Justia Commercial Law Opinion Summaries

Defendant manufactures medical goods and has distributors all over the U.S., including plaintiffs, which had exclusive distributorship agreements. When defendant terminated the agreements, plaintiffs were forced to shut down their businesses and sued for breach of contract, intentional misrepresentation, and negligent misrepresentation. The district court dismissed a negligent misrepresentation claim. A jury returned a verdict against defendant on remaining claims, awarding actual and punitive damages. The magistrate set aside the punitive damages awards. The Seventh Circuit vacated the awards of lost profits as not allowed by the contract and affirmed the decision to set aside punitive damages, but affirmed verdicts against defendant on intentional misrepresentation and negligent misrepresentation. The court vacated awards of actual damages, as supported by insufficient evidence.

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).

This case arose when Commerzbank agreed to acquire Dresdner Bank in September 2008. As part of the deal, Commerzbank also acquired Dresdner Bank's trust preferred structures, and holders of Dresdner's trust preferred securities received distributions in both 2009 and 2010. Plaintiff claimed that paying those distributions "pushed," or required Commerzbank to make distributions on, a class of its owned preferred securities in which plaintiff had an interest, and, by the complaint, plaintiff asked the court to enforce that alleged obligation. Plaintiff also sought specific performance of a support agreement that was argued to require the elevation of the liquidation preference of Commerzbank's trust preferred securities in response to a restructuring of one class of the Dresdner securities. The parties filed cross-motions for summary judgment. The court held, among other things, that because the DresCap Trust Certificates did not qualify as either Parity Securities, defendants were entitled to judgment in their favor as a matter of law regarding plaintiff's claim under the Pusher Provision. The court also held that because DresCap Trust Certificates did not qualify as either Parity Securities or Junior Securities, Section 6 of the Support Undertaking was not triggered by amendment of the DresCap Trust IV Certificates. Accordingly, defendants were entitled to judgment in their favor as a matter of law regarding plaintiff's claim that the amendment of the DresCap Trust IV Certificates required defendants to amend the Trusted Preferred Securities.

Central Mortgage Company (CMC) sued Morgan Stanley after mortgages for which CMC purchased servicing rights from Morgan Stanley began to fall delinquent during the early financial crisis of 2007. CMC subsequently appealed the dismissal of its breach of contract and implied covenant of good faith and fair dealings claims. The court held that the Vice Chancellor erroneously dismissed CMC's breach of contract claims on the basis of inadequate notice where CMC's pleadings regarding notice satisfied the minimal standards required at this early stage of litigation. The court also held that the Vice Chancellor erroneously dismissed CMC's implied covenant of good faith and fair dealings claim where the claims were not duplicative. Accordingly, the court reversed the Vice Chancellor's judgment dismissing all three of CMC's claims and remanded for further proceedings.

Victor Tacke failed to pay real property taxes on his property in Lake County from 2005 to 2008. In 2006, the County conducted a tax sale for the year 2005, at which the County purchased the tax lien. In 2009, the County assigned its interest in the tax lien to Montana Lakeshore Properties (Lakeshore) in exchange for payment of the past due taxes and issued a tax sale certificate to Lakeshore. The County subsequently issued a tax deed to Lakeshore. In 2010, Tacke filed an action to quiet title in the property, seeking a judicial declaration that the tax deed was void. The district court granted summary judgment in favor of Lakeshore. At issue on appeal was whether Lakeshore violated Mont. Code Ann. 15-17-212(3) by paying the back taxes two hours and forty-five minutes short of two weeks after giving notice to Tacke. The Supreme Court affirmed, holding that the district court did not err by granting summary judgment upholding the tax deed obtained by Lakeshore because this case fit within the general principle that "the law regards the day as an indivisible unit" and discards fractional days in most time computations.

In this action, secured parties, as creditors in bankruptcy proceedings and appellees here, attempted in separate cases before the bankruptcy court to execute on four deeds of trust whose affidavits of considerations were missing or improper. Appellants, four trustees in bankruptcy, argued that those defects rendered the deeds of trust invalid such that the trustees possessed the properties free and clear of the creditor's interests. The creditors countered that Md. Code Ann. Real Prop. 4-109 cured the defects at issue. The Court of Appeals accepted certified questions regarding the statute and answered them in the affirmative, holding that Section 4-109 is unambiguous, and pursuant to the plain language of the statute and as confirmed by legislative history, cures the type of defects identified by the trustees, including missing or improper affidavits or acknowledgments, unless a timely judicial challenge is mounted.

Three separate sets of repairs were made to a waste hauler purchased by Consolidated Waste from Standard Equipment. Consolidated Waste filed a complaint in circuit court, seeking to recoup the cost of the second round of repairs and claiming that the first and second set of repairs, performed by Standard Equipment, were made in such a way as to constitute a breach of contract and negligence. The circuit court entered judgment in favor of Standard Equipment. After appealing to the court of special appeals, the Court of Appeals issued a writ of certiorari. The Court affirmed the judgment of the trial court, holding that the trial court did not abuse its discretion (1) by excluding evidence of the third round of repairs, performed by a different company, as a reasonable trial judge could have determined that the danger of prejudice outweighed substantially any probative value of the evidence; and (2) by utilizing a verdict sheet supplied by Standard Equipment.

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.