Justia Commercial Law Opinion Summaries

The LLC was organized in 1999 to own and operate 100 fast-food restaurants. Khan owned 40% of the common units. Remaining common units, and all preferred units, were owned by Sentinel. Plaintiffs, restaurant managers, claim that they accepted lower salaries because Khan told them that he would acquire full ownership and would reward top managers with equity. In 2005, Khan became the sole equity owner, but did not distribute common units to any managers. Plaintiffs calculated that the price paid for Sentinel's interest implied that the business was worth about $48 million; in 2005, 20 managers qualified for units, so each lost about $1.2 million. The district court held that plaintiffs had not adequately estimated damages. The Seventh Circuit reversed, stating that value is what people will pay. The judiciary should not reject actual transactions prices when they are available.View "Malik v. Falcon Holdings, LLC" on Justia Law

Plaintiff rented a car, drove 64 miles in one day, refilled the fuel tank, and returned the car to the same location from which he rented the car. In addition to rental and other fees that he does not dispute, he was charged a $13.99 fuel service fee that he challenged by filing a putative class action, claiming breach of contract, fraud, and unjust enrichment. Defendant claimed that, because plaintiff drove fewer than 75 miles during the rental period, to avoid the charge he was required to return the car with a full fuel tank and to submit a receipt. The district court dismissed, finding that the contract was not ambiguous. The Sixth Circuit affirmed, citing the voluntary payment doctrine.View "Salling v. Budget Rent A Car Sys., Inc." on Justia Law

In 2009 the fire protection district adopted an ordinance requiring commercial buildings and multi-family residences to have fire alarms equipped with wireless radio technology to send alarm signals directly to the district's central monitoring board. The ordinance provided that the district would contract with one private alarm company to provide and service signaling equipment, displacing several private fire alarm companies that have competed for these customers. The alarm companies sued on claims under the U.S. Constitution, federal antitrust law, and state law. The district court granted summary judgment for the alarm companies on the basis of state law and enjoined the district from implementing the ordinance. The Seventh Circuit affirmed in part, holding that the district has statutory authority to require that commercial and multi-family buildings connect directly to its monitoring board through wireless radio technology. The district does not, however, have authority to displace the entire private market by requiring all customers to buy services and equipment from itself or just one private company. View "ADT Sec. Servs., Inc. v. Lisle-Woodridge Fire Prot. Dist." on Justia Law

In 2006, BP began converting company-operated gas and convenience stores into franchisee-operated stores. From 2006 to 2008, plaintiffs purchased gas station sites and entered into long-term contracts with BP for fuel and use of BP's brand name and marks. In 2009 plaintiffs sued under the Illinois Franchise Disclosure Act. Consolidated cases were removed to federal court when plaintiffs added claims under the federal Petroleum Marketing Practices Act. They later added price discrimination claims under the Robinson-Patman Act. Before trial, all federal claims were withdrawn. The district judge relinquished supplemental jurisdiction and remanded to Illinois state court. The Seventh Circuit affirmed. A district court has broad discretion and the general presumption in favor of relinquishment was particularly strong because the state-law claims are complex and raise unsettled legal issues. View "RWJ Mgmt. Co., Inc. v. BP Prod. N. Am., Inc." on Justia Law

Plaintiff, certified by the city as a minority-owned business eligible for favored treatment, sells a variety of products. The city is virtually its only customer. Early in 2005 the city began to suspect that plaintiff was a broker rather than a wholesaler, which would make it ineligible to bid for contracts as an MBE. Plaintiff had only six employees, though it claimed to have a warehouse. The city never completed its investigation, so plaintiff retains its certification. The city also believed that the company had shorted it on a shipment of aluminum sign blanks, and ultimately debarred it from dealing with the city. The company sued immediately and obtained a temporary restraining order; debarment was in effect for only eight days. The city abandoned its attempt to debar the company. The district court then ruled in favor of defendants. The Seventh Circuit affirmed. Claims by the principals in the company were frivolous, given that they continued to be employed by the company. The temporary diminution in business did not amount to destruction of the company nor did it constitute retaliation. Plaintiff did not prove breach of contract. View "Chicago United Indus. v. City of Chicago" on Justia Law

This case concerned a Railcar Contract with TriMet that required Colorado Railcar to secure a $3 million standby letter of credit, which Colorado Railcar arranged through Collateral II, a bankruptcy remote entity. TrimMet certified Collateral II's default and drew on the Letter of Credit when Colorado Railcar defaulted. At issue was whether Collateral II was a surety to Colorado Railcar, entitled to the defense of discharge. The court held that it was not. Because the standby letter of credit issued by KeyBank required TriMet to certify Collateral II's default, TriMet sought clarification that should Colorado Railcar default, TriMet's authority to certify Collateral II's default would be triggered. In response to TriMet's concern, Collateral II agreed to become a part of the Railcar Contract via Modification No. 1, but it undertook no new obligation nor did it subject itself to any additional liability beyond what it previously undertook by securing the Letter of Credit at Colorado Railcar's direction. Thus, no suretyship was created. Because Collateral II was not entitled to the protections of a surety, it was error for the district court to grant summary judgment in its favor. View "In re: CRM Collateral II, Inc., et al. v. Tri-County Metropolitan Transp, et al." on Justia Law

In 2005, plaintiff began consulting for defendant and signed an agreement prohibiting disclosure of proprietary information to third parties, and a non- competition covenant effective during his employment and for two years thereafter. In July, 2006, he left the company. In January 2007, he began consulting for another company. Defendant sued under the agreement. The company filed for bankruptcy. A purchaser moved to substitute itself as plaintiff, but the state court dismissed without prejudice for failure to prosecute. After the court reinstated the case, plaintiff filed in federal court, alleging that the state court suit constituted abuse of process under Massachusetts law and seeking to enjoin the proceedings. He alleged that the amount in controversy was "at least $1,000,000," based on "emotional distress" and harm to his reputation, emotional tranquility, and privacy. The district court dismissed. The First Circuit affirmed. Plaintiff failed to allege damages with substantial particularity to establish jurisdiction. He provided no substantiation for or valuation of any of the alleged economic, emotional or physical damages and could not meet the "good faith" requirement with respect to his assertions. View "Abdel-Aleem v. OPK Biotech LLC" on Justia Law

Defendant, a Russian citizen, attended graduate school and owns real property, vehicles, and bank accounts in Ohio. He spends some time in Ohio each year, ranging from 40 days in 2007 to a total of 17 days in 2008–2009. He visits under a tourist visa and does not have an Ohio driver's license. After going to Russia to take part in a business venture with defendant, plaintiff filed suit in Ohio. The contract had no connection to the state. The trial court dismissed for lack of personal jurisdiction, noting that defendant was not served with process in a manner that automatically confers personal jurisdiction. The Sixth Circuit affirmed, finding that notions of fair play and substantial justice weigh against jurisdiction in Ohio. The court quoted a Russian proverb, “If you’re afraid of wolves, don’t go into the forest” that could be read, “If you’re afraid of the Russian legal system, don't do business in Russia.” View "Conn v. Zakharov" on Justia Law

Court-appointed receiver brought suit against Wells Fargo for conversion and breach of contract with respect to a cashier's check purchased by W Financial Group that Wells Fargo reaccepted for deposit into an account other than that of the named payee, without the proper endorsement. The district court found Wells Fargo liable for conversion. On appeal, Wells Fargo argued that the district court erred in finding that it converted the check and in rejecting certain defenses. The court held that because Wells Fargo made payment on the cashier's check to CA Houston, an entity that was not entitled to enforce the instrument, Wells Fargo was liable for conversion under Tex. Bus. & Comm. Code 3.3420. The court also agreed that Wells Fargo was liable for conversion because it deposited the cashier's check without the necessary indorsement. The court further held that Wells Fargo could not rely upon the condition precedent in its Account Agreement to void liability for conversion of the cashier's check; the district court did not err in denying Wells Fargo's in pari delicto defense; and the court need not address the breach of contract issue. Accordingly, the judgment was affirmed. View "Jones, Jr. v. Wells Fargo Bank, N.A." on Justia Law

In this consolidated appeal, three sets of landowners asserted claims against Arrington for breach of contract, promissory estoppel, and unjust enrichment relating to Arrington's failure to pay cash bonuses under oil and gas leases. The district court granted summary judgment to the landowners on the breach of contract claims and thereafter dismissed the landowners' other claims with prejudice on the landowners' motions. The court rejected the landowners' assertion that the lease agreements could be construed without considering the language of the bank drafts; the drafts' no-liability clause did not prevent enforcement of the lease agreements; Arrington entered into a binding contract with each respective landowner despite the drafts' no-liability clause; the lease approval language of the drafts was satisfied by Arrington's acceptance of the lease agreements in exchange for the signed bank drafts and as such, did not bar enforcement of the contracts; Arrington's admitted renunciation of the lease agreement for reasons unrelated to title precluded its defense to the enforceability of its contracts; Arrington's admission that it decided to dishonor all lease agreements in Phillips County for unrelated business reasons entitled the landowners to summary judgment; there was no genuine issue of material fact as to whether Arrington disapproved of the landowner's titles in good faith. Accordingly, the district court did not err in granting summary judgment on the breach of contract claims. View "Smith, et al. v. David H. Arrington Oil & Gas, Inc.; Foster, Jr., et al. v. Arrington Oil & Gas, Inc.; Hall, et al. v. Arrington Oil & Gas, Inc." on Justia Law