Justia Commercial Law Opinion Summaries

Plaintiff's suit concerning purchase of an aircraft claimed specific performance; and, in the alternative, breach of contract; breach of the covenants of good faith and fair dealing; and breach of the Florida Deceptive and Unfair Trade Practices Act (FDUTPA), Fla. Stat. 501.2105. The district court rejected the claims; proceeded under the Arizona Consumer Fraud Act, as requested by plaintiff; ruled in favor of defendant, but refused to award attorney fees under FDUPTA. After concluding that FDUTPA and its fee award provision are applicable as substantive law of the forum state, the Eleventh Circuit certified questions to the Florida Supreme Court: Whether an offer of judgment may be viable when it purports to settle "all claims," even though it does not explicitly state whether the proposal includes attorneys' fees and whether fees are part of the legal claim; Whether the fee provision applies to a lawsuit seeking damages or, in the alternative, specific performance; Whether the fee-shifting provision applies to an action with the case's unique procedural history; and Whether the provision applies only to fees incurred during the seven months before the FDUTPA claim was defeated at summary judgment, or also to fees incurred during subsequent litigation.

Plaintiff Harodite Industries filed a complaint against defendant Warren Electric for negligence and other causes of action, seeking damages for the failure of a gasket in the oil pre-heater that Harodite purchased from defendant. After conducting discovery, Harodite filed a motion to amend its complaint. The hearing justice denied Harodite's motion. Plaintiff then filed a motion for a stay pending a ruling on the petition for writ of certiorari it intended to file with the Supreme Court. Defendant objected to the motion, arguing that the court should apply a Massachusetts statute of limitations to plaintiff's proposed amended complaint. The hearing justice held that Rhode Island's ten-year statute of limitations should apply and granted Harodite's motion for a stay. The Supreme Court affirmed the rulings of the superior court, holding (1) the hearing justice did not abuse her discretion in denying Harodite's motion to amend its complaint; and (2) the hearing justice correctly determined that Rhode Island's statute of limitations would be the relevant statute of limitations with respect to the allegations set forth in Harodite's proposed amended complaint, and therefore, those allegations would not be barred by the statute of limitations.

Defendant, an American citizen, approached plaintiff, a supplier of dairy products, about doing business with a Chinese company, affiliated with a company operated by defendant's cousin. The American did not claim to be an agent of the Chinese company, but did respond to a request for credit information and paid for the first transaction with her own check. The Chinese buyer claims that the American company wrongfully substituted an inferior product in the second transaction and did not pay. Instead of bringing a claim against the Chinese company, the plaintiff claimed fraud by the American. The district court held that the suit was barred by the economic loss doctrine. The Seventh Circuit affirmed, holding that any false statements by defendant were "interwoven" with the contract; plaintiff could have protected itself contractually against the risk of nonpayment. Holding the American liable in tort would not plug any loophole in contract law. The contract was not concerned with services, for which there is an exception.

In April 2008, plaintiff American Asphalt sued CMX for professional negligence and breach of implied warranty. On October 1, 2008, the superior court issued an order informing plaintiff that if it did not file a motion to set as required by Ariz. R. Civ. P. 38.1(e), the case would be placed on the inactive calendar after January 20, 2009 and dismissed without further notice after March 23, 2009. American did not file a motion to set and the case was dismissed without further notice on April 29, 2009. Plaintiff moved to set aside the dismissal, contending that its failure to comply with Rule 38.1(a) was excusable because it had substituted counsel around the time of the Rule 38.1(d) filing deadline. The superior court denied the motion. The court of appeals affirmed, finding no excusable neglect partly because the court's order provided notice as required by the rule. On review, the Supreme Court vacated the court of appeals' decision and remanded, holding that a notice issued several months prior to placing the case on the inactive calendar does not comply with the rule because the rule requires contemporaneous notice when a case is placed on the inactive calendar.

Richard Orr and Sheldon Cook had a partnership agreement to conduct a cow-calf operation. The parties sold the cows and calves in the spring of 2007. Cook received $230,935 from the sale. Orr sued Cook, disputing the reimbursement amount Cook owed him from the sale and for the cost of feeding and caring for the cows during the winter of 2007. The trial court awarded Orr $41,614. The Supreme Court affirmed in part and reversed in part, holding (1) the trial court was not clearly erroneous in determining the value of the calves; (2) the trial court was not clearly erroneous in determining the amount of reimbursement Cook owed Orr for feed and veterinarian costs; and (3) the trial court did err in refusing to award Orr prejudgment interest because it was requested in a manner allowed by statute.

Plaintiff contracted to purchase 11 Burger King restaurants. A jury found that defendant had properly terminated the agreement but had breached the duty of good faith and fair dealing, and awarded $190,907.27. Over one year later, the district court entered a partial judgment denying specific performance and awarding $5,176.24 of the $424,282.19 in attorneys’ fees and expenses incurred in connection with the litigation. The Sixth Circuit reversed and remanded. The plaintiffs presented evidence that defendant hindered attempts to close the transaction, but defendant's actions in blocking due diligence and failing to provide financial information did not cause plaintiff damages because defendant properly terminated the agreement. The district court erred in calculating fees and expenses.

1/2 Price Checks Cashed (Half-Price) brought a suit in a Dallas County justice court asserting breach of contract on the basis of the obligation owed by the drawer of a check under Tex. Bus. & Com. 3.414 and requested attorney's fees. At issue was whether a holder of a dishonored check could recover attorney's fees under Texas Civil Practice and Remedies Code section 38.001(8) in an action against a check's drawer under section 3.414. The court held that Half-Price's section 3.414 claim was a suit on a contract to which section 38.001(a) applied and applying section 38.001(8) to the claim did not disrupt Article 3 of the Uniform Commercial Code's statutory scheme. Therefore, the court reversed the judgment and remanded for a determination of attorney's fees.

In this case the Kentucky Supreme Court considered whether to adopt the "economic loss rule," which prevents the commercial purchaser of a product from suing in tort to recover for the economic losses arising from the malfunction of the product itself. The case involved a claim to insurers for a damaged piece of machinery. The insurers sued the manufacturers to recover the amount paid, claiming several causes of action including negligence, strict liability, and negligent misrepresentation. The trial court held the economic loss rule barred the tort claims. The court of appeals affirmed the trial court's adoption and application of the rule. The Supreme Court affirmed the judgment of the trial court, holding (1) the economic loss rule applies to claims arising from a defective product sold in a commercial transaction, and that the relevant product is the entire item bargained for by the parties and placed in the stream of commerce by the manufacturer; and (2) the economic loss rule applies regardless of whether the product fails over a period of time or destroys itself in a calamitous event, and the rule's application is not limited to negligence and strict liability claims but also encompasses negligent misrepresentation claims.

ALC filed suit against Lamex in commonwealth court under Puerto Rico's Dealers' Contract Act (Law 75), which prohibits a principal from terminating a business relationship with a dealer without just cause. Before service of process, Lamex filed suit in federal court. The federal district court denied Lamex's requests to pierce the corporate veil and for preliminary and permanent injunctive relief, but granted Lamex's request for a declaratory judgment absolving it from liability under Law 75, ordered ALC to pay, and ordered the Superior Court of San Juan to release the money ALC consigned. The First Circuit affirmed the imposition of sanctions against ALC and the monetary judgment in favor of Lamex, but vacated the judgment with respect to Lamex's claims for a declaratory judgment and to pierce ALC's corporate veil. The district court erred in failing to provide indisputably clear notice of its intent to consolidate the preliminary injunction hearing with a trial on the merits under Rule 65(a)(2) and, in so doing, abrogated ALC's right to a jury trial.

Plaintiff financed an ice cream hardening system. The lender held title and leased the equipment to plaintiff, but refused to set an end-of-lease purchase price. The final agreement did not refer to an estimate in a side letter or conversations concerning the lease price. Two years after the equipment was installed, plaintiff suggested an early buy-out. When the parties were unable to agree to a price, plaintiff filed suit alleging breach of contract and the covenant of good faith and fair dealing, violation of the Utah Unfair Practices Act, promissory estoppel and fraud. The district court rejected other claims, but held that the lender had fraudulently professed, in a side letter, to have estimated 12 percent as the price when, in fact, it had no estimate. The court ordered the lender to convey the equipment and refund to plaintiff part of the payments made under the agreement. The First Circuit affirmed the award of title, but remanded for recalculation of the refund. The transfer of title was an expected outcome of the contract and the evidence supported a finding of fraud.