Justia Commercial Law Opinion Summaries

A 1998 settlement (MSA), between states and large tobacco companies (OPMs) included incentives for non-parties to join, but OPMs retained the most favorable payment terms. The MSA permitted states to enact statutes requiring nonparticipants to make deposits into escrows to be held for 25 years, in case a state obtained a future judgment against that nonparticipant. The MSA ensured that OPMs retained favored treatment over other participants. Plaintiff entered the market in 2000, as a nonparticipant, paying into state escrow accounts. As escrow payments became more burdensome, Plaintiff joined the MSA after negotiating a back-payment and future payments. During negotiations, defendants denied Plaintiff information about payment reductions granted to grandfathered companies. Plaintiff, unhappy with the disparate treatment and unable to meet its obligations, was unable to negotiate better terms because of an MSA provision that would entitle other participants to more favorable terms if such terms were granted to a late-joiner. Plaintiff sued tobacco manufacturers and attorneys general, alleging antitrust (15 U.S.C. 1, 3 (a)) and constitutional violations. The district court dismissed. The Sixth Circuit affirmed. Manufacturer defendants were immunized under the Noerr-Pennington and state-action doctrines. Plaintiff's waivers were knowing, intelligent, and voluntary, regardless of representations made during negotiations. View "VIBO Corp., Inc. v. Conway" 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

Plaintiff filed a voluntary Chapter 13 bankruptcy petition and successfully sought to avoid a lien on her manufactured home held by defendant. The Bankruptcy Appellate Panel and Sixth Circuit affirmed. The mortgage did not originally cover the manufactured home, which was personal property until 2007,when a state court entered an in rem judgment and order of sale converting it to an improvement to real property. After that, the home was covered by the mortgage. The conversion, unlike the mortgage, was involuntary as to the plaintiff, so she had standing under 11 U.S.C. 522(h) to avoid the lien.

Plaintiff sued the bank after it refused to honor cashier's checks it thought he had obtained by fraud. One check, for $100,000, had previously bounced, another was a starter check for $80,000 and was dated five months earlier. The bank had communication with plaintiff's former employer, indicating fraud. The district court granted summary judgment to the bank. The Sixth Circuit affirmed. Under the Uniform Commercial Code as enacted in Michigan, the bank's actions were lawful even absent any finding of fraud. The checks were not supported by consideration, plaintiff was not a person entitled to enforce the instruments, and plaintiff was not harmed.

In 1991, Carpenter pled guilty to aggravated theft and bank fraud. He served jail time and was disbarred. Between 1998 and 2000, he ran a Ponzi scheme, selling investments in sham companies, promising a guaranteed return. A class action resulted in a judgment of $15,644,384 against Carpenter. Plaintiffs then sued drawee banks, alleging that they violated the UCC "properly payable rule" by paying checks plaintiffs wrote to sham corporations, and depositary banks, alleging that they violated the UCC and committed fraud by depositing checks into accounts for fraudulent companies. The district court dismissed some claims as time-barred and some for failure to state a claim. After denying class certification, the court granted defendant summary judgment on the conspiracy claim, based on release of Carpenter in earlier litigation; a jury ruled in favor of defendant on aiding and abetting. The Sixth Circuit affirmed. Claims by makers of the checks are time-barred; the "discovery" rule does not apply and would not save the claims. Ohio "Blue Sky" laws provide the limitations period for fraud claims, but those claims would also be barred by the common law limitations period. The district court retained subject matter jurisdiction to rule on other claims, following denial of class certification under the Class Action Fairness Act, 28 U.S.C. 1332(d).

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.

The credit union provides indirect lending, which allows applicants to apply for loans at automobile dealerships. A third-party administrator compiles the applications and automatically approves low-risk loans. Higher-risk applications are forwarded to the credit union for further review using an eight-factor policy. After an audit disclosed hundreds of high-risk loans issued in violation of the policy, the credit union filed a claim under a fidelity bond that provided coverage for losses caused by an employeeâs "failure to faithfully perform his/her trust." The district court awarded $5,050,000 plus $2,730,415 in interest to be offset by prejudgment interest. The Sixth Circuit affirmed; there was sufficient evidence to support the juryâs finding that the lending policy was "established," "enforced," and "consciously disregarded" as described in the bond language. There was no evidence that the credit union board acquiesced in the violations. Although the court allowed an improper "golden rule" argument, the error does not require reversal; references to the insurer's ability to check the policies and to checklists were not errors.

Plaintiff and defendant, investment trusts that specialize in healthcare-related properties, participated in a two-step auction to purchase the assets of a Canadian company. The defendant's efforts derailed. Plaintiff entered into an agreement to purchase the assets, but before the agreement was approved by shareholders, the defendant made a higher bid and made a public announcement. After a flurry of press releases and a ruling by a Canadian court concerning a confidentiality clause that was part of the bidding process, the defendant revoked its bid. The stockholders rejected the agreement with the plaintiff; the deal closed after plaintiff increased its bid. The district court awarded the plaintiff $101,672,807 for tortious interference with contract and with prospective advantage. The Sixth Circuit affirmed, but remanded for consideration of punitive damages. The declaratory proceedings in Canada did not preclude the claims at issue. Jury instructions concerning tortious interference involving competitors, motive, causation, and breach of the confidentiality agreement as wrongful conduct were appropriate.

The owner of a mortgage company was sentenced to 96 months for fraud and money laundering. The Sixth Circuit affirmed, holding that the conviction was supported by substantial evidence. Evidence of a government witness's prior inconsistent statements that referred to a conviction more than 10 years prior was properly excluded; the trial judge gave the defense proper latitude to impeach the witness. The sentence was properly enhanced for attempting to obstruct the investigation, use of "sophisticated means," and acting as the organizer or leader.