Justia Commercial Law Opinion SummariesArticles Posted in Legal Ethics
Melendez v. Westlake Services, Inc.
Melendez purchased a used 2015 Toyota from Southgate under a retail installment sales contract. Southgate assigned the contract to Westlake. Weeks later, Melendez sent a notice alleging Southgate violated the Consumer Legal Remedies Act (CLRA) and demanded rescission, restitution, and an injunction. Melendez later sued Southgate and Westlake, alleging violations of the CLRA, the Song-Beverly Consumer Warranty Act, Civil Code 1632 (requiring translation of contracts negotiated primarily in Spanish), the unfair competition law, fraud, and negligent misrepresentation. Westlake assigned the contract back to Southgate. Default was entered against Southgate. Westlake agreed to pay $6,204.68 ($2,500 down payment and $3,704.68 Melendez paid in monthly payments). Melendez would have no further obligations under the contract.The parties agreed Melendez could seek attorney fees, costs, expenses, and prejudgment interest. Westlake was entitled to assert all available defenses, “including the defense that no fees at all should be awarded against it as a Holder” The FTC’s “holder rule” makes the holder of a consumer credit contract subject to all claims the debtor could assert against the seller of the goods or services but caps the debtor’s recovery from the holder to the amount paid by the debtor under the contract. The trial court awarded attorney fees ($115,987.50), prejudgment interest ($2,956.62), and costs ($14,295.63) jointly and severally against Westlake, Southgate, and other defendants. The court of appeal affirmed. The limitation does not preclude the recovery of attorney fees, costs, nonstatutory costs, or prejudgment interest. View "Melendez v. Westlake Services, Inc." on Justia Law
Rexing Quality Eggs v. Rembrandt Enterprises, Inc.
Rexing sought a ruling that Rexing was excused from its obligations to purchase eggs under its contract with Rembrandt. Rembrandt filed a counterclaim seeking damages for Rexing’s repudiation of the contract, attorneys’ fees, and interest. Following discovery, the district court granted Rembrandt summary judgment on liability but concluded that there were genuine issues of triable fact as to damages. A jury awarded Rembrandt $1,268,481 for losses on eggs it had resold and another $193,752 for losses on eggs that it was not able to resell. The court determined that the interest term in the parties’ agreement was usurious, so that Rembrandt was not entitled to contractual interest or attorneys’ fees.The Seventh Circuit affirmed the damages award. The district court properly concluded that the resale remedy under Iowa’s version of the Uniform Commercial Code, Iowa Code 554.2706, was the appropriate mechanism for calculating Rembrandt’s damages and Rexing waived its arguments challenging the award by not presenting them to the district court in a post-verdict motion. Reversing in part, the court held that the parties’ agreement fell within the “Business Credit Exception” to Iowa’s usury statute, Iowa Code 535.5(2)(a)(5), and remanded the denial of Rembrandt’s request for interest and fees. View "Rexing Quality Eggs v. Rembrandt Enterprises, Inc." on Justia Law
Companion Health Servs, v. Majors Mobility, Inc.
Companion was authorized to license space in Wal-Mart stores to companies that sell durable medical equipment and entered into licensing agreements with defendants. In 2007, defendants shut down operations. Companion sued. Problems arose during discovery, including defense counsel motions to withdraw, allegations of inadequate responses to discovery requests, objections to the scope of discovery, refusal to attend depositions, motions to compel, multiple extensions, and claims of obstruction. After three years, the district judge imposed a default as to all counts, based on discovery violations by the defendants. The court eventually lifted the default except as to Companion's veil piercing claim, allowing the substantive claims to go to trial. A jury found for Companion and awarded more than $1 million in damages. Defendants, personally liable as a result of the default, appealed. The First Circuit vacated the default and remanded, "because the district court imposed such a severe sanction based on a very limited slice of the relevant facts." View "Companion Health Servs, v. Majors Mobility, Inc." on Justia Law
Hargis v. JLB Corp.
JLB Corporation, a mortgage brokering service, entered into an agreement with Bonnie Hargis to refinance her home. JLB then prepared Hargis's loan application and other financial disclosure documents. JLB alleged it played no role in drawing the note or deed of trust, which were prepared by third parties, and it did not charge for their preparation. Hargis, however, filed a three-count petition against JLB, alleging, inter alia, that JLB engaged in the unauthorized practice of law. The trial court granted summary judgment in favor of JLB on all counts. The Supreme Court (1) affirmed the grant of summary judgment to JLB as to the first two counts relating to the unauthorized practice of law where the record showed that JLB assisted Hargis only in preparing financial documents and did not show that JLB procured or assisted in the drawing of Hargis' note, deed of trust, or other legal documents; and (2) reversed the grant of summary judgment to JLB on the third count alleging unjust enrichment, as JLB's summary judgment motion failed to negate any element of Hargis' unjust enrichment claim. Remanded. View "Hargis v. JLB Corp." on Justia Law
Polsky v. Virnich
Court-appointed receiver Michael Polsky filed a complaint against defendants Daniel Virnich and Jack Moores, owners and officers of Communications Products, for breach of their fiduciary duties to the corporation after Communications Products defaulted on a loan to its largest creditor. The Supreme Court accepted review but split three to three. On return to the court of appeals, the judgment was reversed. Polsky filed a petition to review, which the Supreme Court granted. The Court then affirmed the court of appeals. The current action involved Polsky's motion to disqualify Justice Roggensack, asserting that because Justice Roggensack had not participated in the case when it was previously certified to the Court and when the Court's decision remanded the matter to the court of appeals, she should have been disqualified from participation in the decision to affirm the court of appeals. The Supreme Court denied Polsky's motion, holding (1) the Court does not have the power to remove a justice from participating in an individual proceeding, on a case-by-case basis, and (2) due process is provided by the decisions of the individual justices who participate in the cases presented to the court.