argued on appeal to the Tenth Circuit that the Court should: (1) overrule earlier opinions and find that prejudgment interest was always available for compensatory awards under 42 U.S.C. 1983; or (2) conclude that the district court abused its discretion in disallowing prejudgment interest. The Court rejected both of White's arguments, finding it could not overrule published opinions by other Tenth Circuit panels. Applying an abuse-of-discretion standard, the Tenth Circuit concluded: (1) the district court did not abuse its discretion in denying prejudgment interest on the award of noneconomic compensatory damages; and (2) the district court could reasonably decline to speculate on the amount the jury had regarded as economic damages. View "White v. Wycoff" on Justia Law

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The creditors shipped goods via common carrier from China to World Imports in the U.S. “free on board” at the port of origin. One shipment left Shanghai on May 26, 2013; World took physical possession of the goods in the U.S. on June 21. Other goods were shipped from Xiamen on May 17, May 31, and June 7, 2013, and were accepted in the U.S. within 20 days of the day on which World filed its Chapter 11 petition. The creditors filed Allowance and Payment of Administrative Expense Claims, 11 U.S.C. 503(b)(9), allowable if: the vendor sold ‘goods’ to the debtor; the goods were "received" by the debtor within 20 days before the bankruptcy filing; and the goods were sold in the ordinary course of business. Section 503(b)(9) does not define "received." The Bankruptcy Court rejected an argument that the UCC should govern and looked to the Convention on Contracts for the International Sale of Goods (CISG). The CISG does not define “received,” so the court looked to international commercial terms (Incoterms) incorporated into the CISG. Although no Incoterm defines “received,” the incoterm governing FOB contracts indicates that the risk transfers to the buyer when the seller delivers the goods to the common carrier. The Bankruptcy Court and the district court found that the goods were “constructively received” when shipped and denied the creditors’ motions. The Third Circuit reversed; the word “received” in 11 U.S.C. 503(b)(9) requires physical possession. View "In re: World Imports Ltd" on Justia Law

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Lexington Insurance denied a claim by its insured, Double D Warehouse, for coverage of Double D’s liability to customers for contamination of warehoused products. One basis for denial was that Double D failed to document its warehousing transactions with warehouse receipts, storage agreements, or rate quotations, as required by the policies. PQ was a customer of Double D whose products were damaged while warehoused there. PQ settled its case against Double D by stepping into Double D’s shoes to try to collect on the policies. PQ argued that there were pragmatic reasons to excuse strict compliance with the policy’s terms. The Seventh Circuit affirmed summary judgment in favor of Lexington. PQ accurately claimed that the documentation Double D actually had (bills of lading and an online tracking system) should serve much the same purpose as the documentation required by the policies (especially warehouse receipts), but commercially sophisticated parties agreed to unambiguous terms and conditions of insurance. Courts hold them to those terms. To do otherwise would disrupt the risk allocations that are part and parcel of any contract, but particularly a commercial liability insurance contract. PQ offered no persuasive reason to depart from the plain language of the policies. View "PQ Corp. v. Lexington Insurance Co." on Justia Law