Justia Commercial Law Opinion Summaries

Norfolk Redevelopment and Housing Authority (NRHA) filed a complaint against the St. Joe Company and Advantis Real Estate Services Company alleging unjust enrichment and seeking imposition of a constructive trust and recovery of funds supplied by NRHA to its agent, Advantis, for the payment of contractors who had performed services for NRHA. St. Joe held a perfected secured interest in Advantis's operating account and exercised its rights as a secured creditor over that account to have funds from Advantis's account, including those entrusted to Advantis as NRHA's agent, transferred to a St. Joe account. The circuit court entered summary judgment in favor of NRHA. The Supreme Court affirmed, holding that the imposition of a constructive was was proper and necessary to prevent a failure of justice and unjust enrichment.View "St. Joe Co. v. Norfolk Redev. and Hous. Auth." on Justia Law

This case began as a criminal action filed by the City of Clinton against Southern Paramedic Services, alleging that Southern Paramedic violated two of the City ordinances prohibiting an entity from engaging in the ambulance business within the City without first obtaining a franchise from the City Council. At issue was whether Southern Paramedic qualified for an exemption under Arkansas's Municipal Ambulance Licensing Act as an ambulance service provider who is "not-for-hire on a fee-for-service basis." The City filed a declaratory-judgment action seeking an interpretation of the statute. The circuit court eventually found that Southern Paramedic remained "not for hire" to the general public within the City. The City appealed. The Supreme Court dismissed the appeal as moot, as the issue of whether Southern Paramedic was "not-for-hire on a fee-for-service basis" and not subject to the City's regulation was moot because the ordinances under which the City sought to regulate Southern Paramedic had been repealed.View "City of Clinton v. S. Paramedic Servs., Inc." on Justia Law

General Electric (GE) obtained a judgment against Intra-Med for breach of contract. Thomas Schultz was the president and sole shareholder of Intra-Med. After collecting only a portion of the judgment, GE intervened in another lawsuit and filed a third-party complaint against Schultz seeking to pierce the corporate veil and hold him personally liable for the judgment against Intra-Med. The trial court entered judgment on the pleadings in favor of GE, allowing GE to pierce Intra-Med based upon the instrumentality theory of veil piercing. The court of appeals affirmed, concluding (1) none of Schultz's affirmative defenses negated the fact that he admittedly used corporate funds and property as his own to GE's detriment, and (2) Schultz's admissions fulfilled the requirements for piercing the corporate veil and supported the trial court's judgment on the pleadings. The Supreme Court reversed, holding that the trial court improperly granted GE's motion for judgment on the pleadings, as Schultz's admissions did not conclusively establish harm, fraud, or unjust loss, the three elements that must be established to warrant a piercing of the corporate veil under the instrumentality theory.View "Schultz v. Gen. Elec. Healthcare Fin. Servs., Inc." on Justia Law

Creditor attempted to collect on debt incurred by a wholly-owned subsidiary, but the subsidiary had been deprived of all income and rendered asset-less by the acts of its parent and grandparent corporations (Appellees). Creditor sued Appellees, seeking to pierce the corporate veil and establish Appellees' liability for the judgment. The trial court granted summary judgment to Creditor and the court of appeals affirmed, finding it appropriate to pierce the corporate veil where the evidence showed the subsidiary was merely an instrumentality or alter ego of Appellees, operated by them to achieve tax benefits and avoid various liabilities. The Supreme Court affirmed, holding the lower courts properly pierced the subsidiary's corporate veil to hold Appellees liable for the debt to Creditor because Appellees exercised complete dominion and control over the subsidiary, depriving it of a separate existence, and both Appellees derived the benefits associated with the lease with Creditor while rendering the subsidiary an income-less and asset-less shell incapable of meeting its lease obligations.View "Inter-Tel Techs., Inc. v. Linn Station Props., LLC" on Justia Law

Plaintiffs Greenwood Products, Inc. and Jewett-Cameron Lumber Corp. obtained a jury verdict in their favor on a breach of contract claim against Defendants Forest Products, Dovenberg, and LeFors. They appealed the Court of Appeals' decision that reversed the judgment entered on that verdict. The contract in question required Defendants to sell, and Plaintiffs to buy all of Defendants' inventory, for a certain percentage over Defendants' cost for that inventory. Plaintiffs alleged that Defendants had breached the contract by erroneously accounting for their cost of inventory, causing Plaintiffs to pay $820,000 more for the inventory than they should have. Defendants moved for a directed verdict on the breach of contract claim, but the trial court denied the motion and sent the claim to the jury, which returned a verdict for Plaintiffs. The Court of Appeals held that the trial court should have granted defendants' motion for a directed verdict because the contract did not impose any obligation on defendants to accurately account for the cost of the inventory. Upon review, the Supreme Court concluded that the trial court in this case properly rejected each of the grounds that Defendants' raised at trial for granting their motion for a directed verdict. The Court also concluded that the additional argument that the Court of Appeals relied on in reversing the trial court was not preserved, and therefore reversed the appellate court's decision overturning the trial court. View "Greenwood Products v. Greenwood Forest Products" on Justia Law

James Schlinger owned and operated Curtis Excavation and WW Construction. Schlinger, acting as president of WW Construction, entered into an oral agreement to lease his business and all associated equipment and land to Christopher McGhee and Jack Robinson. McGhee and Robinson formed Curtis-Westwood Construction as the entity to lease and operate the business. After eight months, Schlinger determined McGhee and Robinson were not properly managing the business and terminated the oral lease agreement. The parties disputed the financial implications of the termination. After a bench trial, the district court determined that Schlinger breached his oral agreement with Appellees, McGhee, Robinson, and Curtis-Westood Construction, and that Schlinger owed Plaintiffs $206,875. The Supreme Court (1) reversed the district court's judgment on Appellees' breach of contract claim and rejected Appellants' argument that they should be awarded breach of contract damages, holding that the district court committed clear error in awarding damages as there was insufficient evidence in the record to justify an award of damages to either party; and (2) affirmed the district court's denial of Schlinger's claims for recovery under the theory of unjust enrichment, holding that Schlinger's claims were unsupported by the evidence. View "Schlinger v. McGhee" on Justia Law

CACH, LLC, a debt collector, brought an action against Jon Askew for an alleged outstanding debt owed by Askew. The circuit court entered judgment in favor of CACH and against Askew. Askew appealed, contending that CACH did not properly demonstrate that it had been assigned the debt in question and that the circuit court improperly admitted an exhibit based on the business records exception to the hearsay rule. The Supreme Court reversed, holding (1) the disputed exhibit was erroneously admitted into evidence by the circuit court under the business records exception; (2) without admission of the exhibit into evidence, CACH failed to provide any competent evidence of the alleged assignment of Askew's account to CACH; and (3) without evidence of the validity of this assignment, CACH did not demonstrate it had standing to pursue the claim.View "CACH, LLC v. Askew" on Justia Law

Thomas & Thomas Court Reporters sued Douglas Switzer, an attorney, and his law firm, Hathaway & Switzer (Hathaway Switzer), for failure to pay for court reporting services. The district court entered judgment for Thomas & Thomas. At issue on appeal was whether Hathaway Switzer was liable to Thomas & Thomas for its fees or whether Hathaway Switzer's clients were. The Supreme Court (1) affirmed the district court's judgment to the extent that it held Hathaway Switzer rather than Hathaway Switzer's clients liable, as Hathaway Switzer had not disclaimed liability for those fees; and (2) reversed the court's judgment to the extent that it held Switzer personally liable. Remanded with directions to dismiss Thomas & Thomas' claim against Switzer as an individual.View "Thomas & Thomas Court Reporters, LLC v. Switzer" on Justia Law

Lexmark sells the only type of toner cartridges that work with its laser printers; remanufacturers acquire and refurbish used Lexmark cartridges to sell in competition with Lexmark’s new and refurbished cartridges. Lexmark’s “Prebate” program gives customers a discount on new cartridges if they agree to return empty cartridges to the company. Every Prebate cartridge has a microchip that disables the empty cartridge unless Lexmark replaces the chip. Static Control makes and sells components for cartridge remanufacture and developed a microchip that mimicked Lexmark’s. Lexmark sued for copyright infringement. Static Control counterclaimed that Lexmark engaged in false or misleading advertising under the Lanham Act, 15 U.S.C. 1125(a), and caused Static Control lost sales and damage to its business reputation. The district court held that Static Control lacked “prudential standing,” applying a multifactor balancing test. The Sixth Circuit reversed, applying a “reasonable interest” test. A unanimous Supreme Court affirmed. The Court stated that the issue was not “prudential standing.” Whether a plaintiff comes within a statute’s zone of interests requires traditional statutory interpretation. The Lanham Act includes in its statement of purposes, “protect[ing] persons engaged in [commerce within the control of Congress] against unfair competition.” “Unfair competition” is concerned with injuries to business reputation and sales. A section 1125(a) plaintiff must show that its injury flows directly from the deception caused by the defendant’s advertising; that occurs when deception causes consumers to withhold trade from the plaintiff. The zone-of-interests test and the proximate-cause requirement identify who may sue under section 1125(a) and provide better guidance than the multi-factor balancing test, the direct-competitor test, or the reasonable-interest test. Static Control comes within the class of plaintiffs authorized to sue under section 1125(a). Its alleged injuries fall within the zone of interests protected by the Act, and it sufficiently alleged that its injuries were proximately caused by Lexmark’s misrepresentations. View "Lexmark Int’l, Inc. v. Static Control Components, Inc." on Justia Law

The Federal Aviation Administration Authorization Act (FAAAA) preempts state laws “related to a price, route, or service of any motor carrier ... with respect to the transportation of property.” 49 U. S. C. 14501(c)(1). Pelkey sued in New Hampshire state court, alleging that Dan’s towing company towed his car from a parking lot without Pelkey’s knowledge, failed to notify him of its plan to auction the car, held an auction despite Pelkey’s notice that he wanted to reclaim the car, and traded the car away without compensating Pelkey. Pelkey alleged Dan’s did not meet the requirements of New Hampshire statutes, chapter 262, which regulates disposal of abandoned vehicles by a “storage company;” violated New Hampshire’s Consumer Protection Act; and violated its duties as a bailee The court granted Dan’s summary judgment, concluding that the FAAAA preempted Pelkey’s claims. The New Hampshire Supreme Court reversed, finding FAAAA preemption inapplicable to claims related to conduct in post-storage disposal, as opposed to conduct concerning “transportation of property,” or a “service.” The Supreme Court affirmed. Section 14501(c)(1) does not preempt state-law claims stemming from the storage and disposal of a towed vehicle. Pelkey’s claims are not related to “transportation of property” nor the “service” of a motor carrier. The words “with respect to the transportation of property” limit the FAAAA’s preemptive scope. Transportation of Pelkey’s car from his landlord’s parking lot was a service that ended months before the conduct on which Pelkey’s claims are based. The New Hampshire prescriptions Pelkey invokes hardly constrain participation in interstate commerce by requiring a motor carrier to offer services not available in the market. Nor do they “freez[e] into place services that carriers might prefer to discontinue in the future.” View "Dan’s City Used Cars, Inc. v. Pelkey" on Justia Law