Justia Commercial Law Opinion SummariesArticles Posted in US Court of Appeals for the Sixth Circuit
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