Justia Commercial Law Opinion Summaries

Principals of Cybercos defrauded lending institutions out of more than $100 million in loan. In 2002, Huntington granted Cyberco a multi-million-dollar line of credit, and Cyberco granted Huntington a continuing security interest and lien in all of Cyberco's personal property, including deposit accounts. After discovering the fraud, the government seized approximately $4 million in Cyberco assets, including $705,168.60 from a Huntington Bank Account. Cyberco principals were charged in a criminal indictment with conspiring to violate federal laws relating to bank fraud, mail fraud, and money laundering. Count 10 issued forfeiture allegations against individuals regarding Cyberco assets, including the Account. In their plea agreements, defendants agreed to forfeit any interest they possessed in the assets or funds. The district court entered a preliminary order of forfeiture with regard to the assets, including the Account. Huntington filed a claim, asserting ownership interest in the forfeited Account. The district court found that Huntington did not have a legal claim. On remand, the district court again denied the claim. The Sixth Circuit reversed. A party who takes a security interest in property, tangible or intangible, in exchange for value, can be a bona fide purchaser for value of that property interest under 21 U.S.C. 853(n)(6)(B). View "United States v. Huntington Nat'l Bank" on Justia Law

Plaintiff-Appellant Flying Phoenix Corporation appealed a district court’s dismissal of its claims against Defendants North Park Transportation Company and R&L Carriers Shared Services (the carriers), with prejudice, for lack of subject matter jurisdiction. Flying Phoenix purchased a machine designed to package fireworks for sale to end users from Defendant Creative Packaging Machinery, Inc. The machine arrived severely damaged. Creative Packaging was responsible for shipping the machine to Flying Phoenix. Creative Packaging used R&L Carriers Shared Services to ship from North Carolina to Wyoming. The bill of lading limited the period for filing claims with a carrier to nine months, and limited the time for filing civil suit to two years and one day following denial of a claim. At some point during the delivery, R&L Carriers transferred the machine to North Park Transportation Company to complete delivery to Flying Phoenix. Three days after the machine was delivered, Flying Phoenix filed a claim with North Park based on damage to the machine. Roughly two weeks later, North Park inspected the machine and confirmed that it was damaged. A little less than a month later, North Park and R&L Carriers notified Flying Phoenix that its claim was denied, citing evidence that the shipment was issued with insufficient packaging or protection. Flying Phoenix renewed its claim approximately six months later, in November 2007, and the carriers again denied the claim, asserting that the machine was "used" and inadequately packaged. On appeal, Flying Phoenix argued that the district court erred by holding that (1) its claims were based on the bill of lading, and (2) it was bound by the terms of the bill of lading even though it was not a party and did not consent. Upon review, the Tenth Circuit affirmed the dismissal of Flying Phoenix's claims: "Flying Phoenix claim[ed] that, although it was listed as consignee on the bill of lading, it never saw the bill of lading until after the limitations period lapsed. It argue[d] that, since it did not know the terms of the carriage, it should not be bound. [The Court found] no precedent for Flying Phoenix’s position, and Flying Phoenix [did] not direct [the Court] to any. There is no suggestion in the record that Flying Phoenix ever sought a copy of the bill of lading but was denied access, and it is well-established that a party may not sit idly by, making no effort to obtain obviously necessary documents, and then claim ignorance. Lack of diligence precludes equitable intervention." View "Flying Phoenix Corp. v. Creative Packaging Machinery" on Justia Law

Plaintiff contracted to sell a furniture business to Mendoza in 2004. Westernbank provided partial funding and obtained a first mortgage. To secure a deferred payment of $750,000, Mendoza signed a mortgage in favor of plaintiff and a contract under which plaintiff consigned goods with expected sales value of more than $6,000,000. An account was opened at Westernbank for deposit of sales proceeds. Plaintiff alleges that Westernbank kept funds to which plaintiff was entitled for satisfaction of Mendoza’s debts to Westernbank. Mendoza filed for bankruptcy and transferred its real estate to Westernbank in exchange for release of debt to the bank. Plaintiff agreed to forgive unpaid debts in order to obtain relief from the stay and foreclose its mortgage, then sued Westernbank, employees, and insurers, alleging violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1961-68, and Puerto Rico law causes of action. After BPPR became successor to Westernbank, plaintiff agreed to dismiss the civil law fraud and breach of fiduciary duty claims and the RICO claim. The district court later dismissed remaining claims for lack of subject matter jurisdiction, declining to exercise supplemental jurisdiction over non-federal claims. The First Circuit affirmed. View "Fabrica de Muebles J.J. Alvare v. Inversiones Mendoza, Inc." on Justia Law

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

Trostel was founded in 1858. By 2007 the founder's relations still owned about 11 percent of its stock. Smith, which owned the rest, decided to acquire remaining shares by freezeout merger. Trostel became Smith's wholly owned subsidiary. Notz, one of the Trostel great-grandchildren, who owned 5.5 percent of the stock, rejected proffered compensation of $11,900 per share (about $7.7 million). The rest of the outside investors accepted. In an appraisal action (Wis. Stat. 180.1330(1)), the district court denied Nost's motion to dismiss for lack of subject matter jurisdiction and concluded that fair value of the stock on the merger date was $11,900 per share. The Seventh Circuit affirmed. Wisconsin's corporate is legislative, not contractual and does not block corporations from availing themselves of diversity jurisdiction. View "Albert Trostel & Sons Co. v. Notz" on Justia Law

Maker's Mark sued Jose Cuervo for trademark infringement, based on Cuervo's use of red dripping wax seal on bottles of premium tequila. The district court found that the Maker's Mark trademark was valid, rejecting an argument of "functionality" under 15 U.S.C. 1065, and had been infringed. The court entered an injunction, but denied damages. The Sixth Circuit affirmed. The court traced the history of bourbon whiskey and noted that Maker's Mark and its use of a red dripping wax seal, a registered trademark since 1958, occupy a central place in the modern story of bourbon. The majority of the factors indicate a possibility of "confusion of sponsorship" trademark infringement: strength of the trademark, relatedness of the goods, similarity, and marketing channels. Whether there was actual confusion was a neutral factor. View "Maker's Mark Distillery, Inc. v. Diageo North America, Inc." on Justia Law

A proposed consent order from an FTC investigation indicated that U-Haul attempted to implement a scheme to collude with competitors, Budget and Penske, to raise prices for truck rentals. The FTC concluded that U-Haul's conduct violated the Federal Trade Commission Act, 15 U.S.C. 45(a)(1). The proposed consent order was designed to prevent collusion. U-Haul consented to the relief, but did not admit the conduct or violation. A consumer filed a complaint charging U-Haul with violating Mass. Gen. Laws ch. 93A by engaging in an attempted price-fixing scheme and seeking damages on behalf of a large class. The suit, a follow-on action after a proposed government consent decree, is common in antitrust cases. Because the FTC Act contains no private right of action and the Sherman Act is of doubtful application to price-fixing, the suit rested chapter 93A, which prohibits "[u]nfair methods of competition and unfair or deceptive acts or practices," and permits consumer class actions. The complaint alleged that U-Haul's actions caused plaintiff to pay at least 10 percent more for truck rentals than she would have absent the unlawful action. The district court dismissed, stating that the complaint failed plausibly to allege injury. The First Circuit vacated, finding the claim plausible. View "Liu v. Amerco" on Justia Law

The named plaintiffs are Ohio residents who purchased front-loading washing machines manufactured by defendant. Within months after their purchases, the plaintiffs noticed the smell of mold or mildew emanating from the machines and from laundry washed in the machines. One plaintiff found mold growing on the sides of the detergent dispenser, another saw mold growing on the rubber door seal, despite allowing the machine doors to stand open. They filed suit, alleging tortious breach of warranty, negligent design, and negligent failure to warn. The district court certified a class comprised of Ohio residents who purchased one of the specified machines in Ohio primarily for personal, family, or household purposes and not for resale (Federal Rule of Civil Procedure 23(a) and (b)(3)). The Sixth Circuit affirmed class certification, with proof of damages reserved for individual determination. Plaintiffs’ proof established numerosity, commonality, typicality, and adequate representation. Common questions predominate over individual ones and class action is a superior method to adjudicate the claims.View "Glazer v. Whirlpool Corp." on Justia Law

The Department of Commerce investigated Essar's participation in several programs, including its purchase of iron ore from India's government-owned National Mineral Development Corporation and participation in programs under India's Special Economic Zone Act, and found that Essar received countervailable subsidies (19 U.S.C. 1677(5)(E)(iv)) from the government of India for certain hot-rolled carbon steel flat products. The Court of International Trade affirmed that holding, but remanded with respect to whether the company received subsidies through the Indian state of Chhattisgarh Industrial Program. The Federal Circuit affirmed with respect to the subsidies from the Indian government, but reversed with respect to the CIP. The lower court should have upheld Commerce's application of adverse facts against Essar; Essar did not act to the best of its ability during the review with regard to the CIP issue.View "Essar Steel, Ltd. v. United States" on Justia Law

The Fair and Accurate Credit Transactions Act, 15 U.S.C. 1681c(g), requires that electronically printed receipts not display more than the last 5 digits of the card number, but does not define "card number." A Shell card designates nine digits as the "account number" and five as the "card number" and has 14 digits embossed on the front and 18 digits encoded on the magnetic stripe. Shell printed receipts at its gas pumps with the last four digits of the account number. Plaintiffs contend that it should have printed the final four numbers that are electronically encoded on the magnetic stripe, which the industry calls the "primary account number." Plaintiffs did not claim risk of identity theft or any actual injury, but sought a penalty of $100 per card user for willful failure to comply. The district court denied Shell summary judgment. The Seventh Circuit reversed, holding that Shell did not willfully violate the Act.View "Shell Oil Prods. Co. v. Van Straaten" on Justia Law