Justia Commercial Law Opinion SummariesArticles Posted in Real Estate & Property Law
West Pueblo Partners, LLC v. Stone Brewing Co., LLC
The landlord is a four-member LLC with a single asset--a building in downtown Napa. The tenant, Stone Brewing, a large beer brewing and retail corporation, operates a brewpub in the building. Stone Brewing did not pay rent for several months during the pandemic. The landlord sued for unlawful detainer. Stone argued it was excused from paying rent because COVID-19 regulations and business interruptions triggered a force majeure provision in its lease.The trial court granted the landlord summary judgment, finding that the force majeure provision only excused performance if the claiming party was unable to meet its obligations due to factors outside its control; the tenant admitted during discovery it had the financial resources to pay rent during the period of the COVID-19 regulations but simply refused to do so. The court of appeal affirmed. The force majeure provision does not apply where the tenant had the ability to meet its contractual obligations but chooses not to perform due to financial constraints. The plain meaning of the force majeure provision does not support an interpretation that ties a party’s obligation to pay rent to its profitability or revenue stream instead of a delay or interruption caused by the force majeure event itself. View "West Pueblo Partners, LLC v. Stone Brewing Co., LLC" on Justia Law
Massachusetts Port Authority v. Turo Inc.
The Supreme Judicial Court affirmed the order of the superior court allowing Plaintiff's motion for a preliminary injunction but amended the first numbered paragraph of the order to affirmatively restrain only Turo Inc.'s conduct, holding that the preliminary injunction was properly granted.The Massachusetts Port Authority (Plaintiff) filed suit against Turo, RMG Motors LLC, and John Doe Nos. 1 through 100 (collectively, Defendants) in this dispute over the unregulated pick up and drop off of passengers at the Logan International Airport. At issue on appeal was the superior court judge's order granting a preliminary injunction in favor of Plaintiff that restricted Turo from conducting commercial activity at the airport without written permission from Plaintiff. The Supreme Judicial Court affirmed the order, holding that the judge did not err in issuing the preliminary injunction but that a modification of the terms of the injunction to comply with the requirements of the Communications Decency Act, 47 U.S.C. 230(c)(1) was required. View "Massachusetts Port Authority v. Turo Inc." on Justia Law
Christman v. Clause
The Supreme Court reversed the order of the district court denying Plaintiffs' motion for summary judgment in this case alleging a violation of Article 9A of Montana's adopted version of the Uniform Commercial Code (UCC), holding that the district court erred when it concluded that Article 9 no longer applied to the agreement between the parties.Plaintiffs and Defendants entered into an installment sale contract and security agreement to buy a mobile home. When Plaintiffs continually missed payments on the mobile home Defendants sent a notice of default and then demanded the outstanding balance on the agreement. Plaintiffs moved out of the mobile home and voluntarily returned it to Defendants. After Defendants sold the mobile home to a new buyer Plaintiffs brought suit alleging that Defendants violated provision of Article 9A. The district court denied Plaintiffs' motion for summary judgment and entered judgment in favor of Defendants. The Supreme Court reversed, holding that there were no genuine issues of material fact as to Defendants' UCC violations, and Plaintiffs were entitled to judgment as a matter of law on that issue. View "Christman v. Clause" on Justia Law
Rosenthal & Rosenthal, Inc. v. Benun
In 1995, Jazz Photo Corp., one of several commercial entities (collectively referred to as the Jazz Entities), entered into a factoring agreement with Rosenthal & Rosenthal, Inc. Jazz Photo sold Rosenthal its accounts receivable in return for cash. Five years later, Vanessa Benun, the daughter of Jack Benun, a principal of the Jazz Entities, guaranteed Jazz Photo's obligations under that agreement. At that time, Benun also executed a mortgage on real property she owned in Monmouth County as security for her personal guaranty. In March 2005, another of the Jazz Entities, Ribi Tech Products, LLC entered into a factoring agreement with Rosenthal. Benun personally guaranteed Ribi Tech's obligations to Rosenthal. In March 2007, Riker, Danzig, Scherer, Hyland & Perretti, L.L.P. (Riker), a law firm providing legal services to Jack Benun and the Jazz Entities, obtained a third mortgage from Benun on the same real property. This mortgage was executed in favor of Riker to secure Jack Benun's personal debt under a letter agreement. When Benun executed the mortgage, Jack Benun owed Riker $1,679,701.33 in unpaid legal fees, and the letter agreement reflected his obligations to Riker and Riker's promise to provide continuing legal representation. Riker's mortgage was recorded on April 13, 2007. Rosenthal received actual notice of the Riker mortgage in August 2007. Despite notice of the Riker mortgage, Rosenthal continued to make advances to the Jazz Entities that totaled millions of dollars. In September 2009, Jazz Products filed for bankruptcy. The Jazz Entities defaulted on their obligations to Rosenthal, owing Rosenthal close to $4 million. Benun, in turn, defaulted on her personal guaranty to secure the debt. After Riker recorded its mortgage on the Monmouth County property, it continued to perform legal services for Jack Benun, and his unpaid legal fees ballooned to over $3 million. Jack Benun, and the Jazz Entities defaulted on their obligation to Riker and Benun defaulted on her guaranty. Rosenthal filed a foreclosure complaint against Benun, her husband, and Riker. Benun and her husband did not respond, and Rosenthal requested that a default judgment be entered against them. Riker answered, disputing the priority of Rosenthal's mortgages. Later, both Rosenthal and Riker filed cross-motions for summary judgment regarding the priority of their respective mortgages. The trial court granted Rosenthal's motion, determining that the dragnet clauses in the Rosenthal mortgages were fully enforceable. With regard to priority, the trial court held that Riker's argument that its mortgage displaced the two Rosenthal mortgages was legally flawed because the firm accepted a mortgage on the property with knowledge of two prior mortgages, each securing an obligation of up to $1 million, and with knowledge of the anti-subordination clauses. The court concluded that there was no convincing justification for rewarding Riker a superior priority. Riker appealed, and the Appellate Division reversed. The Supreme Court affirmed the Appellate Division, finding that Rosenthal had advance notice of the law firm's intervening lien but nonetheless proceeded to make optional advances to the commercial entities. "Having done so, its mortgages securing those optional future advances were subordinated to the law firm's intervening lien." View "Rosenthal & Rosenthal, Inc. v. Benun" on Justia Law
Paint Rock Turf, LLC v. First Jackson Bank et al.
In 2004, Paint Rock Turn, LLC purchased a sod farm and related farm equipment. To partially finance the purchase, Paint Rock borrowed $1,706,250 from First Jackson Bank. The loan was secured by a mortgage on the sod farm and a security interest in the equipment used on the farm. By February 2009, reflecting in part a drop in demand for sod caused by the collapsing market for new homes, Paint Rock had defaulted on the loan. In early 2009, Paint Rock filed a Chapter 11 bankruptcy petition. The filing of the petition operated as an automatic stay and precluded First Jackson from foreclosing on the sod farm or retaking the equipment. The bankruptcy petition was dismissed later that year, and a few months later, First Jackson moved forward with its intent to foreclose by publishing the first of three notices of a foreclosure sale on the Paint Rock property. On the morning of the scheduled sale, Paint Rock filed a second bankruptcy petition, which stayed the sale. This second petition was dismissed a month later for failure to file the proper schedules and statements. First Jackson published another notice that the foreclosure sale was rescheduled for December 30, 2009. December 26, Paint Rock filed a third bankruptcy petition. Four days later, the bankruptcy court lifted the automatic stay, expressly finding that Paint Rock misused the bankruptcy process to "hinder and delay First Jackson's efforts to foreclose its mortgage and security agreement." First Jackson was the high bidder at the sale, purchased the property, and sent Paint Rock a letter demanding possession of the sod farm. In early 2010, First Jackson filed an ejectment action. The same day, Paint Rock demanded access to the farm to recover "emblements in the form of sod which is being grown on the real property recently foreclosed upon ...." Paint Rock also requested the return of its equipment. First Jackson denied Paint Rock's request. Paint Rock, relying on a section of the Alabama Code that permits a tenant at will to harvest its crop, counterclaimed for damages for harm suffered as the result of being unable to harvest the sod. Paint Rock also sought damages for conversion of "plats of sod" contained on the sod farm. First Jackson sold the sod farm to Mrs. Goodson, subject to any claim Paint Rock may have to the emblements growing on the property. Paint Rock filed a joint third-party complaint against First Jackson and Mr. and Mrs. Goodson, alleging conversion and detinue, as well as the emblements claim. After the trial court denied motions for a summary judgment filed by First Jackson and the Goodsons, the case proceeded to trial. At the close of Paint Rock and Jones's case, the trial court granted a motion for a JML filed by First Jackson and the Goodsons on Paint Rock's counterclaim for emblements on the ground that Paint Rock was not an at-will tenant. After Paint Rock withdrew its detinue claims and the trial court granted a JML on the wantonness claims, leaving only the conversion and negligence claims. The jury awarded Paint Rock damages against First Jackson for conversion of a sod cutter and cut sod that had been loaded on a tractor-trailer when First Jackson took possession of the property. The jury also awarded Paint Rock damages against the Goodsons for conversion of business property and equipment. Paint Rock appealed the JML in favor of the defendants on the emblements claim; First Jackson cross-appealed the judgment awarding Paint Rock damages for conversion of the cut sod. The Supreme Court affirmed with regard to Paint Rock's emblements claim, but reversed on the conversion of the cut sod claim. View "Paint Rock Turf, LLC v. First Jackson Bank et al. " on Justia Law
Petroleum Solutions, Inc. v. Head
Bill Head, doing business as Bill Head Enterprises (Head), hired Petroleum Solutions, Inc. to manufacture and install an underground fuel system at the truck stop Head owned and operated. After a major diesel-fuel leak occurred, Respondents sued Petroleum Solutions for its damages. The trial rendered judgment in favor of Head and in favor of third-party defendant Titeflex, Inc., the alleged manufacturer of a component part incorporated into the fuel system, on Titeflex’s counterclaim against Petroleum Solutions for statutory indemnity. The court of appeals affirmed. The Supreme Court (1) reversed the judgment as to Head, holding that the trial court abused its discretion in imposing the sanctions of charging the jury with a spoliation instruction and striking Petroleum Solutions’ statute-of-limitations defense, and the trial court’s abuse of discretion was harmful; and (2) affirmed the judgment as to Titeflex’s indemnity claim, holding that Titeflex was entitled to statutory indemnity from Petroleum Solutions. Remanded for further proceedings between Respondents and Petroleum Solutions. View "Petroleum Solutions, Inc. v. Head" on Justia Law
Frey Corp. v. City of Peoria
Frey has owned the Peoria commercial property, which contains a shopping center, for more than 40 years, without prior incident. In 2009, a tenant, ShopRite, was found to be illegally selling Viagra without a licensed pharmacist. The city took legal action against Patel (the franchisee) personally, and the business, then revoked the liquor license for the store and “site approval for the retail sale of alcoholic liquors at the location.” Frey asserted due process violations. The district court and Seventh Circuit rejected the claims. Frey did not adequately explain a substantive due process claim and had no property right such that it was entitled to any process at all before revocation of its site approval, but Frey nonetheless received due process of law before the Peoria Liquor Commission.View "Frey Corp. v. City of Peoria" on Justia Law
Ulbrich v. Groth
Plaintiff successfully bid at a combined foreclosure sale of real estate and secured party auction of personal property owned by Debtors. Bank held mortgage and security interests in the real and personal property. Auctioneer conducted the auction. After purchasing the property, Plaintiff discovered he would not receive much of the personal property he believed to be in the sale. Plaintiff and the current owner of the property (Plaintiffs) brought this action against Debtors, Bank, and Auctioneer (collectively, Defendants), claiming that Defendants' failure to inform Plaintiffs there were conflicting claims as to the ownership of the property constituted negligence and a violation of the Connecticut Unfair Trade Practices Act (CUTPA), among other causes of action. The jury returned a verdict for Plaintiffs on four of their counts. The Supreme Court reversed in part, holding that the trial court (1) improperly concluded that Defendants had a common-law duty to Plaintiffs to properly identify the personal property that was subject to the secured party sale; and (2) lacked the authority to award nontaxable costs pursuant to CUTPA. View "Ulbrich v. Groth" on Justia Law
Knigge, et al v. SunTrust Mortgage, Inc.
Debtors appealed from the ruling of the bankruptcy court granting summary judgment to SunTrust and denying summary judgment to debtors, on debtors' adversary complaint that challenged SunTrust's standing to enforce a promissory note and deed of trust on debtors' property, and sought to remove the deed of trust from the chain of title to such property. The court affirmed the bankruptcy court's judgment and held that the promissory note was a negotiable instrument and that SunTrust was entitled to enforce it and the deed of trust. The bankruptcy court properly used evidence from the affidavit of SunTrust's representative and properly applied judicial estoppel. View "Knigge, et al v. SunTrust Mortgage, Inc." on Justia Law
In re: Pierce
In 2007, Debtor purchased a manufactured home, borrowing the funds from Creditor and granting a security interest. Creditor filed an application for first title and a title lien statement in Whitley County, Kentucky. The seller of the manufactured home is located in Whitley County. Debtor resided at the time in Laurel County, Kentucky. Later, the Kentucky Transportation Cabinet issued a Certificate of Title for the Manufactured Home showing the lien as being filed in Whitley County. In 2010, Debtor filed his voluntary Chapter 7 bankruptcy petition. The Chapter 7 Trustee initiated an adversary proceeding. The Bankruptcy Court avoided the lien, 11 U.S.C. 544. The Sixth Circuit affirmed. The statute requires that title lien statements be filed in the county of the debtor’s residence even if the initial application for certificate of title or registration is filed in another county under KRS 186A.120(2)(a). View "In re: Pierce" on Justia Law