Justia Commercial Law Opinion Summaries

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

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

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

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

Businesses challenged New York General Business Law section 518, which provides that “[n]o seller in any sales transaction may impose a surcharge on a holder who elects to use a credit card in lieu of payment by cash, check, or similar means,” as violating the First Amendment by regulating how they communicate their prices, and as unconstitutionally vague. The Second Circuit vacated a judgment in favor of the businesses, reasoning that in the context of singlesticker pricing—where merchants post one price and would like to charge more to customers who pay by credit card—the law required that the sticker price be the same as the price charged to credit card users. In that context, the law regulated a relationship between two prices: conduct, not speech. The Supreme Court vacated, limiting its review to single-sticker pricing. Section 518 regulates speech. It is not a typical price regulation, which simply regulates the amount a store can collect. The law tells merchants nothing about the amount they may collect from a cash or credit card payer, but regulates how sellers may communicate their prices. Section 518 is not vague as applied to the businesses; it bans the single-sticker pricing they wish to employ, and “a plaintiff whose speech is clearly proscribed cannot raise a successful vagueness claim.” View "Expressions Hair Design v. Schneiderman" on Justia Law

A 16-count complaint alleged conspiracy to funnel valuable pharmaceutical interests away from an entity in which the Plaintiff, CelestialRX, LLC, is a member. The claims include allegedly improper self-dealing by two members of a three-member LLC. On motions to dismiss and for summary judgment, the Delaware Chancery Court rejected a claim that plaintiffs had contractually released certain claims and analyzed the LLC agreement to conclude that good faith—a subjective standard, applies separately to both the transaction and to the conflicted party’s analysis of whether it is “fair and reasonable,” but must be read consistently with the purpose of specific standards, which is to permit conflicted transactions in certain circumstances. The court urged the parties to mediate the dispute. View "CelestialRX Investments, LLC.v. Krivulka" on Justia Law

Dana had a dealer agreement in Texas with AISCO. Unbeknownst to Dana, AISCO sold off most of its assets to newly-formed DanMar, which transferred the assets to UJoints. The name “UJoints” had been a trade name used by AISCO. Under Texas Business and Commerce Coe 57.154(a)(4), “a supplier may not terminate a dealer agreement without good cause.” Good cause exists “if there has been a sale or other closeout of a substantial part of the dealer’s assets related to the business.” Dana terminated the agreement, preventing UJoints from claiming to have been authorized to step into AISCO’s shoes and become a Dana dealer in Texas. The Seventh Circuit affirmed summary judgment in favor of Dana, finding that the transfers gave Dana good cause to terminate its dealer agreement with AISCO. The court rejected an argument that Dana entered into a “dealer agreement,” with the “new, unknown entity the identity of which the owners had concealed from Dana for a significant time.” It was natural for Dana to continue selling, for a time, to its dealer’s, AISCO’s, successor—UJoints. Those sales did not make UJoints a party to a dealer agreement. View "Texas Ujoints LLC v. Dana Holding Corp." on Justia Law

Auraria Student Housing at the Regency, LLC (Regency) sued Campus Village after the University of Colorado-Denver (UCD) instituted a residency requirement which forced a significant portion of its freshmen and international students to live at Campus Village. Campus Village was also an apartment complex located outside the boundaries of the UCD Campus. But the University of Colorado Real Estate Foundation (CUREF) was the sole member of Campus Village, and CUREF operated Campus Village for the benefit of the University of Colorado system. Although Regency alleged that UCD participated in the conspiracy, it named only Campus Village as a defendant in this litigation. On appeal of a jury verdict finding that Campus Village violated section two of the Sherman Antitrust Act based on its conspiracy with UCD to monopolize commerce, Campus Village argued principally that the district court erred by not requiring Regency to define the "relevant market" Campus Village allegedly conspired to monopolize. Specifically, it claimed recent Supreme Court and Tenth Circuit authority mandated that plaintiffs identify both the relevant geographic and product markets to recover under section 2, including for conspiracy-to-monopolize claims. The Tenth Circuit agreed, finding that Regency failed to identify the relevant marked in this case. But because Regency reasonably relied on the Tenth Circuit's contrary holding in "Salco Corp. v. Gen. Motors Corp.," (517 F.2d 567 (1975)), the Court instructed the district court to provide Regency an opportunity to define the relevant market on remand. Accordingly, the Tenth Circuit vacated the jury verdict and remanded this case for further proceedings. View "Auraria Student Housing v. Campus Village Apartments" on Justia Law

Nearly ten years ago, U-Haul Co. of California (UHC) sued Robinson, one of UHC’s independent dealers, for breach of contract and unfair competition after he terminated their contract and began renting Budget trucks from the former UHC dealership. UHC alleged a covenant not to compete in its dealer contract prohibited Robinson from offering the products of UHC’s competitors while a Yellow Pages ad, running at UHC’s expense, was still promoting Robinson’s business. Robinson sought a judicial declaration that the covenant was void due to fraud in the inducement. After UHC lost its request for a preliminary injunction and dismissed its complaint, Robinson filed a separate action alleging malicious prosecution by UHC in the prior lawsuit and violation of Business and Professions Code section 17200, the unfair competition law (UCL). A jury awarded Robinson $195,000 in compensatory damages for malicious prosecution. The trial court issued a permanent injunction prohibiting U-Haul from initiating or threatening judicial proceedings to enforce the noncompetition covenant. It awarded Robinson $800,000 in attorney’s fees as a private attorney general on his UCL cause of action. The court of appeal affirmed, holding that the injunction was proper and the court did not abuse its discretion in allowing Robinson to file a late motion for attorney’s fees. View "Robinson v. U-Haul Co. of Cal." on Justia Law

The defendant companies, based in China, produce conventional solar energy panels. Energy Conversion and other American manufacturers produce the newer thin-film panels. The Chinese producers sought greater market shares. They agreed to export more products to the U.S. and to sell them below cost. Several entities supported their endeavor. Suppliers provided discounts, a trade association facilitated cooperation, and the Chinese government provided below-cost financing. From 2008-2011, the average selling prices of their panels fell over 60%. American manufacturers consulted the Department of Commerce, which found that the Chinese firms had harmed American industry through illegal dumping and assessed substantial tariffs. The American manufacturers continued to suffer; more than 20 , including Energy Conversion, filed for bankruptcy or closed. Energy Conversion sued under the Sherman Act, 15 U.S.C. 1, and Michigan law, seeking $3 billion in treble damages, claiming that the Chinese companies had unlawfully conspired “to sell Chinese manufactured solar panels at unreasonably low or below cost prices . . . to destroy an American industry.” Because this allegation did not state that the Chinese companies could or would recoup their losses by charging monopoly prices after driving competitors from the field, the court dismissed the claim. The Sixth Circuit affirmed. Without such an allegation or any willingness to prove a reasonable prospect of recoupment, the court correctly rejected the claim. View "Energy Conversion Devices Liquidation Trust v. Trina Solar Ltd." on Justia Law