Justia Commercial Law Opinion Summaries

Plaintiff Gabriel Gaumer filed suit against Rossville Truck and Tractor Company, alleging negligence and strict liability for injuries caused by a used hay baler purchased from Rossville. The district court granted Rossville's motion for summary judgment on both the negligence and strict liability claims. The court of appeals affirmed the district court's decision regarding Gaumer's negligence claim but reversed on his strict liability claim. Rossville petitioned for review, and the Supreme Court granted the petition on the single issue of whether strict liability can be applied to a seller of used goods. After analyzing both the state's common law and the Kansas Product Liability Act, the Court held that sellers of used product are subject to strict liability in Kansas. The decision of the district court was therefore reversed, and the decision of the court of appeals was affirmed. Remanded.

In 2003, Sunline imported frozen crawfish from China and procured security for required entry bonds from Hartford. The entries were subject to an antidumping order, but, after review by the International Trade Administration, were liquidated and a higher antidumping duty rate was levied. When Sunline did not pay, Customs sought payment from Hartford. Hartford learned that Sunline personnel had been arrested for using false invoices and claimed Customs' failure to disclose its investigation prior to issuance of the Sunline bonds was a material misrepresentation, making the bonds voidable. Under 19 U.S.C. 1514, Hartford had 90 days to file an administrative protest—which it did not do. Instead, Hartford filed suit under 28 U.S.C. 1581(i). The Court of International Trade held that Hartford should have reasonably known of its claims within the statutory time period and that the claims were within the scope of 19 U.S.C. 1514(c)(3), so that suit was unavailable; in effect, that it lacked jurisdiction. The Federal Circuit reversed and remanded. Hartford’s bonds did not cover the same shipments as those investigated, so it would be unlikely for Hartford to follow that action; the indictment was against two individuals, not against the company by name.

The company imports mellorine, a frozen dessert similar to ice cream, with vegetable or animal fat substituted for some of the butterfat. Mellorine is classified under the Harmonized Tariff Schedule of the U.S. Chapter 21, "Miscellaneous Edible Preparations," Heading 2105, "Ice cream and other edible ice, whether or not containing cocoa," (19 U.S.C. 1202). Customs liquidated the mellorine under Subheading 2105.00.40, which applies to "dairy products described in additional U.S. note 1 to Chapter 4" for amounts above a certain import quota. This note describes three categories of dairy products. The Court of International Trade entered summary judgment in favor of the company. The court determined that mellorine was prima facie classifiable only under Heading 2105 as edible ice, that milk is not the essential ingredient, the ingredient of chief value, nor the preponderant ingredient, and that the mellorine is not an article of milk.The Federal Circuit affirmed, stating that that the mellorine does not have the essential character of an article of milk.

McKinnis Roofing and Sheet Metal and homeowner Jeffrey Hicks entered into two contracts. The first contract related to Hicks' roof, and the second contract related to copper awnings on Hicks' residence. McKinnis filed a complaint in the district court alleging that Hicks breached both contracts after Hicks refused McKinnis' demand for advance payment. After trial, he district court determined that Hicks had breached both contracts, awarding McKinnis damages in the amount of $4,419 with regard to the roofing contract and $789 with regard to the awning contract. McKinnis appealed, arguing that the district court erred in calculating the amount of damages to which it was entitled. Hicks cross-appealed and claimed that the district court erred when it determined that he breached the contracts. The Supreme Court reversed, holding that based on the facts and contract language, Hicks did not breach either contract.

Chicago Lumber recorded a construction lien on JoAnn Selvera's home and sued to foreclose the lien. Selvera brought a counterclaim under Neb. Rev. Stat. 52-157, which provides a remedy against claimants who, in bad faith, file liens, overstate liens, or refuse to release liens. Chicago Lumber eventually withdrew its foreclosure action and released its lien, but Selvera maintained her suit. The district court granted summary judgment to Selvera, concluding that (1) because Selvera had not received a copy of Chicago Lumber's lien within ten days of its recording, the lien was invalid; and (2) Chicago Lumber's failure to dismiss its action and to release the lien before it received Selvera's documents clarifying that she had paid her debt in full constituted bad faith. The court awarded Selvera $10,000 in attorney fees. On appeal, the Supreme Court reversed, holding that because Chicago Lumber had a reasonable belief that its lien was valid, at least before it received Selvera's clarifying documents, Chicago Lumber did not act in bad faith. The Court concluded that after Chicago Lumber received the clarifying documents, questions of fact existed whether Chicago Lumber was acting in bad faith. Remanded.

Deutsche Bank National Trust Company, as trustee in trust for the registered holders of Ameriquest Mortgage Securities, Inc., appealed from a summary judgment entered in the district court in favor of Donald and Kim Pelletier on the bank's complaint for foreclosure. The district court concluded that Deutsche Bank had failed to dispute facts asserted by the Pelletiers demonstrating that they had asserted a right of rescission. On appeal, the Supreme Court affirmed the grant of summary judgment, but because the district court's order reached only the point of determining that the Pelletiers were entitled to rescission, the Court remanded for further proceedings to effectuate the rescission.

The company sued, in New Jersey, for breach of contract, conversion, and embezzlement, based on defendant's retention of checks worth $587,775.05. Defendant asserted counterclaims based on termination of an employment contract. While the lawsuit was pending, the company brought an identical action in South Korea. In 2005, a South Korean court entered judgment for the company in an amount equivalent to $587,755.05 plus post-judgment interest. In 2006, the U.S. district court entered judgment for the company, $587,755.05 on the conversion claim, and for defendant, $910,000 on the counterclaim. The U.S. district court declined the company's request that a turnover order include a setoff, reasoning that setoff would result in double recovery. The Third Circuit affirmed, but remanded pending enforcement of the Korean judgment. Defendant paid the Korean judgment. The district court rejected an argument that the Korean judgment should be equalized with the American judgment in the amount of $205,540.05, the difference between the American judgment ($587,755.05) and actual payments adjusted by currency devaluation ($382,215). The Third Circuit affirmed, characterizing the claim as an attempt to satisfy the Korean judgment for a second time.

Appellant Matthew Kundinger received a default judgment against Louis and Linda Frazer (the Frazers) before the Frazers closed a refinance mortgage with Matrix Financial Services Corporation (Matrix).  In Matrix's foreclosure action, the master-in-equity granted Matrix equitable subrogation, giving the refinance mortgage priority over Appellant's judgment lien. Appellant counterclaimed, alleging his judgment had priority over Matrix's mortgage because it had been recorded first.  Matrix, attempting to gain the primary priority position, then sought to have the refinance mortgage equitably subrogated to the rights of its January 2001 mortgage.  The master-in-equity granted Matrix's request, and Appellant appealed that order. Upon review of the applicable legal authority, the Supreme Court found that a lender that refinances its own debt is not entitled to equitable subrogation.  The Court reversed the lower court's decision and remanded the case for further proceedings.

Black Warrior Minerals, Inc. sued Empire Coal Sales, Inc. and John Fay, Jr. Black Warrior sought money allegedly owed pursuant to a coal-purchase agreement between Black Warrior and Empire and a personal guaranty executed by Mr. Fay. A trial court entered summary judgment in favor of Black Warrior, awarding it damages plus attorney fees and costs. The trial court held a bench trial on the breach-of-guaranty claim against Mr. Fay, entering judgment in favor of Mr. Fay. Black Warrior appealed the latter, arguing that the trial court erred in finding the language of the guaranty was ambiguous and applied only to amounts in excess of $1.2 million owed by Empire to Black Warrior. Upon review of the language of the guaranty and the applicable legal authority, the Supreme Court concluded the trial court erred in its interpretation of the guaranty's terms. The Court reversed the lower court's judgment and remanded the case for further proceedings.

Matador Holdings, Inc. and HoPo Realty Investments, LLC filed separate appeals to challenge elements of a circuit court's order involving commercial property owned by Matador. Matador sued HoPo for payment for materials and services Matador provided to HoPo's lessee Stratford Plastic Components of Alabama. The lease agreement contained provisions allowing for HoPo or its agents to enter the property during the lease-term to make inspections or repairs. Stratford had applied for and received a line of credit with Matador. After taking possession of the leased property, Stratford ordered materials from Matador to convert the property into one suitable for Stratford's production needs. Stratford vacated the property before the lease term expired without paying Matador for the materials. HoPo's agents testified that Stratford did not request any changes be made to the leased property and had no knowledge that Matador would supply materials to the lessee. To resolve the dispute, the trial court denied Matador's claim that HoPo was unjustly enriched by the services provided to Stratford that were unpaid, but the court placed a lien on HoPo's property for the unexpired portion of the Stratford lease. Upon review of the trial court record and its order, the Supreme Court affirmed the lower court's denial of Matador's unjust enrichment claim. Furthermore, the Court reversed the lower court's order insofar as it enforced any portion of a lien against HoPo's property or the improvements made to the property. The Court ruled the lien void.