Justia Civil Procedure Opinion Summaries

Appellant, Overstock.com, Inc. (Overstock) appealed a superior court judgment awarding Appellees/Plaintiff-Relator William French and the State of Delaware (Plaintiffs), $22,000 in civil penalties and $7,266,412.94 in treble damages for violations of the Delaware False Claims and Reporting Act (the DFCRA or the Act). Plaintiffs alleged Overstock engaged in what they described as a scam to evade its obligation to escheat balances owed on abandoned gift cards to the Delaware State Escheator. It did so, they claimed, by making it falsely appear that its gift cards were held by an Ohio company, not Overstock. It was undisputed that Overstock did not file escheat reports or pay the money value of abandoned gift cards to the Delaware Escheator during the years in question. The case was tried before a jury on a theory that Overstock violated the Act between 2010 to 2013. Overstock raised several claims on appeal, but the Delaware Supreme Court addressed only one. Overstock contended the superior court misinterpreted the Act and erred by instructing the jury that the knowing failure to file escheat reports when required to do so was no different than actively making a false statement. Overstock contended that the failure to file such reports does not satisfy the Act’s requirement that a false record or statement be made or used to avoid, conceal or decrease an obligation to pay money to the Government. Furthermore, Overstock contended it did not make or use any false record or statement in connection with gift cards that violated the Act. The Supreme Court agreed that the evidence failed to establish the making or use of a false record or statement in violation of the Act. Accordingly, the superior court’s judgment was reversed and the matter remanded for further proceedings. View "Overstock.com, Inc. v. State" on Justia Law

In 2015, the Government filed a civil action against Neldon Johnson, Gregory Shepard, and Johnson’s three companies: RaPower-3 LLC (“RaPower”), International Automated Systems, Inc. (“IAS”), and LTB1, LLC (“LTB”) (collectively, Defendants). The Government alleged Defendants promoted an abusive tax scheme. Following a bench trial, the district court found for the Government, enjoined the Defendants from further promoting their scheme, and ordered disgorgement of ill-gotten gains. In 2018, the district court appointed a receiver (Appellee) to take control of Defendants' assets and to investigate whether their affiliated entities possessed proceeds from the illicit tax scheme. On the Receiver’s recommendation, the court added 13 nonparty affiliated entities to the Receivership. Six of the added entities (“Appellant Entities”) appeals, arguing the district court included them in the Receivership without providing sufficient due process. Finding the "Receivership Expansion Order" was not immediately appealable because the Appellant Entities did not show the order was final, the Tenth Circuit dismissed the appeal for lack of jurisdiction. View "United States v. RaPower-3" on Justia Law

Alabama imposed a license or privilege tax on tobacco products stored or received for distribution within the State ("the tobacco tax"). Under Alabama law, the Department of Revenue could confiscate tobacco products on which the tobacco tax had not been paid. Panama City Wholesale, Inc. ("PCW") was a wholesale tobacco-products distributor located in Panama City, Florida, and owned by Ehad Ahmed. One of PCW's customers, Yafa Wholesale, LLC ("Yafa"), was an Alabama tobacco distributor owned by Sayeneddin Thiab ("Thiab"). On October 10, 2018, Hurricane Michael destroyed the roof on PCW's warehouse. Department surveillance agents observed observed one of Thiab's vehicles being unloaded at two of the recently rented storage units. The day after that, agents observed one of Thiab's delivery vehicles being loaded with tobacco products from a recently rented unit following the storm. On October 23, 2018, the Department confiscated 1,431,819 cigars from four storage units leased by persons connected to Yafa and Thiab. It is undisputed that the tobacco tax had not been paid on the cigars. Ahmed filed an action against Vernon Barnett, as Commissioner of the Department, seeking a judgment declaring that the cigars were Ahmed's and that they were not subject to confiscation. The case was transferred to the Jefferson Circuit Court, PCW was substituted for Ahmed, and the parties were realigned to make the Commissioner of the Department the plaintiff and PCW the defendant in a civil forfeiture action. On PCW's motion, the circuit court entered a summary judgment in PCW's favor, ruling that the Commissioner failed to present substantial evidence that the cigars were in the possession of a retailer or semijobber, as the court believed was required by the confiscation statute. The Commissioner appealed. A divided Alabama Supreme Court reversed, concluding the circuit court erred in interpreting the confiscation statute to apply only to untaxed tobacco products in the possession of retailers and semijobbers, and because the Commissioner presented substantial evidence that the cigars were subject to confiscation under a correct interpretation of the statute, the Court reversed summary judgment and remanded for further proceedings. View "Alabama Department of Revenue v. Panama City Wholesale, Inc." on Justia Law

The Ritchie entities filed suit seeking to recover millions of dollars they loaned Tom Petters, a convicted fraudster, and two of his companies. The Ritchie entities alleged that defendants helped conceal the fraud so that they could recover millions they had tied up with Petters' companies. The district court dismissed the claims as time-barred.The Eighth Circuit first held that the district court had subject matter jurisdiction under the Edge Act, and the court need not decide whether the district court also had subject matter jurisdiction under 28 U.S.C. 1334(b). Furthermore, the district court was correct to apply New York choice-of-law principles to determine that Illinois law applied to the question of whether the action was time-barred.The court also held that the district court erred in concluding that Illinois's statute of limitations applied to three of the plaintiffs because the pleadings do not definitively establish their claims accrued in Illinois. The district court did not err in finding that the remaining claims were untimely under Illinois law and that the doctrines of discovery rule, equitable estoppel, and equitable tolling did not apply. The court also held that the district court did not abuse its discretion by failing to grant the Ritchie entities leave to amend their complaint yet again because the Ritchie entities failed to submit a motion to amend or indicate what a proposed amended pleading would have stated. Finally, the court reversed the dismissal of the Ritchie Cayman entities' claims against JP Morgan Europe in order for the district court to permit jurisdictional discovery if it deems necessary to determine whether it has personal jurisdiction over JP Morgan Europe. View "Ritchie Capital Management v. JP Morgan Chase & Co." on Justia Law

Subcontractor Construction Drilling, Inc. (CDI) appealed a trial court’s judgment on the merits in its breach-of-contract claim against Engineers Construction, Inc. (ECI). CDI contended the trial court erred in: (1) holding that the terms of the parties’ subcontract required CDI to request a change order before it billed ECI for “drilling in obstructions” in excess of CDI’s bid price; (2) denying CDI’s motions to reopen the evidence and for a new trial; and (3) awarding ECI $234,320 in attorneys’ fees under the Prompt Payment Act. ECI cross-appealed, arguing the trial court improperly allowed CDI’s owner to offer opinion testimony absent a finding of reliability under Vermont Rule of Evidence 702 and maintaining that his testimony could not have met this standard in any event. Therefore, should the Vermont Supreme Court reverse the trial court’s denial of CDI’s breach-of-contract claim, ECI asserted the matter had to be remanded for a new trial without such testimony. The Court affirmed the trial court, and therefore did not reach the issue raised in ECI’s cross-appeal. View "Construction Drilling, Inc. v. Engineers Construction, Inc." on Justia Law

The United States District Court for the District of South Carolina certified a question of law to the South Carolina Supreme Court. Plaintiff Johnny Thomerson alleged Defendants, the former owners of Lenco Marine (a manufacturer of boat products), failed to give him a three-percent ownership interest in Lenco that was promised to him as part of his compensation package. Plaintiff was hired by Lenco no later than May 2007. Defendant Samuel Mullinax was the CEO of Lenco and Defendant Richard DeVito was its president. Lenco was sold in December 2016 to Power Products, LLC. In his complaint, Plaintiff asserted claims against Defendants for: (1) breach of contract and the covenant of good faith and fair dealing; (2) promissory estoppel; (3) quantum meruit and unjust enrichment; (4) negligent misrepresentation; (5) constructive fraud; and (6) amounts due under the South Carolina Payment of Wages Act. Defendants moved for summary judgment, arguing the claims were time-barred. The federal court asked whether the three-year statute of limitations of S.C. Code Ann. 15-3-530 applied to claims for promissory estoppel. The Supreme Court took the opportunity to clarify state law in this regard, and held that the statute of limitations did not apply to promissory estoppel claims. View "Thomerson v. DeVito" on Justia Law

Hunt Strategic Utility Investment, L.L.C. (“Hunt”) owned a one-percent stake in Texas Transmission Holdings Corporation (“TTHC”), a utility holding company. The remaining ninety-nine percent was split equally between the Borealis entities (Borealis Power Holdings, Inc. and BPC Health Corporation, together, “Borealis”) and Cheyne Walk Investment PTE LTD (“Cheyne Walk”); neither Borealis nor Cheyne Walk owned a majority stake in TTHC, each owned 49.5%. TTHC wholly owned Texas Transmission Finco LLC, which wholly owned Texas Transmission Investment LLC (“TTI”). TTI in turn owned 19.75% of Oncor Electric Delivery Company LLC (“Oncor”). The remaining 80.25% of Oncor is held by Sempra Texas Holdings Corp. (“STH) and Sempra Texas Intermediate Holding Company, LLC (“STIH” and, together with STH, “Sempra”). This dispute involved a purported conflict between two separate contracts binding two discrete sets of parties who owned Oncor. Hunt’s sale of its one-percent stake is subject to the TTHC Shareholder Agreement (the “TTHC SA”), which gives Borealis and Cheyne Walk a right of first offer in the event that Hunt wishes to sell (the “ROFO”). But Sempra argued the sale was also subject to a separate contract - the Oncor Investor Rights Agreement (the “Oncor IRA”) - which provided Sempra with a right of first refusal (the “ROFR”) in the event Oncor LLC units were transferred. The Court of Chancery decided in Sempra’s favor, holding that Hunt’s sale of its 1% stake in TTHC was also a “transfer” of Oncor LLC units, as defined in the Oncor IRA. The court thus held Hunt’s proposed sale triggered Sempra’s ROFR, which preempted Borealis’s ROFO because the source of the ROFO was the TTHC SA, which itself stated that enforcement of the TTHC SA could not breach the Oncor IRA. After a de novo review of the language of both the TTHC SA and the Oncor IRA, the Delaware Supreme Court concluded the Oncor IRA, which, by its terms, restricted transfers by Oncor’s Minority Member (TTI) and not by Hunt, did not apply to Hunt’s sale of its interest in TTHC. The Court therefore reversed the judgment of the Court of Chancery. View "Borealis Power Holdings Inc. v. Hunt Strategic Utility Invesment" on Justia Law

The United States District Court for the Southern District of Georgia certified three questions to the Georgia Supreme Court regarding the scope of the Georgia Dealers in Agricultural Products Act, Ga. L. 1956, p. 617 (codified as amended at OCGA sections 2-9-1 to 2-9-16) (“the Act”). At issue was the effect of the Act’s provisions upon contracts entered into by an agricultural products dealer that failed to obtain a license from the Georgia Commissioner of Agriculture: in this case, a contract entered into between San Miguel Produce, Inc. (“San Miguel”), a California corporation, and L. G. Herndon Jr. Farms, Inc. (“Herndon Farms”), a Georgia corporation. The Supreme Court concluded: (1) an entity as described by the district court did qualify as a dealer in agricultural products under the Act and was not exempt under OCGA 2-9-15 (a) (1), with the limited exception of specific transactions “in the sale of agricultural products grown by [itself];” (2) the Act’s licensing requirements were part of a comprehensive regulatory scheme in the public interest and not merely a revenue measure; and (3) if a dealer has failed to obtain a license as required by OCGA 2-9-2, it may not recover under a contract to the extent that the contract relates to business coming within the terms of the Act. View "San Miguel Produce, Inc. v. L.G. Herndon, Jr. Farms, Inc." on Justia Law

In June 2018, plaintiffs-respondents Suzanne Yang and Doc Yang Medical Corporation sued defendants-appellants Tenet Healthcare Inc. doing business as John F. Kennedy Memorial Hospital (the hospital), its medical staff, and individual doctors, alleging defamation and nine other causes of action. Defendants filed a special motion to strike (anti-SLAPP motion) targeting only the defamation cause of action. Dr. Yang alleged that since March 2016, defendants conspired to drive her practice out of business in various ways, including by making defamatory statements. Defendants’ anti-SLAPP motion contended that the statements were protected activity because they were made in connection with the hospital’s peer review process, and because they were made in furtherance of the exercise of the right of free speech in connection with a public issue or an issue of public interest. Defendants also contended that Dr. Yang could not demonstrate a probability of prevailing because she consented to the peer review process that the statements were purportedly in connection with, and because the statements were privileged. Applying the California Supreme Court's recent opinion in FilmOn.com Inc. v. DoubleVerify, Inc., 7 Cal.5th 133 (2019), and concluded defendants’ conduct arose from protected activity because their allegedly defamatory statements were made in connection with an issue of public interest. Furthermore, the Court concluded Dr. Yang did not demonstrate a probability of prevailing on the merits. The Court therefore reversed the trial court, which denied the anti-SLAPP motion. View "Yang v. Tenet Healthcare Inc." on Justia Law

Yunnan New Ocean Aquatic Product Science and Technology Group Co., Ltd. and subsidiaries (YOK defendants) appealed a New Hampshire superior court order attaching funds held by High Liner Foods (USA), Inc. (High Liner USA), the trustee defendant. The YOK defendants argued the trial court erred by maintaining quasi in rem jurisdiction over the funds despite concluding that it lacked personal jurisdiction over them in the underlying action. In 2012, Fortune Laurel, LLC, a Massachusetts company, entered into contracts with the YOK defendants to broker the sale of fish processed by the YOK defendants to companies in the United States and Canada. One company was located in Massachusetts, (later acquired by a Canadian company, High Liner Foods, Inc. (Canada)). High Liner Canada rebranded its corporate acquisition High Liner Foods (USA) and moved to Portsmouth. High Liner USA solicited fish from High Liner Canada, which procured the fish from international sellers, including the YOK defendants. The YOK defendants shipped the fish to High Liner USA in Massachusetts or Virginia. Upon High Liner USA’s acceptance of the fish, the YOK defendants invoiced High Liner USA and the invoice was paid by High Liner Canada, which then invoiced High Liner USA. After the written contract between Fortune Laurel and the YOK defendants expired, the YOK defendants continued to use Fortune Laurel to broker its sales with High Liner USA until 2017, when “the YOK defendants decided to exclude [Fortune Laurel] from the relationship.” Fortune Laurel claimed that the YOK defendants failed to pay commissions in 2017, improperly caused High Liner Canada to revoke its access to High Liner’s online tracking system, sold it fish for resale in Massachusetts that failed to meet applicable standards, and made fraudulent insurance claims that have negatively affected its business. Fortune Laurel also filed a petition for an ex parte attachment of funds that High Liner USA owed YOK as payment for shipments. The trial court found that several of Fortune Laurel’s claims were “wholly unrelated” to New Hampshire and thus that “dismissal for lack of personal jurisdiction was appropriate.” Nonetheless, the trial court ruled that it could continue to exercise quasi in rem jurisdiction over the attached funds. The New Hampshire Supreme Court affirmed because the trial court’s limited exercise of jurisdiction over the attached funds comported with due process requirements. View "Fortune Laurel, LLC v. High Liner Foods (USA), Incorporated, Trustee" on Justia Law