Justia Civil Procedure Opinion Summaries

The case involves Dianna Murphy, who sued Thomas Schaible, her financial advisor and brother-in-law, for breaching his fiduciary duty. Thomas managed an investment account jointly held by Dianna and her husband Michael. Amidst marital difficulties, Michael instructed Thomas to transfer $2.5 million from the joint account to a bank account in Colorado, which Michael then moved to a Mexican account solely under his control. Dianna was not informed of this transfer and claimed that Thomas failed to protect her interests, despite knowing about the couple's marital issues and her interest in dividing their assets.The United States District Court for the District of Colorado heard the case. The jury found Thomas liable for breaching his fiduciary duty and awarded Dianna $600,000 in economic damages. Thomas filed a motion for judgment as a matter of law under Fed. R. Civ. P. 50(b), arguing that Dianna suffered no legally compensable injury and that he did not breach any fiduciary duty by following Michael’s instructions. The district court denied this motion and awarded Dianna prejudgment interest.The United States Court of Appeals for the Tenth Circuit reviewed the case. The court affirmed the district court’s judgment, holding that Thomas breached his fiduciary duty by failing to inform Dianna of the transfer and not advising her on steps to protect her interests. The court also upheld the award of prejudgment interest, rejecting Thomas’s procedural arguments. The court emphasized that fiduciary duties include the duty to inform and act impartially, which Thomas failed to do. The judgment against Thomas was affirmed, and the award of prejudgment interest was deemed procedurally sound. View "Murphy v. Schaible" on Justia Law

The case involves a failed business relationship between Mike Jones, Jeremy Sligar, and Sligar's business, Overtime Garage, LLC. Jones claimed they formed a joint venture in 2011 to buy and sell used vehicles, which Sligar disputed. The relationship deteriorated, and Sligar terminated the venture in 2016. Jones filed a complaint in 2016 seeking a declaratory judgment, dissolution of the joint venture, and other relief. Sligar counterclaimed for similar relief. During the litigation, Safaris Unlimited, LLC, bought Jones's interest in the case at a sheriff's sale and settled the case by dismissing Jones's claims against Sligar.The District Court of the Fifth Judicial District, Twin Falls County, denied Jones's motion to set aside the judgment in the first case (Sligar I) and granted summary judgment to Sligar in the second case (Sligar II), finding that Jones's claims were barred by res judicata. The court also awarded attorney fees to Sligar and Safaris, finding Jones's motion to set aside the judgment was frivolous and untimely. Jones appealed these decisions, arguing the consolidation of small claims actions with Sligar I was improper and that his Rule 60(b) motion was timely.The Supreme Court of Idaho affirmed the district court's decisions. It held that the consolidation of the small claims actions with Sligar I was proper, as the small claims were related to the disputed property in Sligar I. The court also found that Jones did not file his Rule 60(b) motion within a reasonable time, as he delayed over five months without a valid reason. Additionally, the court upheld the summary judgment in Sligar II, agreeing that Jones's claims were barred by res judicata. The court awarded attorney fees to Sligar for the appeal in Sligar I but not in Sligar II, as Sligar did not prevail on its cross-appeal. View "Jones v. Sligar" on Justia Law

In 2006, David and Jill Landrum, along with Michael and Marna Sharpe, purchased land in Madison County to develop a mixed-use project called the Town of Livingston. The project stalled due to the 2008 financial crisis and legal issues. In 2010, Jill and Marna formed Livingston Holdings, LLC, which owned the development properties. Marna contributed more financially than Jill, leading to a disparity in ownership interests. In 2014, Marna sold her interest to B&S Mississippi Holdings, LLC, managed by Michael Bollenbacher. Jill stopped making her required monthly contributions in December 2018.The Madison County Chancery Court disqualified Jill as a derivative plaintiff, realigned Livingston Holdings as a defendant, and dismissed several claims. The court found that Jill did not fairly and adequately represent the interests of the company due to personal interests and economic antagonisms. The court also granted summary judgment in favor of several defendants and denied the Landrums' remaining claims after a bench trial.The Supreme Court of Mississippi reviewed the case and affirmed the lower court's decision to disqualify Jill as a derivative plaintiff and exclude the Landrums' expert witness. The court found that Jill's personal interests and actions, such as failing to make required contributions and attempting to gain control of the company, justified her disqualification. The court also affirmed the dismissal of claims for negligent omission, misstatement of material facts, civil conspiracy, fraud, and fraudulent concealment due to the Landrums' failure to cite legal authority.However, the Supreme Court reversed and remanded the case on the issues of remedies and attorneys' fees under the Second Memorandum of Understanding (MOU) and the alleged breach of fiduciary duty between B&S and Jill. The court found that the chancellor erred in interpreting the Second MOU as providing an exclusive remedy and remanded for further proceedings to determine if Livingston is entitled to additional remedies and attorneys' fees. The court also remanded for factual findings on whether B&S breached its fiduciary duty to Jill regarding property distribution and tax loss allocation. View "Landrum v. Livingston Holdings, LLC" on Justia Law

Petitioners opened brokerage accounts with Stifel, Nicolaus & Company, managed by Coleman Devlin. Dissatisfied with Devlin's performance, they filed for arbitration with the Financial Industry Regulatory Authority (FINRA), alleging negligence, breach of contract, breach of fiduciary duty, negligent supervision, and violations of state and federal securities laws. After nearly two years of hearings, the arbitration panel ruled in favor of Stifel and Devlin without providing a detailed explanation, as the parties did not request an "explained decision."Petitioners moved to vacate the arbitration award in the United States District Court for the District of Maryland, arguing that the arbitration panel manifestly disregarded the law, including federal securities law. The district court denied the motion, stating that the petitioners failed to meet the high standard required to prove manifest disregard of the law. The court noted that the petitioners were essentially rearguing their case from the arbitration.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court noted that the Supreme Court's decision in Badgerow v. Walters requires an independent jurisdictional basis beyond the Federal Arbitration Act (FAA) itself for federal courts to have jurisdiction over petitions to vacate arbitration awards. Since the petitioners did not provide such a basis, the Fourth Circuit vacated the district court's judgment and remanded the case with instructions to dismiss the petition for lack of jurisdiction. The court emphasized that claims of manifest disregard of federal law do not confer federal-question jurisdiction. View "Friedler v. Stifel, Nicolaus, & Company, Inc." on Justia Law

Tegra Corporation, a minority interest holder in Lite-Form Technologies, LLC, filed a derivative action against Patrick Boeshart, the LLC’s manager and president, and Sandra Boeshart, the LLC’s bookkeeper and office manager. Tegra alleged that the Boesharts used their positions to enrich themselves at the expense of the LLC. Specific allegations included engaging the LLC in above-market leases with entities they controlled, paying themselves excessive salaries and bonuses, and mismanaging LLC funds by charging personal expenses to the LLC.The District Court for Dakota County dismissed the derivative claims, concluding that a special litigation committee (SLC) appointed under Neb. Rev. Stat. § 21-168 had conducted its investigation and made its recommendation in good faith, independently, and with reasonable care. The SLC, led by Cody Carse, recommended that the claims be settled through a member meeting rather than litigation. Tegra appealed, arguing that the SLC did not act with reasonable care.The Nebraska Supreme Court reviewed the case de novo and found that the SLC did not exercise reasonable care in its investigation. The court noted that Carse failed to consider the legal elements of Tegra’s claims, did not conduct a cost-benefit analysis, and improperly delegated his duties to the LLC’s members. The court emphasized that Carse’s investigation lacked thoroughness and that he did not adequately assess the potential recovery for the LLC. Consequently, the court reversed the district court’s dismissal of the derivative claims and remanded the case for further proceedings, instructing the district court to dissolve any stay of discovery and allow the action to proceed under Tegra’s direction. The dismissal of Tegra’s individual claims was affirmed. View "Tegra Corp. v. Boeshart" on Justia Law

WasteXperts, Inc. (WasteXperts) filed a complaint against Arakelian Enterprises, Inc. dba Athens Services (Athens) and the City of Los Angeles (City) in June 2022. WasteXperts alleged that Athens, which holds a waste collection franchise from the City, sent a cease and desist letter to WasteXperts, arguing that WasteXperts was not legally permitted to handle Athens’s bins. WasteXperts sought judicial declarations regarding the City’s authority and Athens’s franchise rights, and also asserted tort claims against Athens for interference with contract, interference with prospective economic advantage, unfair competition, and trade libel.The Superior Court of Los Angeles County granted Athens’s anti-SLAPP motion to strike the entire complaint, finding that the claims were based on Athens’s communications, which anticipated litigation and were therefore protected activity. The court also held that the commercial speech exemption did not apply and that WasteXperts had no probability of prevailing on the merits of its claims. WasteXperts’s request for limited discovery was denied.The California Court of Appeal, Second Appellate District, Division Four, reversed the trial court’s order. The appellate court concluded that the declaratory relief claim did not arise from protected activity, as it was based on an existing dispute over the right to move waste collection bins, not on the prelitigation communications. The court also found that the commercial speech exemption applied to Athens’s communications with WasteXperts’s clients, removing those communications from the protection of the anti-SLAPP statute. Consequently, the tort claims did not arise from protected activity. The appellate court did not address the probability of WasteXperts prevailing on the merits or the request for limited discovery. View "Wastexperts, Inc. v. Arakelian Enterprises, Inc." on Justia Law

Dr. Igor DeCastro, a neurosurgeon, worked at the Hot Springs Neurosurgery Clinic for seven years. He claimed that after his initial 18-month salary period, he was supposed to receive compensation based on the net proceeds of his production, less 33% of the clinic's overhead. However, he alleged that he never received more than his base salary because Dr. James Arthur, the clinic's owner, diverted the funds into a "secret account." DeCastro also sued Bank OZK, where the account was held, leading the bank to request the court to determine the rightful owner of the funds.The United States District Court for the Western District of Arkansas dismissed DeCastro's amended complaint for failing to include essential facts, such as specific amounts received, production details, and overhead costs. The court also disbursed the funds to Arthur and denied DeCastro's motions for reconsideration, discovery, and leave to file a second amended complaint. DeCastro's subsequent attempts to revive the case, including a counterclaim in an unrelated contribution action, were dismissed based on res judicata.The United States Court of Appeals for the Eighth Circuit reviewed the case and affirmed the district court's decision. The appellate court agreed that DeCastro's amended complaint lacked sufficient factual matter to state a plausible claim for relief. The court noted that the complaint was filled with legal conclusions rather than specific facts about the alleged breach. Additionally, the court found no abuse of discretion in the district court's denial of DeCastro's post-dismissal motions, as the employment agreement he later produced did not support his original claims. The court also upheld the dismissal of DeCastro's counterclaim based on res judicata, as it was identical to the previously adjudicated claims. View "DeCastro v. Arthur" on Justia Law

The Securities and Exchange Commission (SEC) brought a civil enforcement action against Dale Chappell and his investment entities for insider trading. The SEC alleged that Chappell traded securities based on material, nonpublic information about the FDA's feedback on a drug developed by Humanigen, a company in which Chappell's entities were the largest shareholders. The FDA had expressed significant concerns about the drug's clinical trial and recommended an additional trial. Despite this, Humanigen submitted an application for Emergency Use Authorization (EUA) without conducting a second trial. Chappell sold a significant portion of his Humanigen stock before the FDA's denial of the EUA application was publicly announced, avoiding substantial losses.In the District Court, the SEC sought and obtained a preliminary injunction to freeze Chappell’s assets. Chappell appealed this decision to the United States Court of Appeals for the Third Circuit.The Third Circuit affirmed the District Court's decision. It found that the SEC had shown a likelihood of success on its claim that Chappell violated insider trading laws. The court concluded that the FDA's feedback was material and that Chappell had the necessary mindset to commit fraud. The court also found that the preliminary injunction factors, including irreparable harm, balance of equities, and public interest, supported the injunction. The court noted that without the injunction, there was a substantial potential injury to Humanigen shareholders if Chappell was able to move assets out of reach of future judgment creditors. View "Securities and Exchange Commission v. Chappell" on Justia Law

This case involves a dispute between siblings Elizabeth and Jason Carter, who are both licensed dentists and co-owners of Carter Dental. In 2020, Jason accused Elizabeth of misusing the practice’s funds for her personal benefit. The parties agreed to mediation, which resulted in a settlement agreement that included a noncompete clause. Elizabeth later refused to sign a written mutual release, leading Jason to move to enforce the settlement agreement. The district court found the settlement agreement and noncompete clause enforceable and dismissed the case with prejudice. Elizabeth appealed, arguing that the noncompete clause and the settlement agreement were unenforceable.The Supreme Court of the State of Idaho affirmed the district court's judgments. The court found that Elizabeth was estopped from arguing that the settlement agreement was unenforceable because she had not appealed the district court’s dismissal of the case with prejudice. The court also held that the district court did not err in awarding attorney fees and costs to Jason and Carter Dental. The court concluded that Jason and Carter Dental were entitled to attorney fees and costs on appeal. View "Carter Dental v. Carter" on Justia Law

A mortgage company, Approved Mortgage Corporation, initiated two wire transfers, but the instructions for the transactions were altered by a third party. The funds were transferred to Truist Bank, which deposited the funds into an account it had previously flagged as suspicious. The funds were then withdrawn in the form of cashier’s checks. Approved Mortgage sued Truist, seeking damages in the amount of the transfers. The company asserted two claims under the Indiana Uniform Commercial Code (UCC), which governs the rights, duties, and liabilities of banks and their customers with respect to electronic funds transfers, and a common law negligence claim.The district court dismissed the UCC claims due to lack of privity between Approved Mortgage and Truist, and dismissed the negligence claim as preempted by the UCC. The court held that the UCC does not establish an independent remedy and must be read with another section of the UCC, which entitles a sender to a refund only from the bank which received its payment.On appeal, the United States Court of Appeals for the Seventh Circuit affirmed the dismissal of the UCC claims, agreeing with the lower court that the UCC does not establish an independent remedy and must be read with another section of the UCC. However, the appellate court reversed the dismissal of the negligence claim, holding that to the extent the negligence claim arises from Truist’s issuance of the cashier’s checks after Truist credited the funds to the suspicious account, the claim is not preempted by the UCC. The case was remanded to the district court for further proceedings. View "Approved Mortgage Corporation v. Truist Bank" on Justia Law