Justia Commercial Law Opinion Summaries

The four plaintiffs in this interpleader action (MDQ entities) are limited liability companies that hold production rights or are producers in different territories of a Tony-award winning Broadway musical, "Million Dollar Quartet." MDQ entities filed a complaint in interpleader, alleging conflicting claims by Cleopatra and Gilbert Kelly for those portions of distributions owed to Mutrux that had not otherwise been assigned to Katell Productions. MDQ entities deposited the distributions and undertook to add any future distributions not owed and remitted to Katell Productions to the interpleaded funds.At issue on appeal was which adverse claimant was entitled to the interpleaded funds: a judgment creditor with a properly recorded judgment lien, or an assignee who did not file a financing statement with respect to distributions irrevocably assigned to it by the judgment debtor before the judgment lien was recorded. The court held that, although the assignment created a security interest, the judgment creditor was entitled to the interpleaded funds because its recorded judgment lien had priority over the unperfected security interest.In this case, there was no error in the trial court's judgment releasing the interpleaded funds to Cleopatra and ordering the MDQ entities to pay all subsequent monies otherwise payable to Mutrux, except those allocated to Katell Productions, to Cleopatra, until the judgment was satisfied. The court also held that the trial court did not abuse its discretion in ordering Gilbert Kelly to pay attorney fees and costs. View "MDQ, LLC v. Gilbert, Kelly, Crowley & Jennett LLP" on Justia Law

Huber, a member of the Wiyot Band of Indians, owns and operates a tobacco smoke shop on the Table Bluff Rancheria, near Crescent City. Huber “sold huge quantities of noncompliant cigarettes and transported at least 14,727,290 packs to other stores within the state but beyond her reservation; she invoiced over $30 million for these sales. Her employees delivered the cigarettes using her vehicles on state roads. The Attorney General sued, alleging violation of the Unfair Competition Law, Business and Professions Code section 17200 (UCL), citing as predicate “unlawful acts” violations the Tax Stamp Act (Rev. & Tax. Code 30161), the Directory Act (Rev. & Tax. Code 30165.1(e)(2)), and the Fire Safety Act (Health & Saf. Code, 14951(a)). The trial court granted summary adjudication and entered a permanent injunction on all three claims. The court of appeal affirmed, rejecting Huber’s arguments that, under a federal statute granting California courts plenary criminal jurisdiction but limited civil jurisdiction over cases arising on Indian reservations, the trial court lacked authority to proceed on any of the claims, and that, under the doctrine of Indian preemption, which limits the reach of state law to conduct by Indians on Indian reservations, all the statutes were preempted by paramount federal authority. To the extent enforcement occurs off-reservation, the Wiyot right to self-governance is not implicated. View "People v. Huber" on Justia Law

Total Wine challenged provisions of Connecticut’s Liquor Control Act and regulations as preempted by the Sherman Act, 15 U.S.C. 1. Connecticut’s “post and hold” provisions require state-licensed manufacturers, wholesalers, and out-of-state permittees to post a “bottle price” or “can price” and a “case price” each month with the Department of Consumer Protection for each alcoholic product that the wholesaler intends to sell during the following month; they may “amend” their posted prices to “match” competitors’ lower prices but are obligated to “hold” their prices at the posted price (amended or not) for a month. Connecticut’s minimum-retail-price provisions require that retailers sell to customers at or above a statutorily defined “[c]ost,” which is not defined as the retailer’s actual cost. The post-and-hold number supplies the central component of “[c]ost” and largely dictates the price at which Connecticut retailers must sell their alcoholic products. The Second Circuit affirmed dismissal of the complaint. Connecticut’s minimum-retail-price provisions, compelling only vertical pricing arrangements among private actors, are not preempted. The post-and-hold provisions were not preempted because they “do not compel any agreement” among wholesalers, but only individual action. The court also upheld a price discrimination prohibition as falling outside the scope of the Sherman Act. View "Connecticut Fine Wine and Spirits LLC v. Seagull" on Justia Law

ARC, a distributor of compressed gases, sold its assets to American. Because ARC leased asset cylinders to customers, it was not immediately able to identify the number of cylinders included in the purchase; the Agreement estimated 6,500 cylinders and provided that American would hold back $150,000 for 180 days to protect against a shortage of up to 1,200 cylinders, at $125 per cylinder. When American began billing the customers it acquired, it learned that many of them paid only to have cylinders refilled but did not pay rent on the cylinders they used. An audit revealed that ARC owned and transferred 4,663 asset cylinders--1,837 cylinders short of the 6,500 promised. In an ensuing breach of contract suit, ARC argued that American breached the contract because it did not complete its audit within the specified 180-day period. The district court disagreed, concluding that ARC extended that deadline and that, because only 4,663 cylinders were delivered, ARC was never entitled to receive any portion of the Cylinder Deferred Payment. The court granted American’s counterclaim for breach of contract, holding that American was entitled to the entire $150,000 and to recover $125 for each cylinder it failed to receive under the threshold of 5,300. The Seventh Circuit affirmed. Because ARC was not entitled to any of the Cylinder Deferred Payment in that it provided less than the 5,300 cylinders, it could not have been damaged by the delay in completing the audit. View "ARC Welding Supply, Co. Inc. v. American Welding & Gas, Inc." on Justia Law

The Supreme Court reversed the decision of the district court granting summary judgment in favor of RJC Investment, Inc. on Deneige Kapor’s complaint alleging that RJC failed to pay her the surplus allegedly realized on the resale of her mobile home after she returned it to RJC when she could not make the payments, as required by Article 9 of the Uniform Commercial Code (UCC), holding that the district court erred in granting RJC summary judgment based on its determination that Kapor was equitably estopped from pursuing her claims.Specifically, the Court held that the district court (1) erred in determining that the release agreement Kapor signed terminated any further application of the UCC; (2) erred in determining that the release constituted an acceptance of the collateral in full satisfaction of Kapor’s secured obligation; and (3) correctly held that Kapor was equitably estopped from pursuing her claims because all six elements of equitable estoppel could not be satisfied here. View "Kapor v. RJC Investment, Inc." on Justia Law

Dimond was hired by a Chinese manufacturer to “rig, dismantle, wash, and pack,” and ship used automotive assembly-line equipment to China. Dimond, which lacked experience in international shipment, hired BDP. Dimond asserted that BDP did not disclose that it was not a licensed Ocean Transport Intermediary by the Federal Maritime Commission. In May 2011, BDP informed Dimond that it had obtained a ship and sent a booking note to Dimond. Between May and October 2011, Dimond dismantled and weighed the equipment and prepared a “preliminary" packing list. BDP allegedly provided the preliminary packing list when it obtained quotes from third-party contractors to load the Equipment. In October 2011, BDP notified Dimond that the ship was no longer available. Dimond asserted that BDP “without Dimond’s knowledge, consent or approval” hired Logitrans to perform BDP’s freight forwarding duties. BDP and Logitrans hired a ship. As a result of many ensuing difficulties, Dimond became involved in multiple lawsuits, including suits with its Chinese customer and the stevedores. Dimond sued BDP in July 2013 but never served BDP with the complaint. When the summons expired, the district court dismissed without prejudice. In August 2017, Dimond filed a Motion to Amend and Praecipe for Issuance of Amended Summons for its 2013 suit. The Sixth Circuit affirmed the denial of the motion. The suit was not timely filed within the one-year statute of limitations set forth in the Carriage of Goods by Sea Act. View "Dimond Rigging Co. v. BDP International, Inc." on Justia Law

1st Century was a Delaware corporation headquartered in Los Angeles; its shares were publicly traded on the NASDAQ. 1st Century and Midland announced merger plans. Midland was to acquire 1st Century for $11.22 in cash per share, a 36.3 percent premium over 1st Century’s closing share price on March 10, 2016. The merger was subject to approval by the holders of a majority of 1st Century’s outstanding shares. A shareholder vote on the proposed merger was scheduled. 1st Century’s certificate of incorporation authorized its directors “to adopt, alter, amend or repeal” the company’s bylaws, “subject to the power of the stockholders of the Corporation to alter or repeal any Bylaws whether adopted by them or otherwise.” 1st Century’s board of directors exercised that power when it approved the merger agreement, adding a forum selection bylaw providing that, absent the corporation’s written consent, Delaware is “the sole and exclusive forum for” intra-corporate disputes, including any action asserting a breach of fiduciary duty claim. The trial court stayed a putative shareholder class action, concluding that the bylaw’s forum selection clause was enforceable. The court of appeal affirmed, holding that a forum selection bylaw adopted by a Delaware corporation without stockholder consent is enforceable in California. View "Drulias v. 1st Century Bancshares, Inc." on Justia Law

The Supreme Court held that Plaintiff, rather than his Bank, must suffer the financial consequences of the complete draining of Plaintiff’s bank account by an identity theft through a series of fraudulent transactions.At issue was Tex. Bus. & Com. Code 4.406(c), which limits the liability of a bank when the customer fails to comply with his or her duties to examine the statement of account and notify the bank of any unauthorized payment. Rather than monitor his account as contemplated by the statute, for more than a year Plaintiff failed to look for missing bank statements or inquire about the status of his account. The court of appeals rendered judgment for Plaintiff, holding that the Bank neither sent the statements to Plaintiff nor made them available to him, and therefore, his statutory duties to examine the statements and report unauthorized transactions never arose. The Supreme Court reversed, holding (1) the Bank made the statements “available” to Plaintiff for purposes of section 4.406; and (2) under the circumstances, section 4.406 precluded Plaintiff’s attempt to hold the Bank liable for the losses. View "Compass Bank v. Calleja-Ahedo" on Justia Law

Innovation sold 5-Hour Energy. In 2004, it contracted with CN to manufacture and package 5-Hour. Jones, CN's President and CEO, had previously manufactured an energy shot. When the business relationship ended, CN had extra ingredients and packaging, which Jones used to continue manufacturing 5-Hour, allegedly as mitigation of damages. The companies sued one another, asserting breach of contract, stolen trade secrets or intellectual property, and torts, then entered into the Settlement, which contains an admission that CN and Jones “wrongfully manufactured” 5-Hour products and forbids CN from manufacturing any new “Energy Liquid” that “contain[s] anything in the Choline Family.” CN received $1.85 million. CN was sold to a new corporation, NSL. Under the Purchase Agreement, NSL acquired CN's assets but is not “responsible for any liabilities ... obligations, or encumbrances” of CN except for bank debt. The Agreement includes one reference to the Settlement. NSL, with Jones representing himself as its President, took on CN’s orders and customers, selling energy shots containing substances listed in the Choline Family definition. Innovation sued. Innovation was awarded nominal damages for breach of contract. The Sixth Circuit affirmed the rejection of defendants’ antitrust counterclaim, that NSL is bound by the Settlement, and that reasonable royalty and disgorgement of profits are not appropriate measures of damages. Jones is not personally bound by the Agreement. Upon remand, Innovation may introduce testimony that uses market share to quantify its lost profits. The rule of reason provides the proper standard for evaluating the restrictive covenants; Defendants have the burden of showing an unreasonable restraint on trade. View "Innovation Ventures, LLC v. Nutrition Science Laboratories, LLC" on Justia Law

In answering a question of law certified to it by the United States District Court of the District of Maryland, the Court of Appeals held that Md. Code Ann. Cts. & Jud. Proc. (CJP) 12-601 to 12-613 is a statutory specialty and that actions on it are accorded a twelve-year limitations period.At issue was whether the licensing requirement of the Maryland Consumer Loan Law (MCLL), Md. Code Ann. Com. Law 12-302, was a statutory specialty as contemplated by CJP 5-102(a)(6) requiring filing within twelve years after the cause of action accrues. The Court of Appeals answered the question certified to it in the affirmative, holding that the MCLL’s licensing requirement is an “other specialty” within the meaning of CJP 5-102(a)(6) and that a claim brought on it is entitled to a twelve-year limitations period. View "Price v. Murdy" on Justia Law