Justia Commercial Law Opinion Summaries

DCA Capitol Hill LTAC, LLC and DCA Capitol Hill SNF, LLC (collectively, “DCA”) leased a property from Capitol Hill Group (“CHG”) in Northeast Washington, DC, to operate a long-term acute care hospital and skilled nursing facility. In 2015, DCA began withholding rent payments, claiming dissatisfaction with CHG’s installation of a new HVAC system and generator. CHG sued for breach of contract, and DCA counterclaimed for declaratory relief, breach of contract, and fraud, alleging misrepresentations by CHG.The Superior Court of the District of Columbia granted summary judgment to CHG on DCA’s fraud counterclaims related to pre-lease representations, citing the lease’s integration clauses. After a bench trial, the court ruled in favor of CHG on its breach-of-contract claim and DCA’s counterclaims, finding that CHG had fulfilled its obligations regarding the HVAC system and generator work. The court also awarded CHG attorneys’ fees based on a provision in the lease.The District of Columbia Court of Appeals affirmed the trial court’s rulings. The appellate court held that DCA’s fraud claims related to pre-lease representations failed as a matter of law because DCA’s reliance on the alleged misrepresentations was unreasonable. The court also concluded that CHG had not breached the lease, as the term “new HVAC system” did not include distribution components, and CHG had fulfilled its generator-related obligations by replacing one generator. The court upheld the trial court’s award of attorneys’ fees to CHG, finding no abuse of discretion.The case was remanded to the trial court to consider whether to award CHG attorneys’ fees associated with the appeal. View "DCA Capitol Hill LTAC, LLC v. Capitol Hill Group" on Justia Law

The case involves a business venture between W.R. Cobb Company (Cobb) and V.J. Designs LLC (VJ Designs) to sell diamond products under the Forevermark brand. Cobb, unable to secure a license directly from Forevermark, entered into an agreement with VJ Designs, an existing Forevermark licensee, to form a new company, WR Cobb/VJ LLC (the Joint Entity). The agreement stipulated that the Joint Entity would operate under the Forevermark license. However, VJ Designs could not transfer its Forevermark rights without Forevermark's written consent. The venture quickly fell apart, and Cobb sued VJ Designs and its owner, Benjamin Galili, to recover funds paid under the agreement, alleging breach of contract and misrepresentation.The United States District Court for the District of Rhode Island held a two-day bench trial and ruled in favor of VJ Designs and Galili on all claims. The court found that VJ Designs did not breach the contract or misrepresent any material facts. Cobb appealed, arguing that the district court erred by not rescinding the agreement and not holding Galili personally liable for fraud and misrepresentation.The United States Court of Appeals for the First Circuit reviewed the case. The court affirmed the district court's judgment, holding that VJ Designs did not breach the contract by failing to assign the Forevermark license to the Joint Entity upon execution of the agreement. The court found no provision in the agreement requiring immediate transfer of the license and noted that the parties understood Forevermark's consent was necessary. The court also rejected Cobb's claims of fraud and misrepresentation, finding no evidence of material misrepresentation by VJ Designs or Galili. Additionally, the court dismissed Cobb's mutual mistake theory as it was not pled in the complaint and was raised too late in the proceedings. View "W.R. Cobb Company v. VJ Designs, LLC" on Justia Law

Daniel Genho and Riverdale Hot Springs, LLC had a dispute over payment for construction work Genho performed at Riverdale Resort. Genho was not a registered contractor at the start of the project but became registered midway through. Riverdale refused to pay Genho and prevented him from retrieving his tools and materials. Genho filed a Mechanic’s and Materialmen’s Lien and sued for breach of contract, unjust enrichment, quantum meruit, conversion, and to foreclose on the lien.The District Court of the Sixth Judicial District of Idaho granted Riverdale’s motion for a directed verdict on the breach of contract claim but denied it on the other claims. The court found that there were two separate transactions: one before and one after Genho became a registered contractor. The court allowed the jury to consider the unjust enrichment, quantum meruit, conversion, and lien foreclosure claims. The jury found in favor of Genho, awarding him $295,568, which was later reduced to $68,681. The district court also awarded attorney fees to Genho.The Supreme Court of Idaho reviewed the case and affirmed the district court’s decision in part and reversed it in part. The court held that equitable remedies are available under the Idaho Contractor Registration Act (ICRA) for work performed after a contractor becomes registered, provided the work is severable from the unregistered work. The court affirmed the denial of a directed verdict on the unjust enrichment, quantum meruit, and lien foreclosure claims but reversed the award of attorney fees for the conversion claim, as it was not based on a commercial transaction. The court also affirmed the award of attorney fees for the foreclosure action under Idaho Code section 45-513. Neither party was awarded attorney fees on appeal. The judgment was vacated and remanded for modification consistent with the opinion. View "Genho v. Riverdale Hot Springs, LLC" on Justia Law

Windy Cove, Inc., HB Fuels, Inc., and Staffing and Management Group, Inc. (collectively “Windy Cove”) are gasoline dealers who own Mobil-branded stations in southern California. In 2012, they entered into a 15-year exclusive fuel supply agreement with Circle K Stores Inc. as required by the agreement under which they purchased their gas stations from ExxonMobil. Windy Cove alleged that Circle K did not set gasoline prices in good faith under this exclusive distributorship contract.The United States District Court for the Southern District of California granted summary judgment in favor of Circle K. The court found that the prices charged by Circle K were within the range of those charged by its competitors, including at least one refiner, and thus were set in good faith under California Commercial Code § 2305(2). Windy Cove failed to provide evidence that Circle K's prices were discriminatory or commercially unreasonable.The United States Court of Appeals for the Ninth Circuit reviewed the case. The court affirmed the district court’s summary judgment, holding that Circle K’s prices were presumptively set in good faith because the contract had a “price in effect” term. The court noted that the safe harbor provision under Uniform Commercial Code § 2-305, which is codified as California Commercial Code § 2305(2), presumes good faith if the prices are within the range of those charged by competitors. The court found that Circle K’s prices were lower than at least one refiner, thus falling within the range of prices charged by competitors. Windy Cove’s arguments regarding Circle K’s use of a non-industry-standard pricing formula and higher prices compared to other wholesalers did not rebut the presumption of good faith. The court concluded that summary judgment was appropriate and affirmed the district court’s decision. View "WINDY COVE, INC. V. CIRCLE K STORES INC." on Justia Law

Two Massachusetts-based Volvo dealers filed a lawsuit against Volvo Car USA, Volvo Car Financial Services, and Fidelity Warranty Services, alleging violations of Massachusetts General Laws Chapter 93B. The dispute centers on Volvo-branded Prepaid Maintenance Program (PPM) contracts, which allow customers to prepay for future maintenance services at a discounted rate. Fidelity administers these contracts, which the dealers sell to their customers. The dealers claimed that the defendants were underpaying them for the parts and labor costs incurred in servicing these PPM contracts.The United States District Court for the District of Massachusetts heard cross-motions for summary judgment from both parties. The district court granted summary judgment in favor of the defendants, concluding that entities like Fidelity are not regulated by the relevant provisions of Chapter 93B. The court denied the dealers' motion for summary judgment, leading the dealers to appeal the decision.The United States Court of Appeals for the First Circuit reviewed the case and affirmed the district court's decision, but for a different reason. The appellate court held that the dealers' sale and service of the Volvo PPM are not franchise obligations under Chapter 93B. The court found that the Retailer Agreement between the dealers and Volvo USA did not obligate the dealers to sell or service the Volvo PPM. The court also noted that the dealers had the discretion to sell various financial products, including the Volvo PPM, and that servicing the PPM was not a material term of the Retailer Agreement. Therefore, Chapter 93B did not require Fidelity to reimburse the dealers at the statutory rates. View "Colony Place South, Inc. v. Volvo Car USA, LLC" on Justia Law

VFS Leasing Co. ("VFS") leased trucks to Time Definite Leasing, LLC ("TDL"), which insured the trucks with Markel American Insurance Company ("Markel American"). Markel American issued joint checks to VFS and TDL for insurance claims, but TDL cashed the checks without VFS's endorsement and kept the proceeds. VFS sued Markel American for breach of contract, claiming it was owed the funds from the joint checks.The United States District Court for the Middle District of Florida granted summary judgment in favor of VFS, holding that Markel American breached the insurance contract by failing to ensure VFS received the funds. The court found that under Florida's Uniform Commercial Code (UCC), Markel American's obligation was not discharged because the checks were not properly endorsed by both co-payees.On appeal, the United States Court of Appeals for the Eleventh Circuit reviewed whether Markel American's obligation to VFS was discharged when the drawee bank improperly accepted the joint checks. The court concluded that under Florida Statute § 673.4141(3), a drawer's obligation is discharged when a bank accepts a jointly issued check, regardless of whether both co-payees endorsed it. The court noted that while VFS could pursue a conversion claim against the bank, Markel American's obligation was discharged upon the bank's acceptance of the checks.The Eleventh Circuit reversed the district court's summary judgment in favor of VFS and remanded the case for further proceedings consistent with its opinion. View "VFS Leasing Co. v. Markel Insurance Company" on Justia Law

Hi-Tech Aggregate, LLC supplied Pavestone, LLC with aggregate used to manufacture pavers. After customers complained about efflorescence on the pavers, Pavestone determined that sodium carbonate in Hi-Tech’s aggregate caused the issue. Pavestone sued Hi-Tech for negligence, products liability, breach of contract, and breach of warranty. The district court ruled in favor of Pavestone on the breach of warranty and products liability claims.The Eighth Judicial District Court of Clark County conducted a bench trial and found that Hi-Tech breached the warranty of fitness for a particular purpose and was liable under products liability. Hi-Tech appealed the decision, arguing that it did not know of Pavestone’s specific need for sodium-free aggregate and that the economic loss doctrine barred Pavestone’s tort claims.The Supreme Court of Nevada reviewed the case. It held that Hi-Tech’s sale of aggregate carried an implied warranty of fitness for a particular purpose because Hi-Tech had reason to know Pavestone’s intended use. The court adopted the reasoning of UCC § 2-315, which does not require proof of a seller’s actual knowledge if the seller had reason to know the product’s intended purpose. The court also held that Pavestone was excused from testing the aggregate for sodium carbonate because the defect was latent and not detectable through a simple examination.However, the court reversed the district court’s ruling on the products liability claim, holding that the economic loss doctrine precluded Pavestone’s noncontractual claims. The doctrine applies when the damage is to the product itself and not to other property. Pavestone did not provide sufficient evidence of damage to property other than the pavers. Thus, the Supreme Court of Nevada affirmed the district court’s judgment on the warranty claim but reversed its judgment on the products liability claims. View "Hi-Tech Aggregate, LLC v. Pavestone, LLC" on Justia Law

Michael R. Rattagan, an Argentinian lawyer, was retained by Uber Technologies, Inc. through its Dutch subsidiaries to assist with launching Uber's ridesharing platform in Argentina. Rattagan also agreed to act as the Dutch subsidiaries' legal representative in Argentina, a role that exposed him to personal liability under Argentinian law. Despite warnings about potential personal exposure, Uber allegedly concealed its plans to launch the platform in Buenos Aires, which led to significant legal and reputational harm to Rattagan when the launch was deemed illegal by local authorities.The United States District Court for the Northern District of California dismissed Rattagan’s third amended complaint without leave to amend, ruling that his fraudulent concealment claims were barred by the economic loss rule as interpreted in Robinson Helicopter v. Dana Corp. The court concluded that Robinson provided only a narrow exception to the economic loss rule, which did not apply to Rattagan’s claims of fraudulent concealment. The court also found that Rattagan’s negligence and implied covenant claims were time-barred.The Supreme Court of California, upon request from the Ninth Circuit, addressed whether a plaintiff may assert a tort claim for fraudulent concealment arising from or related to the performance of a contract under California law. The court held that a plaintiff may assert such a claim if the elements of the claim can be established independently of the parties’ contractual rights and obligations, and if the tortious conduct exposes the plaintiff to a risk of harm beyond the reasonable contemplation of the parties when they entered into the contract. The court clarified that the economic loss rule does not bar tort recovery for fraudulent concealment in these circumstances. View "Rattagan v. Uber Technologies, Inc." on Justia Law

Taxinet Corporation sued Santiago Leon, alleging various claims stemming from a joint effort to secure a government concession for a taxi-hailing app in Mexico City. The district court granted summary judgment for Leon on all claims except for a Florida-law unjust enrichment claim, which went to trial along with Leon’s counterclaims for fraudulent and negligent misrepresentation. The jury awarded Taxinet $300 million for unjust enrichment and Leon $15,000 for negligent misrepresentation. However, the district court granted Leon’s Rule 50(b) motion for judgment as a matter of law, ruling that the damages award was based on inadmissible hearsay and was speculative.The United States District Court for the Southern District of Florida initially allowed testimony regarding a $2.4 billion valuation by Goldman Sachs, which was later deemed inadmissible hearsay. The court concluded that without this evidence, there was insufficient support for the jury’s $300 million award. The court also noted that the valuation was speculative and not directly tied to the benefit conferred by Taxinet in 2015.The United States Court of Appeals for the Eleventh Circuit affirmed the district court’s Rule 50(b) order, agreeing that the valuation evidence was inadmissible hearsay and that the remaining evidence was insufficient to support the $300 million award. However, the appellate court exercised its discretion to remand for a new trial on the unjust enrichment claim. The court found that Taxinet had presented enough evidence to show that it conferred a benefit on Leon, which he accepted, and that it would be inequitable for him to retain the benefit without payment. The court also noted that Taxinet could potentially present other evidence of damages in a new trial.The appellate court affirmed the district court’s summary judgment on Taxinet’s other claims, ruling that the alleged joint venture agreement was subject to Florida’s statute of frauds, as it could not be completed within a year. Thus, any claims based on the existence of the joint venture agreement were barred. View "Taxinet Corp. v. Leon" on Justia Law

Davidson Oil Company entered into a fixed-price requirements contract with the City of Albuquerque to supply all of the city's fuel needs for a year. Shortly after the contract was signed, fuel market prices dropped significantly. The city requested a price reduction, which Davidson Oil refused, citing potential losses due to hedge contracts it had entered into to protect against market fluctuations. The city then terminated the contract using a termination for convenience clause, prompting Davidson Oil to sue for breach of contract.The United States District Court for the District of New Mexico granted summary judgment in favor of Davidson Oil, awarding damages for the value of the hedge contracts. The court found that while the city did not breach the explicit terms of the contract, it violated an implied covenant by terminating the contract in bad faith to secure a better bargain elsewhere.The United States Court of Appeals for the Tenth Circuit reviewed the case and affirmed the district court's decision. The Tenth Circuit held that the City of Albuquerque breached the contract by exercising the termination for convenience clause solely to obtain a better deal from another supplier. The court emphasized that such an action violated the implied covenant of good faith and fair dealing inherent in the contract. The court also upheld the district court's award of damages, including the hedge contract losses, as incidental damages under the Uniform Commercial Code, finding them to be commercially reasonable and directly resulting from the breach. View "Davidson Oil Company v. City of Albuquerque" on Justia Law