The Supreme Court reversed the portion of the order of the district court granting summary judgment in favor of Buyer in this dispute arising from an ordinary course covenant in an asset purchase agreement, holding that the district court erred in granting summary judgment for Buyer.In April 2019, Seller entered into an agreement to sell a casino and hotel to Buyer. The agreement contained an ordinary course covenant requiring Seller to operate its business in the usual manner between the time the agreement was signed and closing. In March 2020, in response to the COVID-19 pandemic, Seller complied with the Governor's emergency directive mandating closure of all nonessential businesses. The pandemic also affected Buyer's duties under the agreement. Buyer subsequently terminated the agreement and sued Seller for return of the deposit, alleging various contract claims. Seller counterclaimed for breach of contract. The district court granted summary judgment for Buyer. The Supreme Court reversed, holding that Seller did not violate the agreement's ordinary course covenant by closing the casino and hotel as mandated by the Governor's emergency directive and was entitled to retain the earnest money deposit. View "Lucky Lucy D LLC v. LGS Casino LLC" on Justia Law

Defendant owned real property located at 3546 Multiview Drive in Los Angeles, California (the property). That year, he executed two deeds of trust against the property. Defendant obtained a HELOC from National City Bank, memorialized in an Equity Reserve Agreement and secured by a deed of trust against the property (collectively, the HELOC agreement). Piedmont Capital, L.L.C. (Piedmont)—a debt buyer—purchased the HELOC debt. Piedmont sued Defendant. Following a demurrer to the original complaint sustained with leave to amend, Piedmont filed the operative first amended complaint for (1) breach of contract, (2) money lent, (3) money had and received, and (4) declaratory relief. Although Piedmont alleged that the full amount of the HELOC debt Defendant owed totaled $186,587.26, Piedmont conceded that it was “not seeking to collect on any [amounts] that were already barred by the applicable statute of limitations at the time [the] action was filed.”   The Second Appellate District reversed. At issue is whether the borrower’s duty to make a monthly payment under such a HELOC agreement indivisible from the borrower’s duty to pay the full amount such that the statute of limitations to recover the full amount begins to run upon the first missed monthly payment. The court held that the duties are divisible. The court explained that the HELOC agreement in this case—by setting a fixed maturity date for the full amount and leaving it to the discretion of the lender whether to accelerate that date—necessarily contemplates that a breach as to a monthly payment does not constitute a breach as to the full amount. View "Piedmont Capital Management, L.L.C. v. McElfish" on Justia Law

The Supreme Court affirmed the district court's award of $21,643.65 in attorney fees and costs to DAPCPA RPO, a full-service public accounting firm, after the court concluded that Defendant breached a purchase and sale agreement (PSA) and a covenant not to solicit, holding that there was no error.Defendant, a former employee of DAPCPA RPO, formed a new firm and provided services to former DAPCPA RPO clients. DAPCPA RPO filed suit, alleging several claims. The district court granted summary judgment for DAPCPA RPO in part, concluding that the parties' PSA and covenant not to solicit were valid and enforceable contracts and that Defendant breached them. Ultimately, the Court awarded DAPCPA RPO a total of $21,643.65 in attorney fees and costs. The Supreme Court affirmed, holding that the district court did not abuse its discretion in determining that DAPCPA RPO was entitled to its fees and costs. View "Hensel v. DAPCPA RPO LLC" on Justia Law

Plaintiff brought a series of claims in New York state court arising out of a syndicated loan transaction facilitated by Defendants, a group of financial institutions. Plaintiff’s appeal presents two issues. The first issue presented is whether the United States District Court for the Southern District of New York had subject matter jurisdiction over this action pursuant to the Edge Act, 12 U.S.C. Section 632. The second issue presented is whether the District Court erroneously dismissed Plaintiff’s state-law securities claims on the ground that he failed to plausibly suggest that notes issued as part of the syndicated loan transaction are securities under Reves v. Ernst & Young, 494 U.S. 56 (1990).   The Second Circuit affirmed. The court held that the district court had jurisdiction under the Edge Act because Defendant JP Morgan Chase Bank, N.A. engaged in international or foreign banking as part of the transaction giving rise to this suit. The court also held that the district court did not erroneously dismiss Plaintiff’s state-law securities claims because Plaintiff failed to plausibly suggest that the notes are securities under Reves. View "Kirschner v. JP Morgan Chase Bank, N.A." on Justia Law

The Supreme Court affirmed the judgment of the trial court granting Defendant's motion to dismiss the underlying complaint filed by Port of Louisville for defamation and professional malfeasance, holding that Port of Louisville had no legally recognized relationship with R. Wayne Stratton, CPA and Jones, Nale & Mattingly PLC (collectively, Stratton), and therefore, Stratton did not owe the Port of Louisville any duty.Louisville and Jefferson County Riverport Authority filed a lawsuit seeking to terminate Port of Louisville's lease based on allegations that Port of Louisville breached the parties' lease The action was stayed while the claims were referred to an arbitrator, who found that Port of Louisville had not breached the lease. Based on what occurred during the arbitration the Port of Louisville brought a complaint against Stratton for defamation and professional malfeasance. The trial court granted Stratton's motion to dismiss, and the court of appeals affirmed. The Supreme Court affirmed, holding that Port of Louisville had no legally recognized relationship with Stratton that would cause Stratton to owe it a duty. View "New Albany Main Street Properties, LLC v. R. Wayne Stratton, CPA" on Justia Law

Epsilon, an Ohio corporation with a principal place of business in Texas, entered into Joint Operating Agreements (JOAs) with companies, including Chesapeake, an LLC whose sole member is an Oklahoma citizen, to develop natural gas in Pennsylvania. The JOAs require Chesapeake to “have full control of all operations on the Contract Area.” Chesapeake can be removed as Operator for good cause by a vote of the other JOA parties. The JOAs allow the “Non-Operator parties” to propose new well sites. The others have 30 days to decide whether to participate. The work is then ordinarily performed by Chesapeake. If Chesapeake does not approve the project, the Consenting Parties designate a Consenting Party as Operator. Chesapeake opposed wells proposed by Epsilon, then blocked Epsilon from operating the proposed project unilaterally.Epsilon sought a declaration to drill without Chesapeake’s participation. Chesapeake moved to dismiss the suit for failure to join the other JOA co-signatories. The district court dismissed for failure to state a claim. The Third Circuit remanded. The other contracting parties are required (Fed. R. Civ. P. 19(a)(1)). A declaratory judgment interpreting the JOAs to authorize a single Consenting Party to propose the drilling of a new well would affect all their interests. However, other Absent JOA Parties are citizens of Texas who cannot be feasibly joined without defeating diversity and destroying subject matter jurisdiction. Deciding whether to proceed without them requires findings by the trial judge. View "Epsilon Energy USA Inc. v. Chesapeake Appalachia LLC" on Justia Law

The Appellants, investors in the securities of AmTrust Financial Services, Inc., appealed from a district court judgment dismissing their complaint for failure to state a claim under Sections 11, 12, and 15 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 against AmTrust, various AmTrust corporate officers and board members, AmTrust’s outside auditor, and multiple underwriters of AmTrust’s sale of securities. The district court determined that certain public misstatements relating to AmTrust’s recognition of revenue generated by its extended warranty contracts and the expenses associated with its payment of discretionary employee bonuses were non-actionable statements of opinion.The Second Circuit affirmed in part, vacated in part, and remanded. The court vacated the dismissal of the Appellants’ Section 11 claims against the AmTrust Defendants and the Director Defendants, the Section 12(a)(2) claims against AmTrust, and the Section 15 claims against the Officer Defendants and Director Defendants relating to AmTrust’s accounting for certain warranty contracts and bonuses. The court vacated the dismissal of the Appellants’ claims under Section 11 and Section 12(a)(2) against the Underwriter Defendants relating to AmTrust’s accounting for certain warranty contracts and bonuses. The court concluded that Appellants have adequately established standing under Section 12(a)(2) by alleging that they purchased securities pursuant to the “pertinent offering documents” or in the relevant offerings underwritten by the defendants. View "New England Carpenters Guaranteed Annuity and Pension Funds v. AmTrust" on Justia Law

The First Circuit affirmed the judgment of the Title III court confirming a plan of adjustment that permitted the discharge of the Commonwealth of Puerto Rico from its obligation to pay Plaintiff the entire amount of a settlement it had entered into with the Commonwealth regarding the Commonwealth's milk regulation scheme, holding that there was no error.Plaintiff and the Commonwealth of Puerto Rico litigated for years their dispute over the Commonwealth's milk regulation scheme. The dispute was resolved by settlement, after which the Commonwealth entered Title III proceedings to adjust the Commonwealth's sovereign debt. Under the plan of adjustment, the Commonwealth was no longer obligated to pay Plaintiff the full amount specified in the parties' settlement. Plaintiff subsequently brought this action challenging that decision. The Title III court discharged the Commonwealth from its obligation to pay Plaintiff the full amount specified in the settlement and overruled Plaintiff's objections to the Plan. The First Circuit affirmed, holding that Plaintiff's arguments on appeal failed. View "Financial Oversight & Management Bd. for P.R. v. Cooperativa de Ahorro y Credito" on Justia Law

Geringer Capital, Inc., Roger Geringer and Tricycle Entertainment, LLC (collectively Geringer parties) moved to preclude Jeffrey Konvitz, Blue Rider Finance, Inc.’s counsel of record, from testifying at trial in support of Blue Rider’s claim that the Geringer parties fraudulently induced Blue Rider to enter into a settlement agreement that did not accurately reflect the terms negotiated by the parties. The Geringer parties subsequently clarified that their motion should be considered, in the alternative, a motion to disqualify Konvitz. The court granted the motion and disqualified Konvitz, finding the integrity of the judicial process would be impaired if Konvitz served in dual roles. On appeal Blue Rider contends the court should have denied the motion due to the Geringer parties’ excessive delay in raising the issue.   The Second Appellate District reversed. The court concluded that Konvitz’s representation of Blue Rider at trial while also testifying on its behalf would “detract from the proper administration of justice,” the trial court quoted this general description of the basis for the advocate-witness rule, as well as comments explaining the parallel rule in the ABA Model Rules of Professional Conduct (ABA Model Rule 3.7) and in the ABA’s former Model Code of Professional Responsibility, all pointing to the conclusion that the roles of advocate and witness are inconsistent. The court then added its own observation that these dual roles create the risk of error and confusion, and “the trier of fact will constantly keep wondering whether the advocate-witness is acting under the appropriate role such that it will distract from the arguments and evidence presented.” View "Geringer v. Blue Rider Finance" on Justia Law

Ceska zbrojovka Defence SE (“CZ Czech”) was a firearms manufacturer based in the Czech Republic. To do business in the United States, it had several subsidiaries, including CZ USA, CZ Czech’s Kansas-based subsidiary. Vista Outdoor, Inc. was a Minnesota company that designed, manufactured, and marketed outdoor recreation and shooting products. In November 2018, Vista and CZ Czech entered into an expense reimbursement agreement covering CZ Czech’s potential acquisition of a Vista firearm brand. Under the contract, Vista was obligated to reimburse CZ Czech for certain reasonable expenses in connection with its evaluation and negotiation of the proposed transaction. Even though the sale was not consummated, Vista refused CZ Czech’s subsequent reimbursement demands. CZ USA, not CZ Czech, filed a federal diversity action in the District of Kansas against Vista for breach of contract. The "twist" was that there was no contract between CZ USA and Vista, nor was CZ USA a beneficiary of the contract. CZ Czech, soon realizing the mistake, attempted to amend the complaint under Rule 15 of the Federal Rules of Civil Procedure and substitute itself as the party-plaintiff. The district court declined, finding that the original complaint controlled and that CZ USA, as a non-party to the contract, lacked standing to sue, meaning the court lacked subject-matter jurisdiction over the dispute. To this, the Tenth Circuit concurred and affirmed: the district court lacked subject-matter jurisdiction and correctly dismissed the lawsuit. View "Ceska Zbrojovka Defence SE ("CZ") v. Vista Outdoor" on Justia Law