Justia Civil Procedure Opinion Summaries

In the case considered by the United States Court of Appeals for the Fifth Circuit, employee Michael Ashford sued his former employer, Aeroframe Services, and Aviation Technical Services (ATS), alleging unpaid wages and other damages. The case, which began in Louisiana state court and was later removed to federal court, was complicated by numerous claims and counterclaims among the parties, including third-party defendant Roger Allen Porter, who was Aeroframe's sole principal.Initially, Ashford and other employees pursued claims against Aeroframe and ATS, alleging that negotiations between the two companies led to Aeroframe's insolvency and employees' loss of wages. ATS, in turn, cross-claimed against Aeroframe and Porter, alleging financial losses from its failed attempt to acquire Aeroframe. Porter also cross-claimed against ATS, asserting tortious interference and unfair trade practices.The Court of Appeals previously remanded the case to the district court, finding that the parties were not aligned in their interests at the time of the lawsuit's filing, and the district court lacked jurisdiction due to lack of diversity among the parties. Upon reconsideration, however, the district court found new evidence indicating that the interests of Aeroframe, Porter, and the employees were aligned from the inception of the litigation and that an irrevocable settlement agreement between them existed, allowing removal under the relevant law.The Court of Appeals affirmed the district court's ruling, finding that the non-ATS parties' interests were aligned from the litigation's inception. The Court also affirmed the district court's dismissal of all claims against ATS and the individual judgments against Aeroframe in favor of the employees. View "Ashford v. Aviation Technical Svc" on Justia Law

The case in question involves a receiver, Burton Wiand, appointed after the collapse of a $78 million Ponzi scheme operated by Oasis, who sued ATC Brokers Ltd. (where Oasis held accounts), David Manoukian (owner of ATC Brokers), and Spotex LLC (which provided software to Oasis). Wiand alleged common-law tort claims against the defendants and fraudulent-transfer claims against ATC Brokers only. The district court dismissed Wiand’s complaint with prejudice, ruling that Wiand lacked standing to sue ATC Brokers and Manoukian and that Spotex was immune under the Communications Decency Act.The United States Court of Appeals for the Eleventh Circuit found that the district court erred in dismissing the fraudulent-transfer claims for lack of standing. The court explained that a receiver for a Ponzi estate has standing to maintain fraudulent-transfer claims on behalf of the estate. However, the court agreed with the district court that Wiand lacked standing to maintain the tort claims, as the Oasis corporate entities were not separate and distinct from the Ponzi scheme, and Wiand couldn't allege an injury to sustain his tort claims.As a result, the court reversed the dismissal of the fraudulent-transfer claims and remanded for further proceedings, and vacated the dismissal with prejudice of the tort claims and remanded with instructions to dismiss without prejudice. View "Wiand v. ATC Brokers Ltd." on Justia Law

In 2015, Christopher Novinger and ICAN Investment Group, L.L.C. were sued by the Securities and Exchange Commission (SEC) for fraudulently offering and selling life settlement interests in violation of the Securities and Exchange Acts. As part of the settlement, Novinger and ICAN were prohibited from casting doubt on the validity of the SEC’s investigation or enforcement against them or proclaiming their innocence unless they also indicated their lack of innocence.Later, Novinger sought judicial review of the decree, claiming it violated his First Amendment rights. His motion for relief was denied by the district court, and this decision was affirmed by the United States Court of Appeals for the Fifth Circuit. Novinger then moved for a declaratory judgment under the Declaratory Judgment Act (DJA) and Federal Rule of Civil Procedure 57, essentially raising the same claims as in his initial motion. The district court again denied his motion, ruling that it was procedurally improper and that there was no change in the law or facts that called for a modification of the decrees.Novinger appealed this decision, but the Fifth Circuit ruled that it did not have jurisdiction to review a procedurally improper motion that was denied as such. The court stated that the district court's order did not change the status quo or resolve any substantive issues, and thus, it was not a final decision that could be appealed. The court also rejected the assertion that the motion for declaratory judgment could be construed as an appropriate pleading under the DJA, maintaining the distinction between a pleading as an initial filing in a case and a motion as a subsequent filing. The appeal was dismissed for lack of jurisdiction. View "SEC v. Novinger" on Justia Law

This case revolves around the trial court's discretion to grant leave for amending a complaint under CPLR 3025 (b). The plaintiffs, a group of investors, filed an action against the defendants, the managers of their investment company, alleging breach of fiduciary duty and breach of the operating agreement. Their second amended complaint was dismissed by the Appellate Division due to lack of standing. The Supreme Court subsequently granted the plaintiffs' leave to file a third amended complaint to rectify the standing issue, attracting objections from the defendants who claimed that a new action was required.The Appellate Division sided with the defendants. It held that the Supreme Court possessed no discretion to allow amendment of a complaint that had been dismissed by the Appellate Division. The plaintiffs appealed this decision.The Court of Appeals reversed the decision of the Appellate Division. It held that if an appellate court has dismissed a complaint without prejudice and not on the merits, and the defect could be rectified by amendment, the trial court has the discretion to grant leave for amendment under CPLR 3025 (b). This ruling is in line with the trial court's general discretion to manage its docket for judicial economy. The Court also held that the motion to amend was timely, as it was filed well within the six months provided by CPLR 205 (a), even after accounting for the tolling period due to Executive Order 202.8. The case was remitted to the Appellate Division for further proceedings following this judgement. View "Favourite Ltd. v Cico" on Justia Law

The Nebraska Supreme Court affirmed a decision holding Allen Crow, a corporate officer, personally liable for unpaid use taxes of his former corporation, Direct Media Marketing, Inc. The court determined that Crow failed to rebut the presumption of correctness of the amount of use taxes assessed against Direct Media. The court further found that Crow was a responsible officer of Direct Media and willfully failed to pay Direct Media's use taxes, making him personally liable for the tax deficiency.Despite the Department of Revenue's significant delay in pursuing proceedings against Direct Media and Crow, the court did not find compelling circumstances or demonstrated prejudice that would warrant equitable relief. The court held that the doctrine of laches, which bars a party from relief due to delay, could not be applied against the government in its efforts to enforce a public right or protect a public interest. The court concluded that the delay did not absolve Direct Media and Crow of their liability. Therefore, the court affirmed the district court's order upholding the order of the Tax Commissioner that held Crow personally liable for Direct Media's unpaid taxes. View "Crow v. Nebraska Dept. of Rev." on Justia Law

A Puerto Rican company, Caribe Chem, filed a lawsuit against a Florida company, Southern Agricultural Insecticides, and two Puerto Rican entities. The case was initially non-removable to federal court due to lack of complete diversity among parties. After the Puerto Rican defendants were dismissed from the lawsuit based on the statute of limitations, Southern attempted to remove the case to federal court, citing now-complete diversity of parties. Caribe objected, and the district court ruled in Caribe's favor, ordering the case to be remanded to Commonwealth court. Southern appealed the remand order.The United States Court of Appeals for the First Circuit affirmed the district court's remand order. The court adopted the voluntary/involuntary rule, which states that a lawsuit initially lacking complete diversity can acquire it when all non-diverse parties are dismissed from the action. However, if the non-diverse defendants are dismissed without the plaintiff's acquiescence, the lawsuit is generally not removable. The court ruled that the dismissal of the non-diverse defendants was involuntary since it was over Caribe's objections. The court also stated that the plaintiff's decision not to appeal the dismissal does not make the dismissal voluntary. The court reaffirmed that the voluntary/involuntary rule precludes removal where non-diverse defendants are dismissed without plaintiff's voluntary action. The court also affirmed the district court's denial of Southern's motion to set aside the judgment under Rule 60. View "Caribe Chem Distributors, Corp. v. Southern Agricultural Insecticides, Inc." on Justia Law

In this case, five former customers of Peregrine Financial Group, Inc., a defunct futures commission merchant, filed a class action lawsuit against various defendants, including JPMorgan Chase Bank and National Futures Association. They claimed that their investments were wiped out due to fraudulent activities by Peregrine's CEO. The United States District Court for the Southern District of New York dismissed the federal claims as time-barred and declined to exercise supplemental jurisdiction over the state-law claims.On appeal, the United States Court of Appeals for the Second Circuit affirmed the lower court's decision. The main issue addressed by the Second Circuit was whether a party could compel a district court to exercise subject-matter jurisdiction on a theory of jurisdiction that the party raised untimely.The Court held that a party may not do so. The Court distinguished between objecting to a federal court's exercise of jurisdiction, which a party could do at any stage in the litigation, and invoking the district court’s jurisdiction, which can be forfeited if not raised timely. Therefore, although federal courts must ensure they have jurisdiction, there is no corresponding obligation to find and exercise jurisdiction on a basis not raised by the parties. The Court concluded that the district court was within its discretion to decline to consider the untimely raised theory of jurisdiction. View "Behrens v. JPMorgan Chase Bank, N.A." on Justia Law

In a complex and long-running series of legal disputes over attorney fees, two law firms, Shields Law Group and Paul Byrd Law Firm, and another firm, Hossley-Embry LLP, (collectively referred to as the "Objecting Firms") challenged the district court's approval of a settlement agreement among other firms involved in the litigation. The dispute arose from a class action lawsuit against Syngenta, an agricultural company, which was settled for $1.51 billion in 2018. One-third of the settlement was allocated for attorneys' fees, but the distribution of these fees among the numerous law firms involved in the case led to additional litigation.The district court approved a settlement agreement in which a group of firms (the Appellee Parties) agreed to pay $7 million to another firm, Watts Guerra. The Objecting Firms challenged this decision, arguing that it effectively reallocated money among the various pools of attorney fees. However, the Appellate Court concluded that the Objecting Firms lacked standing to challenge the district court's approval of the settlement agreement because they were not affected by it. The court also found that the Objecting Firms' challenges to the disbursement orders were moot. As a result, the court dismissed the appeals. View "SHIELDS LAW GROUP, LLC v. STUEVE SIEGEL HANSON LLP" on Justia Law

The case in question is a petition for a writ of mandamus filed by Abbott Laboratories, Abbvie Inc., Abbvie Products LLC, Unimed Pharmaceuticals LLC, and Besins Healthcare, Inc. These petitioners were involved in a patent and antitrust lawsuit concerning the drug AndroGel 1%. They sought a writ of mandamus after a district judge ruled that the application of the crime-fraud exception to the attorney-client privilege justified an order compelling the production of certain documents. The Petitioners claimed those documents were privileged.The Court of Appeals for the Third Circuit denied their petition. The court reasoned that the petitioners failed to meet the high standard for granting a petition for writ of mandamus. Specifically, they failed to show a clear and indisputable abuse of discretion or error of law, a lack of an alternate avenue for adequate relief, and a likelihood of irreparable injury.The court also found that the district court did not err in its interpretation of the crime-fraud exception to the attorney-client privilege as it applies to sham litigation. The court held that sham litigation, which involves a client’s intentional “misuse” of the legal process for an “improper purpose,” can trigger the crime-fraud exception. The court also rejected the argument that a "reliance" requirement must be applied in this context. View "In re: Abbott Laboratories" on Justia Law

In the case before the Court of Appeal, Fourth Appellate District Division One State of California, G.F. Galaxy Corporation (Galaxy) sought to enforce a default judgment against Phuoc Lee Johnson. After Johnson failed to pay the judgment, Galaxy filed a second action alleging Johnson was attempting to avoid the lien by transferring assets. While the second action was ongoing, Galaxy filed a cost memorandum seeking attorney fees and costs from the first two years of enforcement efforts. Johnson countered with a motion to tax costs, arguing Galaxy couldn't claim these costs until it prevailed in the second action.The trial court agreed with Johnson, granting his motion to tax costs with prejudice. The court concluded that a judgment creditor could not claim attorney fees and costs incurred in a separate action before prevailing in that action. Galaxy appealed, disagreeing with the interpretation that a "prevailing party" requirement existed in the relevant statute, Code of Civil Procedure section 685.040.The Court of Appeal reversed the trial court's decision. It held that section 685.040, which entitles a judgment creditor to reasonable and necessary costs of enforcing a judgment, does not contain a "prevailing party" requirement. The Court of Appeal found the trial court's interpretation erroneous and an abuse of discretion. The Court remanded the case for further proceedings, including determining whether the claimed attorney fees and costs were reasonable and necessary for enforcing the judgment. The Court also denied Johnson's motion to dismiss the appeal, motion to augment, and motion for judicial notice. View "G.F. Galaxy Corp. v. Johnson" on Justia Law