Justia Commercial Law Opinion Summaries

Beginning in 2004, 1st Source Bank entered into secured transactions with the debtors for the sale or lease of tractors and trailers. The agreements granted 1st Source a security interest in the tractors and/or trailers, accounts, and in proceeds from that collateral. 1st Source filed financing statements that identified the collateral as including the specified tractors/and or trailers, and “all proceeds thereof, including rental and/or lease receipts.” The financing statements did not refer to “accounts,” “accounts receivable,” or any similar language. Later, defendant banks also entered into secured transactions with the debtors and filed financing statements that specifically referred to a security interest in “all accounts receivable now outstanding or hereafter arising.” In 2009, the debtors defaulted. 1st Source undertook repossession of the collateral securing the agreements and attempted to claim a perfected security interest and first priority in debtors’ accounts, arguing that the term “and all proceeds thereof” included accounts receivable. The district court granted defendants summary judgment, finding that 1st Source’s financing statements were not sufficient to put defendants on notice that 1st Source claimed a security interest in accounts receivable, and holding, as a matter of Tennessee law, that “proceeds,” as used in a company’s financing statement, does not include its accounts receivable. The Sixth Circuit affirmed. View "1st Source Bank v. Wilson Bank & Trust" on Justia Law

Wilton imported 39 models of paper punches from Taiwan for use in scrapbooking and craft projects, to cut paper in a variety of shapes and sizes. Except for one model, U.S. Customs and Border Protection initially liquidated the punches under Harmonized Tariff Schedule of the U.S. (HTSUS) subheading 8203.40.60 as “perforating punches and similar handtools” with a duty margin of 3.3%. Customs denied Wilton’s protests to classify them under the duty free HTSUS subheading 8441.10.00 as “cutting machines of all kinds.” The parties entered into a stipulation agreement to classify 23 models under subheading 8441.10.00 because they were too large to use in the hand. Customs maintained that subheading 8203.40.60 was proper for the 16 models that remained in dispute because they were “intended for use when held in the hand.” The U.S. Court of International Trade granted the government summary judgment, setting aside the stipulation and finding that the punches “prima facie fall under Heading 8203 as a perforating punch.” The Federal Circuit affirmed; the articles at issue are described eo nomine by HTSUS Heading 8203.40 View "Wilton Indus., Inc. v. United States" on Justia Law

Sasafrasnet, an authorized distributor of BP products, provided Joseph with notice of its intent to terminate his franchise based on three occasions when Sasafrasnet attempted to debit Joseph’s bank account to pay for fuel deliveries but payment was denied for insufficient funds. The district court denied Joseph a preliminary injunction, finding that Joseph failed to meet his burden for a preliminary injunction under the Petroleum Marketing Practices Act 15 U.S.C. 2805(b)(2)(A)(ii). After a remand, the district court found that two of Joseph’s NSFs should count as “failures” under the PMPA justifying termination, at least for purposes of showing that he was not entitled to preliminary injunctive relief. The Seventh Circuit affirmed. Joseph’s bank account was not adequately funded for the debit on two occasions because Joseph had decided to change banks, circumstances entirely within Joseph’s control. Given Joseph’s history of making late payments in substantial amounts because of insufficient funds (each was more than $22,000), the delinquent payments were not “technical” or “unimportant.” View "Joseph v. Sasafrasnet, LLC" on Justia Law

Plaintiff successfully bid at a combined foreclosure sale of real estate and secured party auction of personal property owned by Debtors. Bank held mortgage and security interests in the real and personal property. Auctioneer conducted the auction. After purchasing the property, Plaintiff discovered he would not receive much of the personal property he believed to be in the sale. Plaintiff and the current owner of the property (Plaintiffs) brought this action against Debtors, Bank, and Auctioneer (collectively, Defendants), claiming that Defendants' failure to inform Plaintiffs there were conflicting claims as to the ownership of the property constituted negligence and a violation of the Connecticut Unfair Trade Practices Act (CUTPA), among other causes of action. The jury returned a verdict for Plaintiffs on four of their counts. The Supreme Court reversed in part, holding that the trial court (1) improperly concluded that Defendants had a common-law duty to Plaintiffs to properly identify the personal property that was subject to the secured party sale; and (2) lacked the authority to award nontaxable costs pursuant to CUTPA. View "Ulbrich v. Groth" on Justia Law

Med‐1 buys delinquent debts and purchased Suesz’s debt from Community Hospital. In 2012 it filed a collection suit in small claims court and received a judgment against Suesz for $1,280. Suesz lives one county over from Marion. Though he incurred the debt in Marion County, he did so in Lawrence Township, where Community is located, and not in Pike Township, the location of the small claims court. Suesz says that it is Med‐1’s practice to file claims in Pike Township regardless of the origins of the dispute and filed a purported class action under the Fair Debt Collection Practices Act venue provision requiring debt collectors to bring suit in the “judicial district” where the contract was signed or where the consumer resides, 15 U.S.C. 1692i(a)(2). The district court dismissed after finding Marion County Small Claims Courts were not judicial districts for the purposes of the FDCPA. The Seventh Circuit affirmed.View "Suesz v. Med-1 Solutions, LLC" on Justia Law

In 2009, to “preserve Delaware’s pre-eminence in offering cost-effective options for resolving disputes, particularly those involving commercial, corporate, and technology,” Delaware granted the Court of Chancery power to arbitrate business disputes. That Court then created an arbitration process as an alternative to trial for certain disputes, 10 DEL. CODE tit. 10, 349; Del. Ch. R. 96-98. To qualify for arbitration, at least one party must be a business entity formed or organized under Delaware law, and neither can be a consumer. Arbitration is limited to monetary disputes that involve an amount of at least one million dollars. The fee for filing is $12,000, and the arbitration costs $6,000 per day after the first day. Arbitration begins approximately 90 days after the petition is filed. The statute and rules bar public access. Arbitration petitions are confidential and are not included in the public docketing system. Attendance at proceedings is limited to parties and their representatives, and all materials and communications produced during the arbitration are protected from disclosure in judicial or administrative proceedings. The Coalition challenged the confidentiality provisions. The district court found that Delaware’s proceedings were essentially civil trials that must be open to the public, under the First Amendment. The Third Circuit affirmed. View "Delaware Coal. for Open Gov't v. Strine" on Justia Law

The ability of consumers to make purchases on the internet from out-of-state merchants without paying Illinois sales or use taxes caused Illinois retailers to ask the legislature to “level the playing field.” The result was a taxing statute, Public Act 96-1544, effective in 2011, called the “click-through” nexus law. The law was challenged by a group of internet publishers that display website texts or images, such as a retailer’s logo, containing a link to a retailer’s website; they are compensated by the retailer when a consumer clicks on the link and makes a purchase from the retailer. Out-of-state retailers who use such arrangements to generate sales of over $10,000 per year become subject to taxation under the statute. Their challenge was based on the federal Internet Tax Freedom Act, 47 U.S.C. 151, which prohibits discriminatory taxes on electronic transactions, and the commerce clause of the U.S. Constitution. The Illinois Supreme Court held that the statute is invalid. The court noted that such marketing, when conducted through print media or on-the-air broadcasting, does not give rise to tax obligations under the Illinois statute. The enactment is a discriminatory tax on electronic commerce within the meaning of federal law, which preempts it. The court did not reach the commerce clause issue. View "Performance Mktg. Ass'n, Inc. v. Hamer" on Justia Law

The issue on appeal to the Supreme Court centered on whether Lincoln Farm, L. L. C. breached a contract to sell potatoes to Farming Technology Corporation, and whether certain provisions of the Uniform Commercial Code involving the unavailability of a carrier and a commercially impracticable method of delivery were applicable to the parties. Farming Technology argued at trial that Lincoln Farm was required to build a private rail spur in order to fulfill Lincoln Farm's contractual obligation to load potatoes on railcars or trucks furnished by Farming Technology Corporation to take delivery of the potatoes. After review of the contract in question, the Supreme Court held that the contract unambiguously stated that Farming Technology Corporation would furnish railcars or trucks to take delivery of the potatoes, and that the contract did not state that Farming Technology had the right to insist on delivery solely by rail, or to insist that Lincoln Farm build a private rail spur. View "Lincoln Farm, LLC v. Oppliger" on Justia Law

Under a 2008 master contract, governed by Minnesota law, Lyon, a Minnesota finance firm, had a right of first refusal to provide lease financing for Illinois Paper’s customers. Lyon had the option to purchase office equipment supplied by Illinois Paper and lease the equipment to Illinois Paper’s customers who were interested in that type of financing. Illinois Paper expressly warranted that “all lease transactions presented ... for review are valid and fully enforceable agreements.” Lyon purchased a copy machine from Illinois Paper and leased it to the Village of Bensenville for a term of six years. The Illinois Municipal Code provides that municipal equipment leases may not exceed five years. When the Village stopped paying, Lyon sued Illinois Paper for breach of the contractual warranty. The district court concluded that the warranty was a representation of law, not fact, and was not actionable in a suit for breach of contract or warranty. The Seventh Circuit certified the question to the Minnesota Supreme Court, noting that Minnesota adheres to the maxim that a person may not rely on another’s representation of law, so where reliance is an element of a tort claim (such as fraud), representations of law are not actionable. View "Lyon Fin. Servs., Inc. v. IL Paper & Copier Co." on Justia Law

Judgment creditor PAL I, LLC levied and executed upon collateral in which KeyBank had a perfected security interest. PAL argued that because KeyBank did not file a third-party claim to the collateral in accordance with I.C. 11-203, it waived its interest in the collateral. The district court held that a perfected security interest survives a creditor's failure to comply with the statute, that KeyBank's security interest extended to the proceeds PAL realized from the sheriff's sale of the collateral, and that KeyBank was entitled to judgment against PAL in that amount. PAL appealed to the Supreme Court. Finding no error, the Supreme Court affirmed. View "Keybank Nat'l Assoc v. Pal I, LLC" on Justia Law