Justia Civil Procedure Opinion Summaries

A Maryland real estate investment trust with over 12,000 shareholders entered into an advisory agreement with UMTH General Services, L.P. and its affiliates to manage the trust’s investments and operations. The agreement stated that the advisor was in a fiduciary relationship with the trust and its shareholders, but individual shareholders were not parties to the agreement. After allegations of mismanagement and improper advancement of legal fees surfaced, a shareholder, Nexpoint Diversified Real Estate Trust, sued derivatively in Maryland. The Maryland court dismissed the claims for lack of standing and subject matter jurisdiction. Nexpoint then transferred its shares to a subsidiary, which, along with Nexpoint, sued the advisors directly in Texas, alleging corporate waste and mismanagement, and claimed the advisory agreement created a duty to individual shareholders.In the 191st District Court of Dallas County, the advisors filed a plea to the jurisdiction, a verified plea in abatement, and special exceptions, arguing that the claims were derivative and belonged to the trust, so the shareholders lacked standing and capacity to sue directly. The trial court denied these motions. The advisors sought mandamus relief from the Fifth Court of Appeals, which was denied, and then petitioned the Supreme Court of Texas.The Supreme Court of Texas held that while the shareholders alleged a financial injury sufficient for constitutional standing, they lacked the capacity to sue individually because the advisory agreement did not create a duty to individual shareholders, nor did it confer third-party beneficiary status. The agreement benefited shareholders collectively through the trust, not individually. The court conditionally granted mandamus relief, directing the trial court to vacate its order and dismiss the case with prejudice, holding that shareholders must pursue such claims derivatively and in the proper forum as specified by the trust’s governing documents. View "IN RE UMTH GENERAL SERVICES, L.P." on Justia Law

In this case, the plaintiff bank sought to foreclose on a residential property in Vermont after the defendant defaulted on a $365,000 loan originally issued by Countrywide Home Loans, Inc. The mortgage was assigned to the plaintiff, and the bank alleged it was the holder of the note. However, the copy of the note attached to the complaint was made out to the original lender and lacked any indorsement. Over the years, the case was delayed by mediation, bankruptcy, and various motions. At trial, the plaintiff produced the original note with an undated indorsement in blank, but could not establish when it became the holder of the note.The Vermont Superior Court, Windsor Unit, Civil Division, denied the plaintiff’s initial summary judgment motion, finding that the plaintiff had not established standing under the Uniform Commercial Code. A later summary judgment was vacated due to procedural errors. After a hearing, the court found the plaintiff was currently a holder of the note and that the defendant had defaulted, but concluded that the plaintiff failed to prove it had the right to enforce the note at the time the complaint was filed, as required by U.S. Bank National Ass’n v. Kimball. Judgment was entered for the defendant, and the plaintiff’s post-judgment motion to designate the judgment as without prejudice was denied.On appeal, the Vermont Supreme Court affirmed the lower court’s decision. The Court held that a foreclosure plaintiff must demonstrate standing by showing it had the right to enforce the note at the time the complaint was filed, declining to overrule or limit Kimball. The Court also declined to address whether the judgment should be designated as without prejudice, leaving preclusion consequences to future proceedings. View "The Bank of New York Mellon v. Quinn" on Justia Law

A commercial real estate broker and consultant partnered with three brothers who owned an architecture and construction company to develop and lease a commercial property. They planned to form a limited liability company (LLC) as equal members, contributing professional services and cash, but did not formalize their agreement in writing. After a dispute arose over a broker commission, the brothers executed a backdated operating agreement that excluded the broker from LLC membership. The broker alleged he was unfairly cut out of the deal and sued for breach of contract and unjust enrichment.The Marshall Circuit Court granted summary judgment to the brothers on the contract claim, finding that Indiana law required written confirmation for LLC membership, which the broker lacked. The court also denied the broker’s request for a jury trial on the unjust enrichment claim, holding that both the claim and the defense of unclean hands were equitable issues for the judge. After a bench trial, the court ruled against the broker on unjust enrichment, finding he failed to prove his claim and that unclean hands barred recovery.On appeal, the Indiana Court of Appeals reversed, holding that initial LLC membership could be established by oral agreement and that unjust enrichment claims for money damages were legal claims entitled to a jury trial. The Indiana Supreme Court granted transfer, vacating the appellate decision.The Indiana Supreme Court held that LLC membership under the Business Flexibility Act requires either a written operating agreement or written confirmation, and the broker was not a member as a matter of law. However, genuine factual disputes remained regarding whether the brothers breached an agreement to make him a member, precluding summary judgment. The Court also held that unjust enrichment claims for money damages are legal claims subject to a jury trial, and the unclean hands doctrine may be asserted as a defense. The judgment was vacated and the case remanded for a jury trial on both claims. View "Andrew Nemeth Properties, LLC v. Panzica" on Justia Law

Two individuals, Kellogg and Mathiesen, formed a limited liability company (LLC) to provide in-home personal care services. Over time, disputes arose regarding ownership interests, capital contributions, and management of the company. The parties executed several agreements, including a 2017 contract transferring Mathiesen’s ownership to Kellogg due to his ineligibility as a Medicaid provider, and a 2019 contract in which Kellogg sold Mathiesen a 50% interest in the LLC’s assets. Allegations of mismanagement, misuse of company funds, and inappropriate conduct by Mathiesen led to litigation between the parties, including derivative claims and counterclaims. Kellogg also sought judicial dissolution of the LLC, citing unlawful conduct and irreconcilable differences.The District Court for Douglas County held a bench trial and found both Kellogg and Mathiesen to be 50-percent co-owners or managers of the LLC. The court denied all derivative claims and counterclaims, citing unclean hands by both parties. However, the court granted Kellogg’s application for dissolution, finding Mathiesen’s conduct oppressive and fraudulent, and ordered the appointment of a receiver to oversee the dissolution and possible sale of the company. Mathiesen appealed both the judgment and the receiver’s appointment.The Nebraska Supreme Court reviewed the consolidated appeals, limiting its review to plain error due to deficiencies in Mathiesen’s appellate briefing. The court determined it had jurisdiction over both appeals and addressed Mathiesen’s argument that Kellogg lacked standing. The court held that Kellogg remained a member of the LLC at the time of filing her derivative action and thus had standing. Finding no plain error in the record, the Nebraska Supreme Court affirmed the district court’s judgment and the order appointing a receiver. View "Kellogg v. Mathiesen" on Justia Law

A married couple owned all shares of a corporation that operated a boat dealership and served as an authorized dealer for a boat manufacturer. After the manufacturer ended its relationship with the dealership, the business failed, leading to foreclosure on its property and the couple’s personal bankruptcies. The couple then sued the manufacturer for intentional misrepresentation, fraudulent concealment, and promissory fraud, alleging that the manufacturer’s conduct caused the loss of their business and personal assets. A jury awarded them $900,000 in compensatory damages for the loss of equity in the dealership’s real property.Following the verdict, the manufacturer filed post-trial motions and, for the first time at the hearing, challenged the couple’s standing, arguing that the damages related to property owned by the corporation, not the individuals, and that any claims should have been brought derivatively on behalf of the corporation. The Circuit Court for Loudon County agreed, finding the couple lacked “statutory standing” and dismissing the suit for lack of subject matter jurisdiction. The Tennessee Court of Appeals reversed, holding that shareholder standing limitations are not jurisdictional and can be waived, and that the manufacturer had forfeited its challenge by raising it too late.The Supreme Court of Tennessee affirmed the Court of Appeals. It held that the couple had constitutional standing to bring their claims, as they alleged injury to their legal rights as shareholders. The Court further held that the trial court erred in applying statutory standing principles, since the claims were not brought as a derivative action. Instead, the issue implicated shareholder standing, which is non-jurisdictional and subject to forfeiture if not timely raised. The case was remanded for further proceedings. View "Houghton v. Malibu Boats, LLC" on Justia Law

A fuel distribution company sought to acquire a competitor in Western Alaska, prompting the State to sue for anticompetitive conduct under Alaska’s consumer protection laws. To resolve the dispute, the State and the company negotiated a consent decree requiring the company to divest a portion of its fuel storage capacity in Bethel to another distributor, Delta Western, before completing the acquisition. The consent decree specified that it would expire in 30 years or could be dissolved by court order for good cause. Delta Western was not a party to the consent decree, but entered into a separate fuel storage contract with the acquiring company as required by the decree. The contract’s term extended beyond the initial five years at Delta Western’s option.Years later, the Superior Court for the State of Alaska, Second Judicial District, Nome, dissolved the consent decree at the acquiring company’s request. The company then notified Delta Western that it considered the fuel storage contract terminated as a result. Delta Western filed a breach of contract action in Anchorage Superior Court, seeking to enforce the contract and arguing that its terms were independent of the consent decree. The contract case was transferred to Nome Superior Court, which issued a preliminary ruling that the contract remained valid despite the dissolution of the consent decree. The court also vacated its initial order dissolving the consent decree to allow Delta Western to intervene and present its position.The Supreme Court of the State of Alaska reviewed whether dissolution of the consent decree automatically terminated the fuel storage contract and whether the superior court abused its discretion by permitting Delta Western to intervene. The court held that dissolution of the consent decree did not automatically void the contract between the parties, and that the superior court did not abuse its discretion in allowing Delta Western to intervene. The Supreme Court affirmed the superior court’s decisions and lifted the stay on the contract case. View "Crowley Marine Services, Inc. v. State of Alaska" on Justia Law

Diego Pavia, a college football player, sought to play for Vanderbilt University during the 2025 season. After a successful 2024 season, Pavia faced ineligibility under National Collegiate Athletic Association (NCAA) rules, which limit athletes to four seasons of intercollegiate competition, including seasons played at junior colleges. Pavia’s path included time at a junior college, New Mexico State University, and Vanderbilt. The NCAA counted his 2021 junior college season toward his eligibility, effectively barring him from playing in 2025. Pavia argued that this rule violated the Sherman Act and sought injunctive relief to allow him to play in the 2025 and 2026 seasons.The United States District Court for the Middle District of Tennessee granted Pavia a preliminary injunction, preventing the NCAA from enforcing the rule against him for the 2025 season and from applying its restitution rule to Vanderbilt or Pavia based on his participation. The NCAA appealed this decision to the United States Court of Appeals for the Sixth Circuit.While the appeal was pending, the NCAA issued a waiver allowing all similarly situated athletes, including Pavia, to play in the 2025 season. The NCAA confirmed that this waiver would remain in effect regardless of the outcome of the appeal. The United States Court of Appeals for the Sixth Circuit determined that, because Pavia had already received the relief he sought at the preliminary injunction stage, the appeal was moot. The court held that it could not grant any further effectual relief and dismissed the appeal for lack of jurisdiction. The court also declined to vacate the preliminary injunction, finding that the NCAA’s own actions had caused the case to become moot. View "Pavia v. NCAA" on Justia Law

Angel Lynn Realty, Inc. (ALR) entered into a partnership agreement with Real Estate Portfolio Management, LLC (REPM) to purchase, rehabilitate, and sell properties, splitting profits equally. ALR alleged that REPM breached the agreement by failing to pay over $800,000 in profits and also breached its fiduciary duties. ALR further claimed that Steve George, REPM’s sole member, was the alter ego of REPM. After REPM failed to pay the judgment, ALR conducted a debtor’s examination and asserted that postjudgment actions by George fraudulently drained REPM’s assets to avoid payment.The Superior Court of Sacramento County held a bench trial and found in favor of ALR on the breach of partnership and fiduciary duty claims, awarding nearly $1 million in damages and interest against REPM. However, the court found that ALR had not proven George was REPM’s alter ego and entered judgment accordingly. When ALR later moved to amend the judgment to add George as a judgment debtor based on alleged postjudgment fraudulent conduct, the trial court denied the motion, ruling that collateral estoppel barred relitigation of the alter ego issue since it had already been decided.The California Court of Appeal, Third Appellate District, reviewed the case and held that the trial court erred by applying collateral estoppel without considering whether new facts or changed circumstances had arisen since the prior decision. The appellate court clarified that collateral estoppel does not bar reconsideration of an issue if material facts have changed after the original judgment. The order denying ALR’s motion to amend the judgment was reversed and the case remanded for the trial court to determine whether postjudgment events warrant a different outcome on the alter ego issue. View "Angel Lynn Realty, Inc. v. George" on Justia Law

In February 2016, Kevin Frost kidnapped his estranged wife, Sherri Frost, during a contentious divorce. He lured her into a situation where he could seize her, forced her into his vehicle, and held her for several hours in a barn owned by a family associate. During captivity, Kevin made Sherri severely intoxicated and later delivered her to the emergency room before turning himself in. Kevin pleaded guilty to assault and kidnapping and served a prison sentence. Sherri subsequently filed a civil suit against Kevin, Frost Ranching Corporation (the Ranch), and other parties, seeking damages for injuries and emotional distress resulting from the kidnapping. She alleged that Kevin acted, at least in part, to prevent her from obtaining an interest in the Ranch during the divorce.The Twenty-First Judicial District Court, Ravalli County, dismissed claims against some defendants and granted summary judgment to Frost Limited Partnership. The court denied summary judgment to the Ranch on vicarious liability, allowing that issue to proceed to trial. At trial, Sherri presented evidence of medical expenses, pain and suffering, and other damages. The jury found Kevin liable for several torts but awarded only $20,000 in damages, which matched the lower end of medical expenses and did not account for pain and suffering. The District Court granted Sherri’s motion for a new trial, finding the jury’s award unsupported by substantial evidence, as it disregarded uncontradicted, credible evidence of pain and suffering. The court also granted the Ranch’s motion for judgment as a matter of law, holding that the Ranch could not ratify Kevin’s conduct absent acceptance of any benefit from the kidnapping.The Supreme Court of the State of Montana affirmed both rulings. It held that the jury’s damages award was not supported by substantial evidence and that a new trial on damages was warranted. The court also held that, under Montana law, ratification requires acceptance of a benefit, which was absent here, so the Ranch could not be held liable for Kevin’s actions. View "Frost v. Frost" on Justia Law

Several plaintiffs, including an individual, an investment fund, and a limited partnership, engaged in trading derivatives tied to the Sterling London Interbank Offered Rate (Sterling LIBOR). They alleged that a group of major banks conspired to manipulate Sterling LIBOR for their own trading advantage. The plaintiffs claimed that the banks coordinated false submissions to the rate-setting process, sometimes inflating and sometimes deflating the benchmark, which in turn affected the value of Sterling LIBOR-based derivatives. The plaintiffs asserted that this manipulation was orchestrated through internal and external communications among banks and with the help of inter-dealer brokers.The United States District Court for the Southern District of New York reviewed the case and dismissed the plaintiffs’ claims under the Sherman Act and the Commodity Exchange Act (CEA). The district court found that two plaintiffs lacked antitrust standing because they were not “efficient enforcers” and had not transacted directly with the defendants, resulting in only indirect and remote damages. The court also determined that the third plaintiff, a limited partnership, lacked the capacity to sue and had not properly assigned its claims to a substitute entity. Additionally, the court found that one plaintiff failed to adequately plead specific intent for the CEA claims.On appeal, the United States Court of Appeals for the Second Circuit affirmed the district court’s dismissal, but on a narrower ground. The Second Circuit held that none of the plaintiffs plausibly alleged actual injury under either the Sherman Act or the CEA. The court explained that because the alleged manipulation was multidirectional—sometimes raising and sometimes lowering Sterling LIBOR—the plaintiffs did not show that they suffered net harm as a result of the defendants’ conduct. Without specific allegations of transactions where they were harmed by the manipulation, the plaintiffs’ claims could not proceed. The judgment of dismissal was affirmed, and the cross-appeal was dismissed as moot. View "Sonterra Cap. Master Fund, Ltd. v. UBS AG" on Justia Law