Justia Commercial Law Opinion SummariesArticles Posted in US Court of Appeals for the Sixth Circuit
Dimond Rigging Co. v. BDP International, Inc.
Dimond was hired by a Chinese manufacturer to “rig, dismantle, wash, and pack,” and ship used automotive assembly-line equipment to China. Dimond, which lacked experience in international shipment, hired BDP. Dimond asserted that BDP did not disclose that it was not a licensed Ocean Transport Intermediary by the Federal Maritime Commission. In May 2011, BDP informed Dimond that it had obtained a ship and sent a booking note to Dimond. Between May and October 2011, Dimond dismantled and weighed the equipment and prepared a “preliminary" packing list. BDP allegedly provided the preliminary packing list when it obtained quotes from third-party contractors to load the Equipment. In October 2011, BDP notified Dimond that the ship was no longer available. Dimond asserted that BDP “without Dimond’s knowledge, consent or approval” hired Logitrans to perform BDP’s freight forwarding duties. BDP and Logitrans hired a ship. As a result of many ensuing difficulties, Dimond became involved in multiple lawsuits, including suits with its Chinese customer and the stevedores. Dimond sued BDP in July 2013 but never served BDP with the complaint. When the summons expired, the district court dismissed without prejudice. In August 2017, Dimond filed a Motion to Amend and Praecipe for Issuance of Amended Summons for its 2013 suit. The Sixth Circuit affirmed the denial of the motion. The suit was not timely filed within the one-year statute of limitations set forth in the Carriage of Goods by Sea Act. View "Dimond Rigging Co. v. BDP International, Inc." on Justia Law
Innovation Ventures, LLC v. Nutrition Science Laboratories, LLC
Innovation sold 5-Hour Energy. In 2004, it contracted with CN to manufacture and package 5-Hour. Jones, CN's President and CEO, had previously manufactured an energy shot. When the business relationship ended, CN had extra ingredients and packaging, which Jones used to continue manufacturing 5-Hour, allegedly as mitigation of damages. The companies sued one another, asserting breach of contract, stolen trade secrets or intellectual property, and torts, then entered into the Settlement, which contains an admission that CN and Jones “wrongfully manufactured” 5-Hour products and forbids CN from manufacturing any new “Energy Liquid” that “contain[s] anything in the Choline Family.” CN received $1.85 million. CN was sold to a new corporation, NSL. Under the Purchase Agreement, NSL acquired CN's assets but is not “responsible for any liabilities ... obligations, or encumbrances” of CN except for bank debt. The Agreement includes one reference to the Settlement. NSL, with Jones representing himself as its President, took on CN’s orders and customers, selling energy shots containing substances listed in the Choline Family definition. Innovation sued. Innovation was awarded nominal damages for breach of contract. The Sixth Circuit affirmed the rejection of defendants’ antitrust counterclaim, that NSL is bound by the Settlement, and that reasonable royalty and disgorgement of profits are not appropriate measures of damages. Jones is not personally bound by the Agreement. Upon remand, Innovation may introduce testimony that uses market share to quantify its lost profits. The rule of reason provides the proper standard for evaluating the restrictive covenants; Defendants have the burden of showing an unreasonable restraint on trade. View "Innovation Ventures, LLC v. Nutrition Science Laboratories, LLC" on Justia Law
Premium Freight Mgmt. v. PM Engineered Solutions
Connecticut imposed liability for breaches of contract when attended by deception. Unhappy with flanges purchased under a contract with PM Engineered Solutions, Inc. (“Powdered Metal”), Bosal Industries-Georgia, Inc. (“Bosal”) decided to switch suppliers and terminate the contract. After a five-day bench trial, the district court found that the termination was not only wrongful in breach of the contract, but that it was deceptive in violation of the Connecticut Unfair Trade Practices Act. Because Connecticut law applied and the district court’s findings rested on a permissible view of the evidence, the Sixth Circuit affirmed except as to the calculation of postjudgment interest on damages. View "Premium Freight Mgmt. v. PM Engineered Solutions" on Justia Law
Exel, Inc. v. Southern Refrigerated Transport, Inc.
Exel, a shipping broker, sued SRT, an interstate motor carrier, after SRT lost a load of pharmaceuticals owned by Exel’s customer, Sandoz, that was being transported from Pennsylvania to Tennessee. After nearly seven years of litigation, including a prior appeal, the district court entered judgment for Exel and awarded it the replacement cost of the lost pharmaceuticals, approximately $5.9 million. SRT argued that the district court erred in discounting bills of lading that ostensibly limited SRT’s liability to a small fraction of the shipment’s value. Exel argued that the court erred in measuring damages by the replacement cost of the pharmaceuticals rather than by their higher market value. The Sixth Circuit affirmed. Exel and SRT had a Master Transportation Services Agreement (MTSA), which stated that any bill of lading “shall be subject to and subordinate to” the MTSA; that SRT “shall be liable” to Exel for any “loss” to commodities shipped pursuant to the agreement; and that the “measurement of the loss . . . shall be the Shipper’s replacement value.” The Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. 14706 “puts the burden on the carrier to demonstrate that the parties had a written agreement to limit the carrier’s liability, irrespective [of] whether the shipper drafted the bill of lading.” SRT did not carry its burden to show that it effectively limited its liability. View "Exel, Inc. v. Southern Refrigerated Transport, Inc." on Justia Law
DAGS II, LLC v. Huntington National Bank
In 2004, Baker Lofts purchased an abandoned building for renovation. Loans of more than $5 million from Huntington were secured by two mortgages on the building and by personal property, including a tax-increment-financing agreement, rental income, and Baker’s liquor license. Baker defaulted in 2011. Huntington assigned the 2005 mortgage to its subsidiary, Fourteen, which foreclosed by public auction. The Notice stated that “[t]he balance owing on the Mortgage is $5,254,435.04,” but did not mention the senior 2004 mortgage, which Huntington retained. Fourteen, the only bidder, purchased the property for $1,856,250. Huntington released the 2004 mortgage. Fourteen sold the property for $2,355,000. Huntington thought that Baker still owed $3.5 million and invoked its security interests in the remaining collateral. At a public sale, Huntington bought the rights to Baker's tax-increment-financing agreement for $1,107,000; began collecting rents; and asserted its security interest in the liquor license, which Baker had sold before it declared bankruptcy. Assignees of Baker's legal claims sought a declaratory judgment that the sale of the building extinguished all of Baker’s debt. They also raised conversion and tortious interference claims and a claim under Michigan’s secured transactions statute. The Sixth CIrcuit affirmed Huntington's judgment. The district court correctly concluded that Baker’s debt exceeded the value of the foreclosed building and that excess permitted Huntington to take possession of the other property securing its loans. View "DAGS II, LLC v. Huntington National Bank" on Justia Law
Majestic Building Maintenance, Inc. v. Huntington Bancshares, Inc.
McNeil opened a business checking account with Defendant. A “Master Services Agreement,” stated: [W]e have available certain products designed to discover or prevent unauthorized transactions, …. You agree that if your account is eligible for those products and you choose not to avail yourself of them, then we will have no liability for any transaction that occurs on your account that those products were designed to discover or prevent. McNeil was not given a signed copy of the Agreement, nor was he advised of its details. McNeil ordered hologram checks from a third party to avoid fraudulent activity. McNeil later noticed unauthorized checks totaling $3,973.96. The checks did not contain the hologram and their numbers were duplicative of checks that Defendant had properly paid. Defendant refused to reimburse McNeil, stating that “reasonable care was not used in declining to use our ... services, which substantially contributed to the making of the forged item(s).” Government agencies indicated that they would not intervene in a private dispute involving the interpretation of a contract. Plaintiff filed a putative class action, citing Uniform Commercial Code 4-401 and 4-103(a), The district court dismissed, holding that the Agreement did not violate the UCC and shifted liability to Plaintiff. The Sixth Circuit reversed. Plaintiff stated a plausible claim that the provision unreasonably disclaims all liability under these circumstances; the UCC forbids a bank from disclaiming all of its liability to exercise ordinary care and good faith. View "Majestic Building Maintenance, Inc. v. Huntington Bancshares, Inc." on Justia Law