Justia Commercial Law Opinion Summaries

David McNeal was convicted in a bench trial in the circuit court for failing to return rented personal property within ten days after expiration of the rental period in violation of Va. Code Ann. 18.2-118. At trial, the store manager of the rental business testified that she rented an aluminum brake to McNeal on September 18, 2008, and after two or three months elapsed without McNeal returning the brake, she contacted the sheriff's office. On cross-examination, the store manager testified that the deputy returned the brake on September 19, 2008. The circuit court concluded that, considering all the evidence, the equipment was gone for two or three months on a week's rental, and thus the evidence was sufficient for a finding of guilt. The court of appeals reversed, concluding that the conflicting evidence was insufficient as a matter of law to sustain McNeal's conviction. The Supreme Court reversed and reinstated McNeal's conviction, holding that the circuit court's judgment finding McNeal guilty was not plainly wrong or without evidence to support it. The Court concluded that the circuit court was entitled to consider all the evidence and to resolve the conflict in the evidence as it did.

Brenda Britt obtained a new car from a car dealership after completing and signing, among other documents, a buyer's order and a retail installment sales contract. After failing to obtain financing for the sale of the car, the dealership repossessed and disposed of the vehicle without providing prior notice to Britt. Britt filed a warrant in debt against the dealership in the city general district court, alleging the dealership violated Article Nine of the UCC, which requires a secured party, after repossessing collateral, to provide the debtor with notice before disposing of the collateral. The district court and trial court both found in favor of Britt. The Supreme Court affirmed, holding that the dealership was a secured creditor and Britt a debtor under Article Nine. Therefore, the dealership failed to provide Britt the required notice of disposition following repossession required by Article Nine.

"Homes by George," run by Adelaide and Rick George, developed residential real estate known as "Esther's Estates" in Newton. Homes by George entered into a written contract with Defendant Al Hoyt & Sons, Inc., in which Defendant agreed to perform certain work in connection with the development. Defendant was paid but did not complete the work. Plaintiffs alleged breach of contract and claimed that Defendant violated the State Consumer Protection Act (CPA). Defendant counter-claimed that Plaintiff failed to pay amounts due in accordance with the contract. The trial court bifurcated the proceedings to allow a jury to first determine liability claims. A second trial was held on the contract claims. Plaintiffs won on all liability claims in the first trial, and received damages on its breach of contract and CPA claims at the second. Both parties appealed to the Supreme Court. Plaintiffs challenged the amounts of damages they were awarded by the trial court. Defendant argued that the trial court erred in its finding of violations under the CPA, and in its damages awarded to Plaintiffs. Upon careful consideration of the arguments and the applicable legal authority, the Supreme Court affirmed part and reversed part of the lower court's decision. The Supreme Court found that the grant of damages was appropriate in light of the terms of the contract, the state case law, and the evidence presented at trial. However, the Court questioned how the trial court arrived at the amount of damages. The Court remanded the case back to the trial court for further proceedings on its damages award to Plaintiffs. The Court affirmed the trial court in all other aspects of its decision.

The holder of patents on an FDA-approved product that promotes eyelash growth claimed patent infringement and violation of California Business & Professions Code 17200 unfair competition provisions against companies marketing similar products. The district court dismissed the state law claims for lack of standing under an amendment to that law, enacted by the voters as Proposition 64. The Federal Circuit reversed and remanded. The complaint adequately alleged economic injury caused by defendants' unfair business practices; it is not necessary that the plaintiff had direct business dealings with the defendants.

The credit union provides indirect lending, which allows applicants to apply for loans at automobile dealerships. A third-party administrator compiles the applications and automatically approves low-risk loans. Higher-risk applications are forwarded to the credit union for further review using an eight-factor policy. After an audit disclosed hundreds of high-risk loans issued in violation of the policy, the credit union filed a claim under a fidelity bond that provided coverage for losses caused by an employeeâs "failure to faithfully perform his/her trust." The district court awarded $5,050,000 plus $2,730,415 in interest to be offset by prejudgment interest. The Sixth Circuit affirmed; there was sufficient evidence to support the juryâs finding that the lending policy was "established," "enforced," and "consciously disregarded" as described in the bond language. There was no evidence that the credit union board acquiesced in the violations. Although the court allowed an improper "golden rule" argument, the error does not require reversal; references to the insurer's ability to check the policies and to checklists were not errors.

An Indiana medical transport company executed a software licensing agreement with the plaintiff to replace its dispatch and billing software. The software did not work as the Indiana company expected, so it attempted to exercise an option to terminate the agreement. Plaintiff sued and the Indiana company counter-claimed fraud. A magistrate dismissed the fraud claim and awarded plaintiff damages on the breach of contract claim and attorney's fees. The Seventh Circuit affirmed the decisions on fraud and breach of contract, but vacated the damages award and remanded. A party is not required to disclaim every departure from earlier proposals made during negotiations to avoid liability for fraud; there was no termination option. The plaintiff terminated the contract by locking the software, so the computation of damages was incorrect. The court ordered reconsideration of attorney fees, noting that the contract language did not appear to allow fees for defense of the fraud claim.

Plaintiff filed a quiet title claim against Bank of New York ("BNY") after he failed to make payments on a loan for over a half of a year and BNY foreclosed on his property. At issue was whether BNY lacked authority to carry out the sale where plaintiff alleged that America's Wholesale Lender, the original lender, had authority to foreclose on the property. The court held that plaintiff's note plainly constituted a negotiable instrument under Va. Code. Ann. 8.3A-104 and that note was endorsed in blank. Therefore, BNY possessed the note at the time it attempted to foreclose on the property and once plaintiff defaulted on the property, Virgina law straightforwardly allowed BNY to take the actions that it did.

A division of New Jersey's Department of Treasury purchased $300 million in preferred stock issued by the defendant, which later asked New Jersey to convert its preferred shares to common stock. New Jersey agreed, if the terms of conversion were as favorable as terms governing the exchange of other stockholders' preferred shares. Defendant agreed and in July 2008 the parties entered into a share exchange agreement with a forum selection clause providing that "exclusive jurisdiction . . . shall lie in the appropriate courts of the State [of] New Jersey." The state sued for breach and the defendant sought to remove the case to federal court. The district court held that the agreement waived the right to remove the pending litigation to the federal district courts in New Jersey. The Third Circuit affirmed, stating that federal courts are in the states, but not "of" the states.

Plaintiff and defendant, investment trusts that specialize in healthcare-related properties, participated in a two-step auction to purchase the assets of a Canadian company. The defendant's efforts derailed. Plaintiff entered into an agreement to purchase the assets, but before the agreement was approved by shareholders, the defendant made a higher bid and made a public announcement. After a flurry of press releases and a ruling by a Canadian court concerning a confidentiality clause that was part of the bidding process, the defendant revoked its bid. The stockholders rejected the agreement with the plaintiff; the deal closed after plaintiff increased its bid. The district court awarded the plaintiff $101,672,807 for tortious interference with contract and with prospective advantage. The Sixth Circuit affirmed, but remanded for consideration of punitive damages. The declaratory proceedings in Canada did not preclude the claims at issue. Jury instructions concerning tortious interference involving competitors, motive, causation, and breach of the confidentiality agreement as wrongful conduct were appropriate.

Wanting to retire from the trucking business, the owner entered into employment contracts so that the plaintiffs would act as CEO and vice president and a stock purchase agreement. The relationship broke down while they were negotiating a buy-sell agreement. The owner fired the plaintiffs and paid benefits specified in the employment contract. The plaintiffs did not purchase stock or place $750,000 into an escrow, as they were entitled to do to secure their position. The district court ruled in favor of the owner. The Seventh Circuit affirmed, holding that neither party violated a clause in the stock purchase contract that required that they use "best efforts" to enter into a buy-sell agreement. The plaintiffs retained the right to purchase stock, but chose not to do so, which entitled the owner to terminate their employment. The owner took full advantage of his rights under the contracts, but did not exploit the plaintiffs.