Justia Contracts Opinion Summaries

MayPort Farmers Co-Op appealed the judgment entered after trial and the district court's order denying MayPort's motion to amend findings of fact and conclusions of law and to amend judgment. MayPort sued St. Hilaire Seed Co., Inc., alleging St. Hilaire owed MayPort money for storage of edible beans St. Hilaire purchased from MayPort. The district court concluded "usage of trade" applied as a gap-filler and found industry custom and standards rendered storage charges inappropriate because MayPort's inability to perform caused the need for storage. Upon review, the Supreme Court affirmed, concluding the district court's findings of fact were not clearly erroneous and the district court did not abuse its discretion by denying MayPort's motion to amend. View "MayPort Farmers Co-Op v. St. Hilaire Seed Company, Inc." on Justia Law

House of Flavors purchased equipment from Tetra and executed an agreement with Tetra to fund its installation. Under the agreement, Tetra paid for the installation, House of Flavors then transferred ownership of the installed system to Tetra, and Tetra leased the system back to House of Flavors. After House of Flavors began monthly lease payments, it sought to exercise the buy back option a year early. Notwithstanding the twelve percent estimate it quoted earlier, Tetra quoted a purchase price around forty percent of the equipment and installation costs. House of Flavors filed suit in federal district court, where it prevailed on its claims. The First Circuit Court of Appeals affirmed but remanded the case to reconsider the balance due between the parties. On remand, the judge recalculated the balance due and determined that, rather than owing House of Flavors, Tetra was in fact due $156,399. The First Circuit dismissed House of Flavors' appeal, holding (1) the attack on the recalculated figure was foreclosed by a jurisdictional objection, as the appeal was untimely; and (2) the appeal was jurisdictionally timely as to the district court's refusal to award attorneys' fees under a Utah statute, but the denial of attorneys' fees was affirmed. View "House of Flavors, Inc. v. TFG-Michigan, L.P." on Justia Law

Pielet Brothers Scrap Iron and Metal, was founded Arthur Pielet and his brothers shortly after World War II. Arthur sold his interest to his sons in 1986 through an agreement providing for a lifetime payment to him of a “consulting” fee, and, on his death, for a lifetime fee payment to his wife, Dorothy. The agreement was binding on successors and assigns. In 1994, the then- successor company, P.B.S., dissolved, but payments to Arthur continued until 1998, when its successor, MM, had financial difficulties. It filed for bankruptcy in 1999. Litigation began. The trial court awarded Dorothy almost $2 million. In the appellate court, P.B.S. argued the traditional rule that a cause of action that accrued (1998) after dissolution (1994) cannot be brought against a dissolved corporation. The appellate court rejected the argument, holding that Dorothy’s claim could survive, but remanded for determination of whether the companies could be relieved of liability for the fee under a theory of novation. The Supreme Court reversed in part, holding that the claim of breach of contract against P.B.S. could not survive the corporate dissolution. The issue of novation is relevant as to two other successor corporations and required remand. View "Pielet v. Pielet" on Justia Law

GTI went bankrupt after it purchased OAI, a subsidiary of Onkyo for $13 million in cash and $12 million in three-year promissory notes. Onkyo filed a proof of claim for $12 million. GTI responded by suing Onkyo under the theory that the OAI purchase was a fraudulent, voidable transaction. The bankruptcy court agreed, finding that OAI was worth $6.9 million at the time of the transaction, not $25 million. The court voided GTI’s obligation to pay the remainder of the purchase price and ordered Onkyo to repay GTI $6.1 million. The district court and Sixth Circuit affirmed. The bankruptcy court’s determination that the indirect benefits were insubstantial was valid without the necessity of providing calculations; its adoption of GTI’s expert’s value based on the comparable transactions method was not clearly erroneous. Once the bankruptcy court determined that the sale of OAI had been a fraudulent transfer and Onkyo was a good-faith transferee, awarding GTI relief was a simple matter of subtraction. View "Onkyo Europe Elec., GMBH v. Global Technovations Inc." on Justia Law

Northwest Building Company, LLC (Contractor) performed construction services for Northwest Distributing Co., Inc. (Owner) on a Taco John’s/Good Times facility in Gillette, Wyoming. Contractor brought an action against Owner seeking payment for its services, and Owner counterclaimed. After Contractor’s attorney moved to withdraw, the district court ordered Contractor to find substitute counsel in time for the pretrial conference. When Contractor was unable to find substitute counsel by the deadline, the district court sanctioned it by dismissing its complaint and granting judgment in favor of Owner on its counterclaims. Contractor appealed, raising a number of procedural issues. Upon review, the Supreme Court concluded that the district court did not abuse its discretion by dismissing the Contractor's complaint, and affirmed the lower court's judgment. View "Northwest Building Company, LLC v. Northwest Distributing Co., Inc." on Justia Law

In 2005, a Union Pacific train derailed in Oklahoma causing extensive damage to both the railroad and the train’s cargo. Kawasaki, K-Line, and Union Pacific sought damages, alleging that Plano’s steel injection molds were improperly packed, broke through their crate, and fell onto the track. The district court granted Plano summary judgment. The Seventh Circuit affirmed in part. Negligence claims were properly rejected, Plano had no indication that the parties with which it dealt would be unable to properly package and transport its steel molds from China to the United States, nor did Plano have any special knowledge of any unique danger the molds would pose during transit. Plano owed no special duty of care to the carriers. There were, however, unresolved questions of fact material to the determination of one contract claim, based on a bill of lading. It was unclear whether Plano or another arranged the molds’ shipment. View "Kawasaki Kisen Kaisha, Ltd. v. Plano Molding Co." on Justia Law

Petitioner appealed from a decision of the United States tax court concluding that he owed $128,292 in income tax for the 2004 taxable year. Petitioner entered into an agreement with Optech Limited pursuant to which he transferred floating rate notes (FRNs) worth approximately $1 million to Optech in return for a nonrecourse loan of ninety percent of the FRNs' value. The agreement gave Optech the right to receive all dividends and interest on the FRNs and the right to sell the FRNs during the loan term without Petitioner's consent. Instead of holding the FRNs as collateral for the loan, Optech sold the FRNs and transferred ninety percent of the proceeds to Petitioner. Petitioner did not report that he had sold the FRNs in his 2004 federal income tax return. The Ninth Circuit Court of Appeals affirmed the decision of the tax court, holding that Petitioner's transaction with Optech constituted a sale for tax purposes despite its taking the form of a loan because the burdens and benefits of owning the FRNs were transferred to Optech. View "Sollberger v. Comm'r of Internal Revenue" on Justia Law

Plaintiffs are wholesalers of beer and wine; each acted as the exclusive distributor of Miller and/or Coors brands within a defined territory under written franchise agreements. In 2007, Miller and Coors entered a Joint Venture agreement, contemplating creation of MillerCoors, restructured their respective businesses and assets, and assigned distribution agreements to the Joint Venture. MillerCoors notified the plaintiffs that it intended to terminate their distribution rights as a successor manufacturer under Ohio Rev. Code 1333.85(D). The district court found that MillerCoors is not a “successor manufacturer” under Ohio law because it is controlled by Miller and Coors, and that the Act, therefore, prohibits MillerCoors from terminating the distributorships. The Sixth Circuit affirmed. Miller and Coors exercise control over MillerCoors through their equal voting power, veto power, the appointment of directors, all of whom are present officers or employees of the joint venture partners, and who owe their fiduciary duty only to Miller or Coors, their influence over the executive team, and their funding of MillerCoors. Even under the manufacturers’ proposed definition of “control,” the evidence shows that Miller and Coors together retain the power to “direct, superintend, restrict, govern, [and] oversee” MillerCoors. View "Beverage Distrib., Inc. v. Miller Brewing Co." on Justia Law

The Scotts Company, an Ohio LLC, brought a diversity action against Seeds, Inc., a Washington corporation, in federal district court. Thereafter, Millhorn Farmers, Maple Leaf Farms, Mica Creek, and Tim Freeburg (Growers) sued Seeds and Scotts in Washington state court. Maple Leaf Farms and Mica Creek were Washington corporations, Millhorn Farms was an Idaho corporation, and Tim Freeburg was a citizen of Idaho. Scotts subsequently filed an amended complaint in federal court adding the Growers as defendants and seeking declaratory relief. The district court subsequently realigned the Growers and plaintiffs and Seeds and Scotts as defendants and held, alternatively, that it would stay the federal proceedings in favor of the related state court proceedings under either the Brillhart doctrine or the Colorado River doctrine. Because the parties' realignment resulted in the absence of complete diversity of citizenship between defendant Seeds and newly-aligned plaintiffs-Growers, the district court dismissed the action for lack of subject matter jurisdiction. The Ninth Circuit Court of Appeals reversed, holding that the district court should not have declined to entertain the claim for declaratory relief under the Brillhart doctrine, and instead, the claims should have been evaluated under the Colorado River doctrine. Remanded. View "Scotts Co., LLC v. Seeds, Inc." on Justia Law

EAR, a seller of manufacturing equipment, defrauded creditors by financing non-existent or grossly overvalued equipment and pledging equipment multiple times to different creditors. After the fraud was discovered, EAR filed for bankruptcy. As Chief Restructuring Officer, Brandt abandoned and auctioned some assets. Five equipment leases granted a secured interest in EAR’s equipment; by amendment, EAR agreed to pay down the leases ($4.6 million) and give Republic a blanket security interest in all its assets. Republic would forebear on its claims against EAR. The amendment had a typographical error, giving Republic a security interest in Republic’s own assets. Republic filed UCC financing statements claiming a blanket lien on EAR’s assets. After the auction, Republic claimed the largest share of the proceeds. The matter is being separately litigated. First Premier, EAR’s largest creditor, is concerned that Republic, is working with Brandt to enlarge Republic’s secured interests. After the auction, EAR filed an action against its auditors for accounting malpractice, then sought to avoid the $4.6 million transfer to Republic. The bankruptcy court approved a settlement to end the EAR-Republic adversary action, continue the other suit, divvy proceeds from those suits, and retroactively modify the Republic lien to correct the typo. First Premier objected. The district court affirmed. The Seventh Circuit affirmed. First Premier was not prejudiced by the settlement. View "First Premier Capital, LLC v. Republic Bank of Chicago" on Justia Law