Justia Commercial Law Opinion Summaries

An environmental remediation company and an oil corporation entered into a Master Services Contract in 2008, which included a Texas choice-of-law and venue provision and an indemnification clause requiring the remediation company to defend and indemnify the oil corporation for claims arising from violations of applicable laws. In 2012, it was discovered that the remediation company’s then-president, along with subcontractors, had engaged in fraudulent overbilling for work performed for the oil corporation. Upon discovery, ownership of the remediation company changed hands, and litigation ensued in Louisiana state court. The remediation company’s new owner alleged that the oil corporation’s employee was complicit in the fraud, making the corporation vicariously liable.The oil corporation then filed suit in the United States District Court for the Southern District of Texas seeking a declaratory judgment that the remediation company had a duty to defend and indemnify it in the Louisiana litigation, and also sought attorney’s fees as damages for breach of contract. The district court granted summary judgment for the oil corporation, holding that Texas law applied, the remediation company owed both a duty to defend and to indemnify, and awarding attorney’s fees for both the Texas and Louisiana lawsuits.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the district court’s rulings de novo regarding summary judgment and attorney’s fees. The appellate court held that Texas law governed under the contract’s choice-of-law clause since Louisiana did not have a more significant relationship or materially greater interest, and applying Texas law did not contravene Louisiana public policy. The indemnity provision was not void as against public policy or for illegality. The court affirmed the duty to defend and to indemnify, but vacated the judgment to the extent it would require indemnification for punitive and exemplary damages, and remanded for modification. It also vacated attorney’s fees awarded for the underlying Louisiana litigation, affirming only those fees related to the declaratory judgment action. View "Anadarko v. Alternative Environmental Solutions" on Justia Law

In 2007, GM sold a power plant to DTEPN, which leased the land under the plant for 10 years. DTEPN agreed to sell utilities produced at the plant to GM, to maintain the plant according to specific criteria, and to address any environmental issues. DTEPN’s parent company, Energy, guaranteed DTEPN’s utility, environmental, and maintenance obligations. Two years later, GM filed for bankruptcy. GM and DTEPN agreed to GM’s rejection of the contracts. DTEPN exercised its right to continue occupying the property. An environmental trust (RACER) assumed ownership of some GM industrial property, including the DTEPN land. DTEPN remained in possession until the lease expired. RACER then discovered that DTEPN had allowed the power plant to fall into disrepair and contaminate the property.The district court dismissed the claims against Energy, reasoning that RACER’s allegations did not support piercing the corporate veil and Energy’s guaranty terminated after GM rejected the contracts in bankruptcy.The Sixth Circuit reversed. Michigan courts have held that a breach of contract can justify piercing a corporate veil if the corporate form has been abused. By allegedly directing its wholly-owned subsidiary to stop maintaining the property, Energy exercised control over DTEPN in a way that wronged RACER. DTEPN is now judgment-proof because it was not adequately capitalized by Energy. RACER would suffer an unjust loss if the corporate veil is not pierced. Rejection in bankruptcy does not terminate the contract; the contract is considered breached, 11 U.S.C. 365(g). The utility services agreement and the lease are not severable from each other. Energy guaranteed DTEPN’s obligations under the utility agreement concerning maintenance, environmental costs, and remediation, so Energy’s guaranty is joined to DTEPN’s section 365(h) election. View "EPLET, LLC v. DTE Pontiac North, LLC" on Justia Law

Environmental Law Foundation (ELF), sued Beech-Nut and other food manufacturers, distributors, and retailers, seeking enforcement of the Safe Drinking Water and Toxic Enforcement Act of 1986, commonly referred to as Proposition 65 (Health & Saf. Code, 25249.5). ELF alleged certain of defendants’ products contain toxic amounts of lead sufficient to trigger the duty to provide warnings to consumers. The trial court entered judgment in favor of defendants, concluding they had no duty to warn because they satisfactorily demonstrated that the average consumer’s reasonably anticipated rate of exposure to lead from their products falls below relevant regulatory thresholds. The court of appeal affirmed, analyzing regulations promulgated by the Office of Environmental Health Hazard Assessment. View "Environmental Law Found. v. Beech-Nut Nutrition" on Justia Law

Trade associations representing commercial ship owners and operators petitioned for review of a nationwide permit issued by the EPA for the discharge of pollutants incidental to the normal operation of vessels. Petitioners raised a number of procedural challenges, all related to the EPA's decision to incorporate into the permit conditions that states submitted to protect their own water quality. The court held that because petitioners had failed to establish that the EPA could alter or reject state certification conditions, the additional agency procedures they demanded would not have afforded them the relief they sought. Accordingly, the court denied the petition for review.

Defendant Robert St. Onge, president and member of Winterwood, operated a composting facility at his farm that accepted solid waste and converted it into compost for sale. The Department of Environmental Protection filed a land use complaint against Winterwood related to the discharge of pollutants from its composting operation into a nearby brook. The court entered a contempt order that required Winterwood to cease the discharge of pollutants into state waters. On the Department's motion to enforce the contempt order, the court ordered that Winterwood was immediately prohibited from receiving any other composting material. Later, four different waste companies delivered waste to Winterwood for composting. The state filed a criminal complaint and summons, charging St. Onge as principal of Winterwood with contempt. In superior court, St. Onge signed a jury trial waiver. The court adjudicated St. Onge to be in contempt as a Class D crime and sentenced him to six months in jail. St. Onge appealed. The Supreme Court affirmed all aspects of the judgment with the exception of the Class D modification. Because an adjudication of contempt with punitive sanctions is not a Class D crime, the judgment was modified accordingly.