Justia Commercial Law Opinion Summaries
BRC Rubber & Plastics, Inc. v. Continental Carbon Co.
BRC and Continental signed a five-year contract. Continental agreed to supply BRC with “approximately 1.8 million pounds of prime furnace black annually” taken in “approximately equal monthly quantities.” The price of carbon black consists of a baseline price and “feedstock” adjustments. The contract listed baseline prices with instructions for calculating feedstock adjustments. In 2010, BRC bought 2.6 million pounds of carbon black. In early 2011, BRC bought about 1.3 million pounds. In April 2011, supplies were tight. Continental tried to increase baseline prices. BRC replied that the price increase would violate the contract. BRC placed new orders relying on the contract’s prices. Continental did not respond to BRC's protests. On May 11, Continental missed a shipment to BRC. Continental would not confirm future shipment dates or tell BRC when to expect a response. On May 16, BRC formally invoked U.C.C. 2-609, asking for adequate assurance that Continental would continue to supply carbon black under the existing contract, requesting a response by May 18. Continental gave contradictory responses and continued to demand that BRC accept the price increase. On June 2, BRC notified Continental that it was terminating the contract and had filed suit. BRC proceeded to “cover” by buying from another supplier at higher prices.The Seventh Circuit affirmed an order that Continental pay damages. The district court properly applied U.C.C. 2-609 to find that Continental gave BRC reasonable grounds for doubting that it would perform and that Continental repudiated by failing to provide adequate assurance that it would continue to perform. The court properly applied U.C.C. 2-712 to find that cover was commercially reasonable and awarded prejudgment interest. View "BRC Rubber & Plastics, Inc. v. Continental Carbon Co." on Justia Law
Sutton 58 Associates LLC v. Pilevsky
The Court of Appeals held that federal bankruptcy law did not preempt Plaintiff's state law claims asserted against non-debtor third parties for tortious interference with a contract.Plaintiff loaned $147,250,000 to nonparties "Mezz Borrower" and "Mortgage Borrower" (collectively, Borrowers). Borrowers later defaulted, and Plaintiff sought to conduct a foreclosure sale of Mezz Borrower's 100 percent membership interest in Mortgage Borrower pursuant to the pledge and security agreement. Mezz Borrower and Mortgage Borrower subsequently filed separate voluntary petitions for chapter 11 bankruptcy in federal court. Plaintiff then commenced this action in state court alleging that Defendants had tortiously interfered with the loan agreements between Plaintiff and the nonparty borrowers. Defendants - various affiliated persons and entities - moved for summary judgment on the ground that the action was preempted by the Bankruptcy Code. Supreme Court denied the motion, holding that the action was not preempted because it did not involve the bankruptcy. The Appellate Division reversed, concluding that Plaintiff's claims were preempted by federal law because damages arose only because of the bankruptcy filings. The Court of Appeals reversed, holding that Defendants failed to meet their burden of establishing that federal bankruptcy law preempted Plaintiff's tortious interference claims. View "Sutton 58 Associates LLC v. Pilevsky" on Justia Law
Murray v. UPS Capital Ins. Agency, Inc.
David Murray purchased used computer equipment worth nearly $40,000, which was damaged by the United Postal Service (UPS) while it was being transported from California to Texas. Murray believed he purchased appropriate insurance to cover this loss, but the insurance company denied his claim. Murray sued his insurance broker, UPS Capital Insurance Agency (UPS Capital), for breach of contract and negligence, claiming UPS Capital owed him a special duty to make the insurance policy language understandable to an ordinary person and to explain the scope of coverage. The court granted UPS Capital’s motion for summary judgment after concluding there was no heightened duty of care and dismissed Murray’s lawsuit. On appeal, Murray asked the Court of Appeal to create a new rule that brokers/agents, specializing in a specific field of insurance, hold themselves out as experts, and are subject to a heightened duty of care towards clients seeking that particular kind of insurance. While the Court declined the invitation to create a per se rule, it concluded Murray raised triable issues of fact as to whether UPS Capital undertook a special duty by holding itself out as having expertise in inland marine insurance, and Murray reasonably relied on its expertise. Therefore, the Court reversed the judgment of dismissal and remanded the matter for further proceedings. View "Murray v. UPS Capital Ins. Agency, Inc." on Justia Law
Continental Vineyard LLC v. Dzierzawski
Dzierzawski was vice-president of Forsyth's vineyard company. When Forsythe declined an opportunity to produce a custom wine for the Meijer grocery chain, Dzierzawski formed Vinifera and began doing business with Meijer, while continuing to work for Forsythe. Forsythe eventually became aware of the scope of Dzierzawski’s operation and filed suit.The district court granted summary judgment in favor of Dzierzawski on the corporate opportunity theory. A jury found Dzierzawski liable on the unfair competition contention but rejected unjust enrichment, fiduciary duty, and breach of the duty of good faith theories. The jury left the damages section on the verdict form blank. The court polled the jurors, who unanimously responded that it was their intention to award no damages. Forsyth did not object to the verdict at that time but later moved for a new trial. The court denied that motion but granted Forsyth’s request for disgorgement as alternative relief, and ordered Dzierzawski to pay $285,731, reasoning that “the jury’s verdict is merely advisory on the issue of equitable disgorgement, as it is an equitable remedy to be imposed by the Court.” The Seventh Circuit affirmed. The evidence does not support that Dzierzawski stole a corporate opportunity from his company and there was no reversible error in the disgorgement order. View "Continental Vineyard LLC v. Dzierzawski" on Justia Law
Phytelligence Inc. v. Washington State University
Phytelligence, an agricultural biotechnology company that used tissue culture to grow trees, and Washington State University (WSU) contracted for the propagation of WSU's patented “WA 38” apple trees. Section 4 of the agreement was entitled “option to participate as a provider and/or seller in [WSU] licensing programs.” The parties acknowledged that WSU would need to “grant a separate license for the purpose of selling.” Phytelligence expressed concern about the “wispy forward commitment.” WSU responded that “Phytelligence and others would have a shot at securing commercial licenses.”WSU later requested proposals for commercializing WA 38. Phytelligence did not submit a proposal. WSU accepted PVM’s proposal, granting PVM an exclusive license that required PVM to subcontract exclusively with NNII, a fruit tree nursery association, to propagate and sell WA 38 trees. Phytelligence later notified WSU that it wanted to exercise its option. WSU responded that PVM was WSU’s “agent.” Phytelligence rejected PVM’s requirement to become an NNII member and two non-membership proposals for obtaining commercial rights to WA 38. WSU terminated the Propagation Agreement, alleging that Phytelligence breached the Agreement when it sold WA 38 to a third-party without a license and that such actions infringed its plant patent and its COSMIC CRISP trademark.Phytelligence sued, alleging breach of the Agreement. The Federal Circuit affirmed summary judgment in favor of WSU. Section 4 is an unenforceable agreement to agree. WSU did not commit to any definite terms of a future license. View "Phytelligence Inc. v. Washington State University" on Justia Law
R3 Composites Corp. v. G&S Sales Corp.
G&S had a written contract to work as a representative for a manufacturer, R3. The critical term dealing with sales commissions did not show any agreement on commission rates. It said that the parties would try to agree on commission rates on a job-by-job, customer-by-customer basis. While the original 2011 “agreement to agree” would not have been enforceable by itself, the parties did later agree on commission rates for each customer and went forward with their business. In 2014, changes made by customers in their ordering procedures led to disputes about commissions.The district court granted summary judgment for R3, relying primarily on the original failure to agree on commission rates. The Seventh Circuit reversed. A reasonable jury could find that the later job-by-job commission agreements were governed by the broader terms of the original written contract. The rest of the case is “rife with factual disputes that cannot be resolved on summary judgment.” View "R3 Composites Corp. v. G&S Sales Corp." on Justia Law
Eloquence Corp. v. Home Consignment Center
Under a 2008 consignment agreement, Eloquence would consign jewelry and loose diamonds to HCC for resale. HCC was to send a monthly sales report of each item sold. Upon receipt of that report, Eloquence would prepare an invoice setting forth the payment due from HCC. The Agreement required HCC to pay the invoices within 30 days and provided for a bi-annual reconciliation of the inventory of consigned goods. Following a reconciliation, two invoices dated November 10, 2009, identified “items reported as missing” from an HCC store: 16 pieces of jewelry ($64085). Eloquence gave HCC a five-month extension for payment. Delivery of consigned goods to HCC continued for seven years, totaling $616,633.30 in sales invoices. In 2017, Eloquence sued HCC and its general partners, asserting “breach of written agreement” and “open book account” by failing to pay the November 2009 invoices, in the total amount of $64,085 and that it “furnished to HCC, at its request, on an open book account, merchandise of the agreed value of $64,085.The court of appeal affirmed summary judgment. Eloquence’s breach of contract cause of action time-barred because the agreement contemplated a series of discrete transactions each evidenced by a separate invoice. The doctrine of continuous accrual applies; the statute of limitations expired in May 2014. There was no agreement by the parties to enter into an open book accountt. View "Eloquence Corp. v. Home Consignment Center" on Justia Law
Finance Authority of Maine v. Grimnes
The Supreme Judicial Court affirmed the judgment of the superior court against Appellant, guarantor of a promissory note held by Finance Authority of Maine (FAME), holding that the superior court correctly determined that neither of two of the default provisions contained in Article 9 of Maine’s Uniform Commercial Code - 11 M.R.S. 9-1607 and 9-1626 - required FAME to prove the reasonableness of its decision not to pursue the collateral before it could obtain a judgment against Appellant.FAME extended a loan to Harbor Technologies, LLC. Harbor executed a promissory note and security agreement under which its assets were pledged as collateral to secure the note. Appellant executed a personal guaranty of Harbor's obligations to FAME. After Harbor defaulted on the loan, FAME sued Appellant on his guaranty for the entire amount due. The circuit court entered judgment in favor of FAME. The Supreme Judicial Court affirmed, holding that, in light of the independent and unconditional nature of Appellant's guaranty, the court was correct when it determined that neither section 9-1607 nor section 9-1626 imposed a burden on FAME to prove the commercial reasonableness of its decision not to pursue the collateral before it could obtain a judgment against Appellant. View "Finance Authority of Maine v. Grimnes" on Justia Law
New Jersey Coalition of Automotive Retailers, Inc. v. Mazda Motor of America Inc
The Coalition, an association of franchised New Jersey new car dealerships, filed suit under the New Jersey Franchise Practices Act on behalf of 16 Mazda dealer-members. Mazda had an incentive program for its franchised dealers (MBEP), which provides incentives, per-vehicle discounts or rebates on the dealers’ purchases of vehicles from Mazda, to dealers who make certain investments in their physical facilities that highlight their sale of Mazda vehicles or dedicate their dealerships exclusively to the sale of Mazda vehicles. The incentives come in different tiers, with the highest tier available to dealers who have exclusive Mazda facilities and a dedicated, exclusive Mazda general manager. Mazda dealers also earn incentives if they meet customer experience metrics. Mazda dealers who sell other brands of vehicles as well as Mazdas, do not receive incentives for brand commitment. Only three of the 16 Mazda dealers in the Coalition qualified for the highest tier; eight others qualified for some tier of incentives. The complaint alleged that the MBEP creates unfair competitive advantages for dealers who qualify for incentives under the MBEP at the expense of those dealers who do not, and even among incentivized dealers through different tiers.The Third Circuit reversed the dismissal of the case, rejecting as too narrow the district court’s rationale--that the Coalition lacked standing because only five of the 16 Mazda dealers would benefit from the lawsuit, so the Coalition cannot possibly be protecting the interests of its members. View "New Jersey Coalition of Automotive Retailers, Inc. v. Mazda Motor of America Inc" on Justia Law
MidWestOne Bank v. Heartland Co-op
In this dispute between a secured lender (Bank) and a grain elevator (Elevator) the Supreme Court reversed in part the district court's judgment in favor of the Bank, holding that the district court erred by applying the discovery rule but otherwise did not err.The Bank filed this civil action alleging damages for drying and storage charges withheld in a three-year period. The Bank asserted that the Elevator had a junior interest to the Bank's prior perfected security interests. The Elevator asserted affirmative defenses of, among other things, failure to state a claim and unjust enrichment. The district court granted the Bank's motion for summary judgment and denied the Elevator's motion for summary judgment. The Supreme Court affirmed in part and reversed in part, holding that the district court (1) correctly applied the two-year limitation period in Iowa Code 614.1(10), which barred the Bank's claims filed more than two years from the date of sale of goods subject to its perfected security interest; (2) erred by applying the discovery rule allowing the Bank to recover on transactions that occurred more than two years before it filed its civil action; and (3) correctly ruled that the Bank's prior perfected security interest trumped the Elevator's claim for storage and drying costs. View "MidWestOne Bank v. Heartland Co-op" on Justia Law