Justia Commercial Law Opinion Summaries

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

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

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

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

Defendant manufactures aloe vera gel, sold under its own brand and as private‐label versions. Suppliers harvest, fillet, and de-pulp aloe vera leaves. The resulting aloe is pasteurized, filtered, treated with preservatives, and dehydrated for shipping. Defendant reconstitutes the dehydrated aloe and adds stabilizers, thickeners, and preservatives to make the product shelf‐stable. The products are 98% aloe gel and 2% other ingredients. Labels describe the product as aloe vera gel that can be used to treat dry, irritated, or sunburned skin. One label calls the product “100% Pure Aloe Vera Gel.” An asterisk leads to information on the back of the label: “Plus stabilizers and preservatives to insure [sic] potency and efficacy.” Each label contains an ingredient list showing aloe juice and other substances.Plaintiffs brought consumer deception claims, alleging that the products did not contain any aloe vera and lacked acemannan, a compound purportedly responsible for the plant’s therapeutic qualities. Discovery showed those allegations to be false. Plaintiffs changed their theory, claiming that the products were degraded and did not contain enough acemannan so that it was misleading to represent them as “100% Pure Aloe Vera Gel,” and to market the therapeutic effects associated with aloe vera. The Seventh Circuit affirmed summary judgment in favor of the defendants. There was no evidence that some concentration of acemannan is necessary to call a product aloe or to produce a therapeutic effect, nor evidence that consumers care about acemannan concentration. View "Beardsall v. CVS Pharmacy, Inc." on Justia Law

In 1987, Whitaker opened commodity futures trading accounts that eventually were assigned to Wedbush. Whitaker did not enter into a new customer or security agreement with Wedbush. Wedbush held Whitaker’s funds in customer segregated accounts at BMO Harris, which provided an online portal for Wedbush to process its customers' wire transfers. In December 2014, Wedbush received emailed wire transfer requests purporting to be from Whitaker but actually sent by a hacker. Wedbush completed transfers to a bank in Poland totaling $374,960. Each time, Wedbush sent an acknowledgment to Whitaker’s e-mail account; the hacker apparently intercepted all email communications. Whitaker contacted Wedbush after receiving an account statement containing an incorrect balance. After Wedbush refused Whitaker’s demand for the return of the transferred funds, Whitaker filed suit seeking a refund under the UCC (810 ILCS 5/4A-101). The circuit court rejected the UCC counts, stating that Wedbush had not operated as a “bank” under the UCC definition. The appellate court affirmed.The Illinois Supreme Court reversed, rejecting an argument that an entity may not qualify as a bank if it does not offer checking services. Courts construe the term “bank” in article 4A liberally to promote the purposes and policies of the UCC. The term “includes some institutions that are not commercial banks” and that “[t]he definition reflects the fact that many financial institutions now perform functions previously restricted to commercial banks, including acting on behalf of customers in funds transfers.” View "Whitaker v. Wedbush Securities, Inc." on Justia Law

The San Francisco Examiner sued the San Francisco Chronicle, claiming that the defendant sold a certain type of print advertising in the Chronicle at prices that violated California’s Unfair Practices Act (UPA, Bus. & Prof. Code, 17000) and Unfair Competition Law (UCL, 17200). The trial court granted the defendant summary judgment. The court of appeal affirmed. The trial court properly rejected the claim of below-cost sales under the UPA after excluding the opinion of the plaintiff’s expert on costs. The plaintiff had disclaimed reliance on specific transactions to prove the Chronicle’s alleged underpricing of its print advertising, leaving only the aggregate cost analysis prepared by that expert to establish the occurrence of alleged below-cost sales. The plaintiff’s expert lacked the foundational knowledge to conduct the requisite cost analysis and based his analysis on another individual’s non-UPA-related pricing analysis without understanding its foundations, such as some of the included cost components. Summary judgment was proper as to the claim for unlawful use or sale of loss leaders under the UPA because the plaintiff failed to identify the loss leader sales on which this claim was based. The trial court did not err in granting summary judgment on the causes of action for secret and unearned discounts under the UPA. View "San Francisco Print Media Co. v. The Hearst Corp." on Justia Law

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

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

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