Justia Civil Procedure Opinion Summaries

Plaintiff ClearOne is a Utah corporation and Defendant Revolabs is a competitor incorporated in Delaware with its principal place of business in Massachusetts. The underlying dispute arose when Revolabs recruited and hired Timothy Mackie while he was still employed by ClearOne. ClearOne brought this suit in Utah district court, alleging intentional interference with a contractual relationship, predatory hiring, and aiding and abetting a breach of fiduciary duty. Revolabs filed a motion to dismiss for lack of personal jurisdiction. The trial court granted the motion. The Supreme Court affirmed, holding (1) ClearOne failed to allege that Revolabs had sufficient minimum contacts to subject it to specific personal jurisdiction in Utah; and (2) the trial court did not abuse its discretion in denying discovery to determine whether Revolabs was subject to general personal jurisdiction in Utah. View "ClearOne, Inc. v. Revolabs, Inc." on Justia Law

Plaintiff, the minority shareholder of Omega, filed suit against majority shareholder Kent Constable, his wife Karen, and Omega, alleging direct and derivative claims arising from a dispute over management of Omega and its assets. Counsel represented all defendants in the litigation. The trial court granted plaintiff's motion to disqualify Counsel from representing any of the defendants. The court concluded that the trial court did not err by disqualifying Counsel as to Omega because Counsel concurrently represented defendants in the same action where an actual conflict existed between them, and Kent alone did not have authority to consent to the conflicting representation on Omega's behalf. The court concluded that the trial court erred by disqualifying Counsel as to the Constables where Counsel's continued representation of the Constables poses no threat to Counsel's continuing duty of confidentiality to Omega. Finally, the trial court did not err by concluding defendants did not meet their burden of showing plaintiff waived his right to seek to disqualify Counsel where plaintiff's 16-month delay was not unreasonable because prejudice to defendants was not extreme. Accordingly, the court affirmed in part and reversed in part. View "Ontiveros v. Constable" on Justia Law

Victims of a massive ponzi scheme centered in South Carolina obtained a judgment of over $150 million against Derivium and others. Plaintiffs are now pursuing others whom they claim also participated in the scheme. The district court granted Vision International's motion to dismiss for lack of personal jurisdiction under FRCP 12(b)(2). The district court also granted Randolph Anderson, Patrick Kelley, and Total Eclipse's motion for judgment as a matter of law on plaintiffs' claim for aiding and abetting common law fraud. Plaintiffs filed separate appeals on the two rulings. The court consolidated the appeals. The court concluded that, because the parties engaged in full discovery on the jurisdictional issue and fully presented the relevant evidence to the district court, that court properly addressed Vision International’s Rule 12(b)(2) motion by weighing the evidence, finding facts by a preponderance of the evidence, and determining as a matter of law whether plaintiffs carried their burden of demonstrating personal jurisdiction over Vision International. Further, the court agreed with the district court’s conclusion that South Carolina has not recognized a cause of action for aiding and abetting common law fraud and that it is not the court's role as a federal court to so expand state law. Accordingly, the court affirmed the judgment as to both appeals. View "Grayson v. Anderson" on Justia Law

This appeal stemmed from a dispute regarding a contract the parties entered into, which gave Lewmar the exclusive right to manufacture and sell Steinerʹs patented sailboat winch handle, a device used to control the lines and sails of a sailboat. The parties resolved the dispute when Lewmar made, and Steiner accepted, an offer of judgment under Rule 68 of the Federal Rules of Civil Procedure. After judgment was entered, Steiner moved for attorneysʹ fees of $383,804 and costs of $41,470. The district court denied attorneysʹ fees but awarded costs of $2,926. The court concluded that Steiner was precluded from seeking fees pursuant to the Agreement in addition to the $175,000 settlement amount because claims under the Agreement were unambiguously included in the Offer; Steiner was not precluded from seeking attorneysʹ fees under the Connecticut Unfair Trade Practices Act (CUTPA), Conn. Gen. Stat. 42‐110g(d), because the Offer did not unambiguously encompass claims for attorneysʹ fees under CUTPA; and the court remanded for the district court to clarify whether it considered the claim for attorneys' fees under CUTPA on the merits and if not, to do so. Finally, the court concluded that the district court correctly added costs under the ʺcosts then accruedʺ provision of Rule 68. View "Steiner v. Lewmar, Inc." on Justia Law

Corporate citizens of Delaware, Nebraska, and Illinois, sued Americold, a “real estate investment trust” organized under Maryland law, in a Kansas court. Americold removed the suit based on diversity jurisdiction, 28 U.S.C. 1332(a)(1), 1441(b). The federal court accepted jurisdiction and ruled in Americold’s favor. The Tenth Circuit held that the district court lacked jurisdiction. The Supreme Court affirmed. For purposes of diversity jurisdiction, Americold’s citizenship is based on the citizenship of its members, which include its shareholders. Historically, the relevant citizens for jurisdictional purposes in a suit involving a “mere legal entity” were that entity’s “members,” or the “real persons who come into court” in the entity’s name. Except for that limited exception of jurisdictional citizenship for corporations, diversity jurisdiction in a suit by or against the entity depends on the citizenship of all its members, including shareholders. The Court rejected an argument that anything called a “trust” possesses the citizenship of its trustees alone; Americold confused the traditional trust with the variety of unincorporated entities that many states have given the “trust” label. Under Maryland law, the real estate investment trust at issue is treated as a “separate legal entity” that can sue or be sued. View "Americold Realty Trust v. ConAgra Foods, Inc." on Justia Law

This was a dispute between two computer software companies. SynEcology Partners, L3C challenged the trial court’s order dismissing its complaint against Business RunTime, Inc. stemming from its failure to comply with Business RunTime’s discovery requests. In 2008, SynEcology’s founders, Edward Grossman and Jeanne Conde, sold the company’s assets to Lawrence Kenney. Grossman and Conde subsequently started a new software company, Business RunTime. In August 2011, SynEcology filed a civil complaint against Business RunTime, Edward Grossman, Jeanne Conde, and two former SynEcology employees, Thomas Reynolds and Toby Leong, for alleged fraud, theft of intellectual property, industrial sabotage, computer crimes, burglary, larceny, willful breaches of nondisclosure and employee contracts, theft and disclosure of trade secrets, and tortious interference with contractual relations. What followed was a protracted discovery phase, culminating in Business RunTime’s motion for contempt, sanctions, and attorneys’ fees, filed on July 23, 2014, which ultimately resulted in dismissal of SynEcology’s complaint. The Supreme Court affirmed. " It is clear from its discussion that the trial court lost faith in SynEcology’s willingness to undertake a good faith effort to comply with the discovery orders or motions to compel. Although SynEcology argues that it was willing and able to produce the Comcast emails and privilege log, the trial court had no reason to believe SynEcology would suddenly make good on its promises having failed to do so in the past." View "Synecology Partners L3C v. Business RunTime, Inc." on Justia Law

This case involved competing claims to the ownership of Alderney Investments, LLC by relatives of Rudolf Skowronska (Rudolf), a Polish national. The initial filing with the Wyoming Secretary of State identified two Panamanian corporations as Alderney’s only two members: Nominees Associated Inc. and Management Nominees Inc. (MNI). In the years that followed, the beneficial ownership of Alderney went through a series of transformations: Rudolf initially held beneficial ownership of Alderney through a series of intermediary entities, including MNI and Nominees Associated Inc., as well as UEB Services, LTD and Morgan & Morgan Corporation Services S.A. In August 1999, Rudolf, although not individually a member of Alderney, purported to transfer ownership of Alderney to his half-sister, Dagmara Skowronska. Alderney’s managers subsequently voted to give Dagmara “power of attorney” over Alderney’s affairs. The Appellee, MNI, was Belizean corporation also named Management Nominees Inc., which contended that in 2003, Dagmara transferred her interest in Alderney to Rico Sieber, her husband and MNI’s sole shareholder. The Appellants, Alderney and Edyta Skowronska, Rudolf’s wife, contend that Dagmara transferred 90% of her interest to Edyta and her two children after Rudolf’s disappearance in 2005. Further complicating matters, in 2012, Alderney’s members, Management Nominees Inc. and Nominees Associated Inc., transferred their membership interest in Alderney to MNI, making MNI the sole member of Alderney. The dispute over ownership of Alderney came to a head in 2013, when Edyta sought to dissolve Alderney. Edyta, on behalf of Alderney, filed articles of dissolution with the Wyoming Secretary of State. The Secretary issued a certificate of dissolution for Alderney in March 2013, and this lawsuit followed. This case raised a dispute regarding the citizenship Alderney and whether, in light of the Tenth Circuit's decision in "Siloam Springs Hotel, L.L.C. v. Century Surety Co.," (781 F.3d 1233 (2015)), the district court lacked subject-matter jurisdiction over the case. The Tenth Circuit concluded that Alderney was an unincorporated association for purposes of federal diversity jurisdiction, with its citizenship therefore determined by that of its members. Because Alderney’s members were foreign corporations, there was not complete diversity between Alderney and MNI. As a result, the district court lacked subject-matter jurisdiction over the action. The trial court's grant of summary judgment was vacated and the case remanded for dismissal. View "Management Nominees v. Alderney Investments" on Justia Law

Akuna filed suit in federal court seeking dissolution of an oil and gas partnership and a determination of its ownership share. The district court granted summary judgment in favor of Akuna and ultimately ordered termination of the partnership and awarded $213,354.01 in partnership profits to Akuna, plus attorneys’ fees. The court rejected Garrisons' claim that Akuna's suit was barred by res judicata, concluding that this federal court suit to terminate the partnership, damages for breach of which had been adjudicated only nine months before the filing of this suit, still involves a different transaction. The court also concluded that Garrison was not deprived of a trial where the records supports that the nature of the district court proceeding approximates a trial on the merits because that court conducted a factual inquiry, assessed credibility, and weighed the evidence. Finally, the court rejected Garrison's claim that it was entitled to present oral testimony on the valuation and ownership issues. Accordingly, the court affirmed the judgment. View "Akuna Matata v. Texas NOM Ltd." on Justia Law

Plaintiff Archangel Diamond Corporation Liquidating Trust, as successor-in-interest to Archangel Diamond Corporation (collectively, “Archangel”), appealed dismissal of its civil case against defendant OAO Lukoil (“Lukoil”), in which it alleged claims under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), breach of contract, and commercial tort law. The district court dismissed the case for lack of personal jurisdiction over Lukoil and under the doctrine of forum non conveniens. Archangel Diamond Corporation was a Canadian company and bankrupt. The liquidating trust was located in Colorado. In 1993, Archangel entered into an agreement with State Enterprise Arkhangelgeology (“AGE”), a Russian state corporation, regarding a potential license to explore and develop diamond mining operations in the Archangelsk region of Russia. Archangel and AGE agreed that Archangel would provide additional funds and that the license would be transferred to their joint venture company. However, the license was never transferred and remained with AGE. In 1995, AGE was privatized and became Arkhangelskgeoldobycha (“AGD”), and the license was transferred to AGD. Diamonds worth an estimated $5 billion were discovered within the license region. In 1998, Lukoil acquired a controlling stake in AGD, eventually making AGD a wholly owned subsidiary of Lukoil. Pursuant to an agreement, arbitration took place in Stockholm, Sweden, to resolve the license transfer issue. When AGD failed to honor the agreement, Archangel reactivated the Stockholm arbitration, but the arbitrators this time concluded that they lacked jurisdiction to arbitrate the dispute even as to AGD. Archangel then sued AGD and Lukoil in Colorado state court. AGD and Lukoil removed the case to Colorado federal district court. The district court remanded the case, concluding that it lacked subject-matter jurisdiction because all of the claims were state law claims. The state trial court then dismissed the case against both AGD and Lukoil based on lack of personal jurisdiction and forum non conveniens. The Colorado Supreme Court affirmed the dismissal as to AGD, reversed as to Lukoil, and remanded (leaving Lukoil as the sole defendant). On remand, the Colorado Court of Appeals reversed the trial court’s previous dismissal on forum non conveniens grounds, which it had not addressed before, and remanded to the trial court for further proceedings. The trial court granted Lukoil and AGD's motion to hold an evidentiary hearing, and the parties engaged in jurisdictional discovery. In 2008 and early 2009, the case was informally stayed while the parties discussed settlement and conducted discovery. By June 2009, Archangel had fallen into bankruptcy due to the expense of the litigation. On Lukoil’s motion and over the objection of Archangel, the district court referred the matter to the bankruptcy court, concluding that the matter was related to Archangel’s bankruptcy proceedings. Lukoil then moved the bankruptcy court to abstain from hearing the matter, and the bankruptcy court concluded that it should abstain. The bankruptcy court remanded the case to the Colorado state trial court. The state trial court again dismissed the action. While these state-court appeals were still pending, Archangel filed this case before the Tenth Circuit Court of Appeals, maintaining that Lukoil had a wide variety of jurisdictional contacts with Colorado and the United States as a whole. Finding no reversible error in the district court's ruling dismissing the case on forum non conveniens grounds, the Tenth Circuit affirmed. View "Archangel Diamond v. OAO Lukoil" on Justia Law

Plaintiff filed this action against three outside directors of nominal defendant EXCORP, Inc., alleging breach of fiduciary duty, among other claims. The directors filed a motion to dismiss. Recognizing that he had not pled a non-exculpated claim against the directors, Plaintiff proposed a dismissal without prejudice. The directors, in turn, sought a dismissal with prejudice that would bind all potential plaintiffs. The Court of Chancery dismissed the claims against the outside directors with prejudice as to the named plaintiff only, holding (1) Plaintiff failed to establish good cause for a without-prejudice dismissal; and (2) the Due Process Clause prevents a judgment in a derivative action that is entered before the stockholder plaintiff acquires authority to litigate on behalf of the corporation from binding anyone other than the named stockholder plaintiff. View "In re EZCORP INC. Consulting Agreement Derivative Litig." on Justia Law