Justia Civil Procedure Opinion Summaries

Two counties sued Sherwin-Williams in state court, seeking abatement of the public nuisance caused by lead-based paint. Anticipating suits by other counties, Sherwin-Williams sued in federal court under 42 U.S.C. 1983. Sherwin-Williams claimed that “[i]t is likely that the fee agreement between [Delaware County] and the outside trial lawyers [is] or will be substantively similar to an agreement struck by the same attorneys and Lehigh County to pursue what appears to be identical litigation” and that “the Count[y] ha[s] effectively and impermissibly delegated [its] exercise of police power to the private trial attorneys” by vesting the prosecutorial function in someone who has a financial interest in using the government’s police power to hold a defendant liable. The complaint pleaded a First Amendment violation, citing the company’s membership in trade associations, Sherwin-Williams’ purported petitioning of federal, state, and local governments, and its commercial speech. The complaint also argued that the public nuisance theory would seek to impose liability “that is grossly disproportionate,” arbitrary, retroactive, vague, and “after an unexplainable, prejudicial, and extraordinarily long delay, in violation of the Due Process Clause.”The Third Circuit affirmed the dismissal of the suit. Sherwin-Williams failed to plead an injury in fact or a ripe case or controversy because the alleged harms hinged on the County actually filing suit. View "Sherwin Williams Co. v. County of Delaware" on Justia Law

Dr. Dominick Lembo employed Arlene Marchese in his dental practice as his office manager, and Karen Wright, a dental hygienist. Sometime before December 2011, Marchese and Wright unlawfully took possession of numerous checks totaling several hundred thousand dollars, forged Lembo’s indorsement on the checks, and deposited the proceeds from the forged checks into their personal accounts at TD Bank. In February 2015, Lembo filed a complaint against TD Bank, alleging that “TD Bank knew or should have known that Marchese and/or Wright were not permitted to negotiate checks made payable to [Lembo].” The complaint also alleged that by permitting them to negotiate checks with forged indorsements, TD Bank “aided and abetted Marchese and Wright in their fraudulent scheme and conduct.” The complaint did not assert that Lembo had a banking relationship with TD Bank. And Lembo did not file an action for conversion under the Uniform Commercial Code (UCC) within the three-year limitations period. Had Lembo done so, TD Bank would have been strictly liable for depositing or cashing those checks, subject to the defenses in N.J.S.A. 12A:3-405 or N.J.S.A. 12A:3-406. The trial court granted the Bank's motion to dismiss, finding that the UCC governed Lembo's remedies against the Bank, and “common law negligence is not such a remedy” in the absence of a “special relationship” between Lembo and the bank. The court also rejected Lembo’s argument that the Uniform Fiduciaries Law (UFL) provided an affirmative cause of action against the bank. The Appellate Division reversed, reading into the complaint the basis for an affirmative UFL claim, and remanded to allow Lembo to amend the complaint to assert such a claim. The New Jersey Supreme Court concluded the Appellate Division misconstrued the purpose of the UFL, finding the Legislature enacted the UFL not to create an affirmative cause of action against a bank but to provide a defense when the bank is sued for failing to take notice of and action on the breach of a fiduciary’s obligation. "The UFL confers a limited immunity on a bank, unless the bank acts in bad faith or has actual knowledge of a fiduciary breach." The Supreme Court found no affirmative cause of action arose under the statute; whether a UFL claim was adequately pled was therefore moot. Recognizing the predominant role the UCC plays in assigning liability for the handling of checks, the Supreme Court also found Lembo had no “special relationship” with the bank to sustain the common law causes of action. View "Lembo v. Marchese" on Justia Law

Since 2010, appellant Mark Spanakos has tried to gain control over and revive Hawk Systems, Inc., a void Delaware corporation, by filing a series of direct and derivative actions in Florida against former Hawk Systems insiders and taking several steps outside of court to establish himself as the Company’s majority stockholder and sole director. Spanakos was successful in his direct Florida litigation, having won a Partial Final Judgment in one action and favorable Summary Judgment rulings in another. Spanakos’s derivative claims in the third Florida action, however, were stayed to allow Spanakos to clarify his standing to pursue those claims. Accordingly, in 2018 Spanakos filed suit in the Delaware Court of Chancery seeking: (1) a declaration that he controlled a majority of the voting shares of Hawk Systems and that he was the validly elected, sole director and officer of Hawk Systems; or (2) in the alternative, an order compelling the company to hold an annual election of directors under 8 Del. C. sections 223(a) and 211(c). Following a trial, briefing, and post-trial argument, the Court of Chancery denied both of Spanakos’s requests for relief, ruling that he had not carried his burden of proof to obtain any of the relief that he sought. On appeal, Spanakos argues that the Court of Chancery abused its discretion when it declined to order a stockholders’ meeting for the election of directors despite the fact that Spanakos satisfied the elements of Section 211. Having reviewed the record on appeal and the court’s opinion below, the Delaware Supreme Court found the Court of Chancery did not abuse its discretion when it declined to compel a stockholders’ meeting given the unique facts of this case. View "Spanakos v. Page, et al." on Justia Law

This case arose from a federal grand jury investigation of the acquisition of one company by another company. The grand jury issued two indictments and subpoenas to a third company, Doe Company ("the Company"), and to Pat Roe, a former officer at the acquired company and a current partner at the Company. The Company appealed the district court's denial of the Company's motion to quash and order of compliance by both the Company and by Pat Roe. After the Company declined to produce the documents, the district court held the Company in contempt.The Ninth Circuit held that it lacked appellate jurisdiction to review the district court's enforcement order directed to Roe. The panel clarified under Perlman v. United States, 247 U.S. 7 (1918), that in seeking interlocutory review of a court order enforcing a grand jury subpoena, an appellant must assert a claim of evidentiary privilege or some other legal claim specifically protecting against disclosure to the grand jury. Because the Company makes no such claim, the panel held that it did not have jurisdiction under Perlman and dismissed in part.After determining that it had jurisdiction to review the district court's enforcement orders directed to the Company and holding the Company in contempt, the panel held that, taken together, the district court's findings adequately support its determination that it had in personam jurisdiction over the Company. Furthermore, service of process on the Company was proper where it was fair, reasonable, and just to imply the authority of the General Counsel to receive service on behalf of the Company. Accordingly, the panel affirmed in part. View "United States v. Doe Co." on Justia Law

Terrance Fredericks appealed a district court judgment ordering him to pay more than $1,000,000 in damages to McCormick, Inc.; Native Energy Construction, LLC; and Northern Improvement Company. McCormick and Northern Improvement cross-appealed a judgment denying their motion for a judicially supervised winding up of Native Energy. In 2010, McCormick and Fredericks created Native Energy Construction to engage in construction operations related to oil production. McCormick and Fredericks executed a purchase agreement in April 2014 for Fredericks’ purchase of McCormick’s interest in Native Energy. Fredericks was unable to complete the purchase. The parties did not wind up Native Energy and the business was involuntarily dissolved by the North Dakota secretary of state in May 2015. In 2016, McCormick and Northern Improvement sued Fredericks, alleging he breached contractual and fiduciary duties owed to Native Energy, McCormick and Northern Improvement. McCormick alleged Fredericks took distributions from Native Energy without making a corresponding distribution to McCormick, wrongfully converted Native Energy’s assets for his own use, made improper payments to his wife and performed other business activities on behalf of Native Energy without McCormick’s authorization. Fredericks counterclaimed, alleging McCormick breached a fiduciary duty by taking the 5% management fee from Native Energy’s gross revenues. Fredericks requested the judicially-supervised winding up of Native Energy. The North Dakota Supreme Court affirmed in part and reversed in part. The portion of the final judgment ordering Fredericks to pay McCormick $49,795.76 was reversed and remanded for further proceedings. The remainder of the final judgment was affirmed. The judgment denying McCormick’s motion for a judicially supervised winding up of Native Energy was reversed and remanded for further proceedings. View "McCormick, et al. v. Fredericks" on Justia Law

Bosch, an engineering company, asked J.S.T. to design and manufacture a connector that Bosch could incorporate into a part that it builds for GM. For a time, Bosch retained J.S.T. as its sole supplier of those connectors. Then, according to J.S.T., Bosch wrongfully acquired J.S.T.’s proprietary designs and provided them to J.S.T.’s competitors, who used the stolen designs to build knockoff connectors and eventually to displace J.S.T. from its role as Bosch’s supplier. After filing various lawsuits against Bosch, J.S.T. filed suit in Illinois against the competitors, alleging misappropriation of trade secrets and unjust enrichment. The Seventh Circuit affirmed the dismissal of the case for lack of personal jurisdiction. The competitors’ only link to Illinois is that they sell their connectors to Bosch, knowing that the connectors will end up in GM cars and parts that are sold in Illinois. For personal jurisdiction to exist, though, there must be a causal relationship between the competitors’ dealings in Illinois and the claims that J.S.T. has asserted against them. No such causal relationship exists. View "J.S.T. Corp. v. Foxconn Interconnect Technology, Ltd." on Justia Law

This case arose out of a stabbing that took place outside of an Idaho Falls bar. Steven and Audra Fell were patrons of the First Street Saloon, owned and operated by Fat Smitty’s L.L.C. (Fat Smitty’s). Towards the end of the evening, an altercation took place that resulted in Steven Fell being stabbed by another patron, LaDonna Hall. The Fells filed a complaint against Fat Smitty’s, alleging Fat Smitty’s breached its duty to: (1) warn the Fells, as invitees, of any hidden or concealed dangers in the bar; (2) keep the bar in a reasonably safe condition; and (3) protect the Fells from reasonably foreseeable injury at the hands of other patrons at the bar. The district court granted summary judgment in favor of Fat Smitty’s, ruling that the Fells’ claims were barred by Idaho’s Dram Shop Act because the Fells failed to give Fat Smitty’s timely notice of their claims. The Fells appealed the district court’s grant of summary judgment. Finding no reversible error, the Idaho Supreme Court affirmed. View "Fell v. Fat Smitty's" on Justia Law

This appeal arose from a contractual dispute between the Christopher W. James Trust (“the Trust”) and Idaho Mineral Springs, LLC, a water bottling company owned by Helmut Tacke. In 2000, Tacke built Idaho Mineral Springs’ bottling facility on approximately 10 acres of a 374 acre parcel he owned in Lemhi County, Idaho. He installed a high-density polyester pipeline running about eight-tenths of a mile from a spring on the property to the water-bottling plant. From 2000 to 2013, Tacke sold little to no bottled water. By March 2013, Tacke owed on two promissory notes secured by mortgages on the property. That same year, Tacke’s machinery malfunctioned and he needed to obtain new equipment. Tacke negotiated an agreement with Christopher James (“James”), who, with his wife, Debra, were trustees of the Trust and the Firstfruits Foundation (“Firstfruits”), a 501(c)(3) nonprofit foundation. The Agreement called for Firstfruits to pay off the outstanding loans on the property. In exchange, Tacke transferred title to 364 acres of the property, retaining the 10 acres of land where Idaho Mineral Springs’ operations were conducted. The Agreement further provided that the Trust would loan Idaho Mineral Springs $500,000 for two years with a 5% interest rate. Because James expected that the U.S. dollar would depreciate against the Australian dollar and precious metals, the Agreement called for the loan to be repaid in specified quantities of gold, silver and Australian dollars (“the commodity basket”). The Agreement also called for quarterly interest payments of 1.25% based upon the value of the commodity basket. Firstfruits entered into a joint venture with another nonprofit, Youth Employment Program, which sought to develop and manage the 364 acres. A conflict arose between the parties over Tacke’s waterline: Adams removed Tacke’s mainline and replaced it with a new PVC system. Adams reduced the flow to Idaho Mineral Springs from 91 gallons per minute (a discharge rate that Adams believed “could collapse the mainline”) to 30 gallons per minute. Tacke claimed that the new water system prohibited a direct flow of water from the spring to his plant and operated at a dramatically lower pressure than Tacke needed for Idaho Mineral Springs’ operations. Tacke appealed the district court’s ultimate judgment in favor of the Trust for $653,793.40. The Idaho Supreme Court reversed and remanded, finding that the awards of contract damages and prejudgment interest had to be vacated because the Trust failed to prove the value of the commodity basket. The matter was remanded for further proceedings. View "Christopher W. James Trust v. Tacke" on Justia Law

In 2006, Ram’s Gate purchased a Sonoma County winery from the Roches. Ram’s Gate later sued the Roches for breach of contract, fraud, and negligent nondisclosure, claiming they withheld seismic information about the property and made misstatements concerning the ability to build on an existing building pad. Protracted litigation ultimately ended with Ram’s Gate dismissing the action, Roche paying nothing to Ram’s Gate, and Ram’s Gate paying most but not all of Roche’s attorney fees. Roche then brought a malicious prosecution suit against Ram’s Gate, two of its members, and their attorney, Hyde, alleging they withheld documents in discovery that would have proved they knew or should have known the seismic information they claimed was kept from them when they bought the property from Roche. The defendants filed unsuccessful special motions to strike the complaint as a strategic lawsuit against public participation (anti-SLAPP motions). The court of appeal affirmed the denial of the motion under Code Civ. Proc., 425.16(b)(1). A cause of action for malicious prosecution fits by definition into the scope of the anti-SLAPP statute but Roche is likely to succeed on the merits and is now entitled to proceed to trial. View "Roche v. Hyde" on Justia Law

A "subtle" question concerning entitlement to attorney fees raised by this appeal was one of first impression for the Court of Appeal. In a separate lawsuit filed at Superior Court, plaintiffs obtained a judgment for breach of contract, including an award of attorney fees, against certain entities not parties to the present suit. Plaintiffs filed the present enforcement action against defendants, seeking to hold them liable on the judgment as alter egos of the judgment debtors. Plaintiffs lost against one of the defendants, Steve Saleen (Steve). Steve moved for attorney fees under the contract; the court granted the motion and plaintiffs appeals. Plaintiffs contended this was not an action on the contract and, therefore, fees were unavailable under Civil Code section 1717. Instead, it was an enforcement action. They cited caselaw for the proposition that a judgment on the contract subsumes and extinguishes contractual rights. On the other hand, had plaintiffs included Steve as a defendant in the Superior Court suit, making the exact same alter ego allegations they made to the Court of Appeal, undoubtedly Steve would have been entitled to contractual attorney fees under the doctrine of reciprocity established by Civil Code section 1717 and Reynolds Metals Co. v. Alperson, 25 Cal.3d 124 (1979), even though he was not a signatory on the contract. The Court of Appeal concluded the timing of an alter ego claim (either pre- or postjudgment) was too arbitrary a consideration on which to base the right to attorney fees. "When a judgment creditor attempts to add a party to a breach of contract judgment that includes a contractual fee award, the suit is essentially 'on the contract' for purposes of Civil Code section 1717." The Court therefore agreed with Steve and affirmed judgment. View "MSY Trading Inc. v. Saleen Automotive, Inc." on Justia Law