Justia Commercial Law Opinion Summaries

Appellee, which manufactures and distributes specialized products for use in the defense, security, and aerospace industries, entered into a consultant agreement with Appellant, under which Appellant agreed to identify buyers for Appellee’s products. Three years later, Appellee acquired the rights to manufacture and sell RH1280B field-programmable gate array (“FPGA”)s, which are semiconductor integrated circuits that are used in satellites and other space equipment. Operating under the terms of the consultant agreement, Appellant found customers for RH1280B FPGAs, accepted delivery of the PFGAs, and resold the goods to its customers. Before Appellant accepted delivery, however, Appellee warned it that the RH1280Bs failed to meet certain specifications. Appellant subsequently refused to pay an outstanding balance of $1,800,000, alleging that Appellee breached its express warranty regarding the performance characteristics of the RH1280B. Thereafter, Appellee terminated the consultant agreement. The district court granted summary judgment in Appellee’s favor. The First Circuit Court of Appeals affirmed, holding that, under the circumstances of this case, the district court correctly granted summary judgment in Appellee’s favor. View "BAE Sys. Info. & Elec. Sys. Integration, Inc. v. SpaceKey Components, Inc." on Justia Law

Aleris supplied aluminum to Behr under a requirements contract until a labor dispute forced Aleris to close its Quebec factory in 2008. After learning of the closure, Behr took delivery of aluminum worth $2.6 million from Aleris without paying for it and scrambled to obtain aluminum from other suppliers, which Behr says increased its costs by $1.5 million. Behr filed suit in Michigan state court. That suit was stayed in 2009 when Aleris’s parent company filed for bankruptcy in the U.S. Aleris filed for bankruptcy in Canada. Aleris sued Behr in federal court seeking recovery of $2.6 million for the aluminum delivery. Behr asserted numerous defenses and counterclaims including a setoff for its increased costs after the factory closure. The district court abstained from adjudication of Behr’s counterclaim, characterizing it as “part and parcel of the stayed state-court proceedings,” then granted summary judgment to Aleris in the amount of $1.1 million and closed the case. Behr satisfied the judgment. The state court declined to lift the stay. The Sixth Circuit reversed, stating that the decision gave Behr full value for its untested counterclaim and has the impact of depriving the Canadian estate of monies to which it might be entitled.View "RSM Richter, Inc. v. Behr America, Inc." on Justia Law

In 2004, Plaintiff, a manufacturer and distributor of medical devices, and Defendant, the developer and manufacturer of CoStar, a coronary stent, entered into an agreement designating Plaintiff as the exclusive distributor of CoStar for a worldwide market territory. In 2007, Defendant notified Plaintiff that it was recalling CoStar and removing it from the worldwide market. Plaintiff subsequently sued Defendant for breach of contract, seeking damages for lost profits related to its resale of the stents. Supreme Court granted summary judgment in favor of Defendant on the issue of damages, concluding that the lost profits sought by Plaintiff were consequential damages and subject to the agreement’s damages limitation provision. The court subsequently dismissed the complaint because, by denying Plaintiff lost profits as a remedy, the court effectively ended the lawsuit. The Appellate Division affirmed, concluding that Plaintiff’s claim was barred by the agreement’s limitation on consequential damages. The Court of Appeals reversed, holding that, under the parties’ exclusive distribution agreement, the lost profits constituted general damages, which fell outside the scope of the agreement’s limitation on recovery. View "Biotronik A.G. v. Conor Medsystems Ireland, Ltd." on Justia Law

Corning hired Hyundai, an ocean shipper, to transport thin glass sheets for use in televisions and computer monitors from the U.S. to Asia. Although it is not clear when the damage occurred, damage was noted when Hyundai unloaded the containers from flatcars operated by its subcontractors (Norfolk Southern Railway and BNSF, another rail carrier). Corning had no role in selecting and no relationship with the subcontractors. There were opinions that the damage was caused by movement of the railcars, not by packing, but the actual cause was not established. Corning’s insurer paid Corning $664,679.88 and filed suit. The district court held that the case would proceed solely under the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. 11706, apparently reasoning that the damage undisputedly occurred while the cargo was in the possession of a rail carrier. The court found that a Subcontracting Clause did not immunize the rail carriers from suit, but obligated Corning to indemnify Hyundai for any resultant claims by a subcontractor against Hyundai arising out of the same facts. The court held that a $500-per-package limit of liability did not apply to the rail carriers or Hyundai. After a jury trial, the court found Hyundai and the railroads liable, but denied prejudgment interest. The Sixth Circuit affirmed the judgment against Hyundai, reversed and vacated judgments against the railroads, and remanded for reconsideration of prejudgment interest.View "CNA Ins. Co. v. Hyundai Merch. Marine Co., Ltd." on Justia Law

Plaintiff, a seller seeking damages from a buyer that breached contracts to purchase goods, argued at trial that it was entitled to recover its market price damages. The trial court determined that plaintiff was entitled to the lesser of its market price damages or its resale price damages, and the court ultimately awarded plaintiff its resale price damages. The Court of Appeals reversed and remanded, because the it determined that plaintiff could recover its market price damages, even though it had resold some of the goods at issue. Upon review of the matter, the Supreme Court agreed that plaintiff was entitled to recover its market price damages, even if those damages exceeded plaintiff's resale price damages. View "Peace River Seed Co-Op v. Proseeds Marketing" on Justia Law

Williams Alaska Petroleum owned and operated a refinery, which ConocoPhillips Alaska supplied with crude oil. ConocoPhillips demanded that Williams tender a payment of $31 million as adequate assurances of Williams’s ability to perform if an ongoing administrative rate-making process resulted in a large retroactive increase in payments that Williams would owe ConocoPhillips under the Exchange Agreement. ConocoPhillips offered to credit Williams with a certain rate of interest on that principal payment against a future retroactive invoice. Williams transferred the principal of $31 million but demanded, among other terms, credit corresponding to a higher rate of interest. Williams stated that acceptance and retention of the funds would constitute acceptance of all of its terms. ConocoPhillips received and retained the funds, rejecting only one particular term in Williams’s latest offer but remaining silent as to which rate of interest would apply. Years later, after the conclusion of the regulatory process, ConocoPhillips invoiced Williams retroactively pursuant to their agreement. ConocoPhillips credited Williams for the $31 million principal already paid as well as $5 million in interest calculated using the lower of the two interest rates. Williams sued ConocoPhillips, arguing that a contract had been formed for the higher rate of interest and that it was therefore owed a credit for $10 million in interest on the $31 million principal. The superior court initially ruled for Williams, concluding that a contract for the higher rate of interest had formed under the Uniform Commercial Code when ConocoPhillips retained the $31 million while rejecting one offered term but voiced no objection to Williams’s specified interest term. On reconsideration, the superior court again ruled for Williams, this time determining that a contract for the higher rate of interest had formed based on the behavior of the parties after negotiation under the UCC, or, in the alternative, that Williams was entitled to a credit for a different, third rate of interest in quantum meruit. The superior court also ruled in favor of Williams on all issues related to attorney’s fees and court costs. ConocoPhillips and Williams both appealed. Upon review, the Supreme Court concluded that the superior court was right the first time and that the parties entered into a contract for the higher rate of interest under the UCC. View "ConocoPhillips Alaska, Inc. v. Williams Alaska Petroleum, Inc." on Justia Law

The Halims own named WR Property Management. The company’s predecessor had contracted to buy natural gas from CES for the Halims’s 41 Chicago-area rental properties. CES delivered, but the company stopped paying and owed about $1.2 million when CES cut off service and filed suit. An Illinois court awarded $1.7 million, including interest and attorney fees. The company did not pay; the Halims had transferred all of its assets to WR. CES filed a diversity suit under the Illinois Fraudulent Transfer Act. The district court granted CES summary judgment and entered a final judgment for $2.7 million on fraudulent‐conveyance and successor‐liability claims. The Seventh Circuit affirmed, stating: “If the Halims are wise, they will start heeding the adage: if you’re in a hole, stop digging.” View "Centerpoint Energy Servs., Inc. v. WR Prop. Mgmt., LLC" on Justia Law

Crewzers was awarded blanket purchase agreements (BPAs) with the Forest Service to provide buses that transport fire crews to wildfires and other disaster areas in regional and national wilderness zones and to provide flame retardant tents to disaster areas. Both BPAs established dispatch priority lists within geographic zones. When an emergency arose, the Service would to submit an order for the highest-ranked (lowest-priced) resource available on the priority. BPAs are frameworks for future contracts and state that “If a Contractor cannot be reached or is not able to meet the time and date needed, the dispatcher may proceed with contacting the next resource on the dispatch priority list.” The Service has discretion to deviate from priority lists as needed and did not make any guarantee that it would actually place orders under the BPAs. The BPAs required Crewzers to accept orders only if “willing and able.” The Service terminated the Crewzers BPA for buses after Crewzers allegedly responded with unauthorized vehicles and attempted to bill at a higher-than-authorized rate and later terminated its BPA for tents after Crewzers allegedly provided tents that did not meet specifications or failed to deliver on time. Crewzers sought a declaratory judgment that it was entitled to damages or to reinstatement of the BPAs. The Claims Court dismissed. The Federal Circuit affirmed, finding that the BPAs were not binding contracts for purposes of invoking Tucker Act (28 U.S.C. 1491(a)) jurisdiction. View "Crewzers Fire Crew Transp., Inc. v. United States" on Justia Law

Contractors Cargo, engaged in heavy-haul operations, commissioned Empire Bucket to fabricate a steel deck to be used with Cargo’s specialized rail freight car for transporting oversized loads. A third party designed the deck, specifying that the deck be fabricated from T-1 high-strength steel and that welding be performed to American Welding Society specifications. The deck was designed to transport up to 800,000 pounds. Empire fabricated the deck, which passed inspection by an outside agency and all nondestructive tests, and delivered it. Cargo connected the deck to its railcar and loaded it to 820,000 pounds. The next morning, an employee observed that the deck had dropped about three inches. Cargo attempted to raise it with a hydraulic jacking system, but the deck fractured. Cargo hired a metallurgical engineer, who determined that a portion of the weld was composed of material with properties different from the properties of the material in the rest of the weld where the crack originated. Cargo refused to pay the full purchase price. Empire sued and Cargo filed counterclaims. The district court granted Empire’s motion in limine to exclude testimony concerning one test performed on the deck after it failed. The jury returned a verdict for Empire. The Seventh Circuit affirmed, stating that, given testimony admitted at trial, the excluded evidence would have added little to the implied warranty claims. View "Empire Bucket, Inc. v. Contractors Cargo Co." on Justia Law

Newman Park, LLC was formed for the sole purpose of developing a piece of property. In 2004, it took out a loan to purchase the property at issue in this suit. In 2008, without knowledge of the other owners in Newman Park, one member went to Columbia Community Bank and requested a loan for his 95%-owned company, Trinity. Trinity had nothing to do with Newman Park, but the Bank's loan to Trinity was secured by a second deed of trust on the Newman Park property. The issue before the Supreme Court in this case was whether the Bank, who was tricked into refinancing the property that the borrower lacked authority to pledge as security, could benefit from equitable subrogation when that Bank had no preexisting interest in the property. The property-owner/debtor argued that the Bank's lack of the preexisting interest barred it from equitable subrogation because of the "volunteer rule" which would characterize it as an intermeddler. The Court rejected the volunteer rule as a bar to equitable subrogation. The Court affirmed the appellate court which held that the defrauded Bank was entitled to be equitably subrogated as first priority lienholder.View "Columbia Cmty. Bank v. Newman Park, LLC" on Justia Law