Justia Contracts Opinion Summaries

In this action brought pursuant to 8 Del. C. 225, plaintiffs sought a determination that certain written consents validly removed defendant directors and replaced them with a new slate. Defendant directors contended that they could not be removed or a new slate elected without the consent of a majority of the Series B Preferred Stock. Applying enhanced scrutiny, the court held that defendant directors breached their fiduciary duties when issuing the Series B Preferred Stock where, although they honestly believed they were acting in the best interests of the company, they breached their duty of loyalty by structuring the stock issuance to prevent an insurgent group from waging a successful proxy contest. Therefore, the class provision could not be given effect and the written consents validly elected a new board.

This post-trial opinion determined the voting membership of GnB, LLC, a Delaware limited liability company. The parties disputed whether Firehouse Gallery, LLC, a Florida limited liability company, was a voting member of GnB. The parties also disputed whether GnB possessed an exclusive license to use the first-tier, generic domain name candles.com; held an option to purchase candles.com; and owned other assorted domain names relating to the candles business. The court held that Firehouse and plaintiff, who controlled GnB, each held a 50% voting membership interest; GnB owned the exclusive license and option to purchase candles.com and the other domain names; and plaintiff and defendant, the current principal of Firehouse, each breached their fiduciary duty of loyalty to GnB and must account for the profits and personal benefits they received. The court held that defendant was not otherwise liable to GnB or plaintiff. Because all of the litigants engaged in misconduct that could support fee-shifting, the doctrine of unclean hands applied with particular salience. Accordingly, the court held that all parties would bear their own fees and costs.

Respondent Atlantic Coast Builders & Contractors, LLC brought an action against Petitioner Laura Lewis for negligent misrepresentation, unjust enrichment, and breach of contract.  In 2003, Petitioner, acting through a leasing agent, entered into a commercial lease whereby Respondent would lease from Petitioner property located in Beaufort County.  Although Petitioner represented in the lease that the property could lawfully be used for a building and construction office, the property was zoned "rural," meaning virtually all commercial uses were prohibited. Respondent occupied the property and made numerous alterations to it. A few months later, a Beaufort County zoning official served Respondent with notice and warning of two violations for Respondent's failure to obtain a certificate of zoning compliance before occupying the premises and its failure to obtain a sign permit before erecting a sign.  Respondent vacated the property, relocated its business, and ceased making rental payments. Respondent then instituted this action. Petitioner denied the allegations and made a counterclaim for breach of contract.  The master in equity entered judgment in favor of Respondent. The Court of Appeals affirmed, finding the master properly granted judgment in favor of Respondent. Upon review, the Supreme Court found that Petitioner did not appeal all grounds on which the master's judgment was based.  Namely, she did not challenge the determination that Respondent was entitled to recover based on unjust enrichment.  Accordingly, the Court affirmed the master-in-equity's and appellate court's decisions in favor of Respondent.

Plaintiff Fox Rest Associates (Fox Rest) was formed to purchase Fox Rest Apartments. Defendants in this case were George Little, Fox Rest's legal counsel through his law firm, George B. Little and Associates (GBL&A), George Little's wife, and GBL&A. This action took place after Mr. Little sold the Apartments without knowledge of Fox Rest and transferred a portion of the proceeds from the sale in an account he held with Mrs. Little. Unable to satisfy a previous judgment finding Mr. Little and GLB&A liable to Fox Rest for, inter alia, malpractice and double billing, Fox Rest filed this action against Defendants, seeking to void various transactions by Mr. Little as fraudulent conveyances and voluntary conveyances. The court granted Defendants' motion to strike, finding that Fox Rest did not present sufficient evidence in its case in chief to establish a prima facie case for its claims. The Supreme Court affirmed in part and reversed in part, holding that, except for a portion of the claims relating to the sale of certain equipment, the circuit court erred in striking Fox Rest's fraudulent conveyance and voluntary conveyance claims. Remanded.

The Bank of Commerce (Bank) brought an action against SouthGroup Insurance and Financial Services, LLC (SouthGroup) and Norman White, an agent of SouthGroup, for negligent misrepresentations made by White regarding the type of liability insurance coverage they would need to purchase. The trial court granted summary judgment for SouthGroup and White on two grounds: (1) that the Bankâs claims are barred by the statute of limitations; and (2) that the damages sought by the Bank constituted a voluntary payment which may not be recovered under Mississippiâs voluntary payment doctrine. The Bank appealed the trial courtâs decision. Upon review, the Supreme Court concluded that the three-year statute of limitations began to run when the Bank first received notice that it did not have entity coverage on January 18, 2005. When the Bank filed its claim against Defendants on July 17, 2008, the statute of limitations already had run, therefore barring the Bankâs claims against them. The Court affirmed the trial court's grant of summary judgment dismissing the Bank's case.

WPP Luxembourg Gamma Three Sarl (WPP) appealed from the district court's dismissal of the amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). Defendant and cross-appellants cross-appealed the district court's decision to dismiss some of WPP's claims without prejudice. WPP generally alleged violations of the Securities and Exchange Act of 1934, 15 U.S.C. 78(a), that amidst large operating losses unknown to investors, Spot Runner executives solicited WPP to buy shares in it at the same time that executives of the company were selling personally owned shares. The court affirmed the dismissal of the Rule 10b-5(a) and (c) fraudulent scheme against all of the defendants, the dismissal of the Rule 10b-5(b) fraudulent omissions claim against the general counsel for Spot Runner and Spot Runner, and the dismissal of the Rule 10b-5 insider trading claim against Spot Runner. The court reversed the dismissal of the Rule 10b-5(b) omission claims against the founders of Spot Runner.

This action arose out of the sale of Giant Cement Holding, Inc. (Giant) by defendant Cementos Portland Valderrivas (CPV) to defendant Corporacion Uniland S.A. Sagarra Inversiones, S.L. (Sagarra) challenged the transaction on the basis of CPV's self-dealing because of its position as the majority shareholder on both sides of the transaction. Sagarra purported to bring this action individually and derivatively on behalf of nominal defendant Uniland Acquisition Corp. (Uniland Delaware). The court held that to the extent the Complaint asserted a multiple derivative action on behalf of Uniland Delaware, it must be dismissed because Sagarra did not have standing to raise those claims based on the court's review of Spanish law. The court held that for the same reasons, Counts I and II, which assert multiple derivative claims on behalf of Uniland Delaware, were dismissed. The court's determination with respect to Sagarra's lack of standing as to Counts I and II was equally applicable to Count III. The court finally held that because Count IV raised fiduciary duty claims under Spanish law, the better course of action was for the court to exercise its discretion and dismiss Count IV. Therefore, defendants' motion to dismiss the Complaint was granted and an implementing order would be entered.

This case stemmed from a dispute between a hedge fund manager and the hedge fund's seed investor. The central issue was contractual and involved whether the hedge fund manager could use the Gate Provision in the Partnership Agreement to lock up the seed investor. The court held that the hedge fund manager's refusal to honor the withdrawal request and return the seed investor's capital in full was a violation of the Seeder Agreement and a breach of contract. The court held that, in the alternative, even if the Gates were potentially applicable, it was a breach of fiduciary duty for the hedge fund manager to use the Gates solely for a selfish reason. Therefore, the court ordered the immediate return to the seed investor of all of its capital and awarded interest to compensate it for the delay. The court also disposed of several other claims raised by the hedge fund manager and the seed investor.

This case arose when appellant alleged claims of tortuous interference with contract or business expectancy and violation of the Arkansas Deceptive Trade Practices Act (ADTPA), Ark. Code Ann. 4-88-101, et seq. Appellant subsequently sought a temporary retraining order and preliminary injunction after appellee terminated appellant's patient privileges at a residential nursing home. The court held that appellant did not meet the factors in the Dataphase Syst. Inc. v. C.L. Syst., which evaluated whether to issue an injunction. Consequently, the court held that the district court did not abuse its discretion in denying the motion for a preliminary injunction and the judgment was affirmed.

This suit stemmed from the efforts of plaintiff and its owner and founder to obtain a patent for an invention related to personalized postage stamps and the suit involved state law claims of fraud and breach of fiduciary duty in connection with a patent application. Plaintiff appealed the district court's grant of summary judgment in favor of defendants, holding that there was no genuine issue of material fact as to whether plaintiff's claims were time-barred such that defendants were entitled to judgment as a matter of law and that in the alternative, there was no genuine issue of material fact as to the causation elements of plaintiff's claims. The court held that this case raised issues of patent law, and those issues were substantial because of the special federal interest in developing a uniform body of patent law in the Federal Circuit as recognized in Scherbatskoy v. Halliburton Co. and expressed by Congress's grant of exclusive appellate jurisdiction over patent cases to that court. Therefore, the court held that it lacked jurisdiction over the appeal and transferred the suit to the United States Court of Appeals for the Federal Circuit pursuant to 28 U.S.C. 1631.