Justia Civil Procedure Opinion Summaries

A Canadian citizen married an American citizen in 2017. The couple lived in Canada until 2020, then moved to Hawaii, where the American spouse began working as a physician. The Canadian spouse entered the United States on a tourist visa and soon applied for lawful permanent residency. To support this application, the American spouse signed a federal Affidavit of Support, committing to maintain the non-citizen’s income above 125% of the federal poverty line. The Canadian spouse obtained permanent residency in 2021. Around that time, the marriage ended, and the American spouse moved to Michigan and filed for divorce. In 2022, the parties entered into a settlement agreement and consented divorce judgment in Michigan, in which they resolved all issues—including spousal support—and released any claims against each other.The Canadian spouse later filed suit in the United States District Court for the Eastern District of Michigan, alleging that his former spouse had failed to provide the financial support required by the Affidavit of Support. The former spouse moved to dismiss, arguing that the district court lacked jurisdiction under the Rooker-Feldman doctrine and that the divorce judgment precluded the claim. The district court rejected the jurisdictional argument but agreed that claim preclusion under Michigan law barred the lawsuit, and dismissed the action.On appeal, the United States Court of Appeals for the Sixth Circuit affirmed. The court held that federal courts must give state court judgments the same preclusive effect they would have under state law, pursuant to the Full Faith and Credit Act. The court ruled that Michigan claim preclusion law applied, and that the prior divorce judgment barred the new lawsuit because the claim could have been raised in the divorce proceedings. The court also rejected arguments that federal law or preemption required a different result. View "Ramgoolam v. Gupta" on Justia Law

After Jet Midwest International Co., Ltd. made a $6.5 million loan to Jet Midwest Group, LLC (JMG) for the purchase of a Boeing 737-700, JMG defaulted on repayment. Jet Midwest sued for breach of contract, and when it could not collect on its judgment due to JMG’s lack of funds, Jet Midwest brought claims under the Missouri Fraudulent Transfer Act against several individuals and entities (the Ohadi/Woolley defendants), alleging the improper transfer of assets to avoid payment. Following a bench trial, Jet Midwest prevailed on its claims, and the district court awarded money damages, interest, and set a schedule for further motions on attorney’s fees and costs.Previously, the United States District Court for the Western District of Missouri awarded Jet Midwest over $6.5 million in attorney’s fees and costs. The United States Court of Appeals for the Eighth Circuit vacated this award, finding the district court had not properly performed a lodestar calculation for attorney’s fees and had not analyzed which costs were recoverable under federal law. On remand, Jet Midwest reduced its fee request but sought a multiplier; the district court ultimately awarded $5.8 million in attorney’s fees, granted prejudgment interest at 14 percent, and included expert witness fees and other litigation costs. Both sides appealed aspects of this award.The United States Court of Appeals for the Eighth Circuit held that the district court properly calculated and awarded $5.8 million in attorney’s fees but erred in awarding expert witness fees as part of attorney’s fees, as Jet Midwest failed to provide sufficient evidence that such fees were recoverable under the relevant standards. The Eighth Circuit also held that the district court erred in applying a 14 percent prejudgment interest rate and ordered that Missouri’s statutory rate of nine percent should apply. Additionally, the court clarified that, after August 6, 2020, the federal postjudgment interest rate under 28 U.S.C. § 1961(a) governs. The case was affirmed in part, reversed in part, and remanded for further proceedings consistent with these rulings. View "Jet Midwest International Co., Ltd v. Ohadi" on Justia Law

A company that designs and manufactures interactive technology products entered into reseller agreements with another company, granting the latter exclusive rights to sell its products in certain territories. Several years later, the manufacturer revoked the exclusivity, after which the reseller’s owner and his son developed a competing product. The manufacturer then terminated the reseller relationship. Subsequently, the reseller sued the manufacturer in South Carolina state court for various business torts and contract claims. The parties settled and executed a written agreement that broadly released and dismissed any and all claims and counterclaims that could have been brought in the litigation, including through a specific handwritten provision. Nevertheless, shortly after, the manufacturer initiated a federal lawsuit, alleging intellectual property violations related to the competing product.The state court dismissed the original action with prejudice, including all possible claims and counterclaims. In the federal action, the defendants argued that the settlement agreement and res judicata barred the new claims. The United States District Court for the District of South Carolina initially allowed certain claims to proceed, but after further evidence and reconsideration, it granted summary judgment for the defendants, finding the claims precluded by the settlement and the state court’s dismissal. A jury was then impaneled for trial on the defendants’ counterclaims.On appeal, the United States Court of Appeals for the Fourth Circuit affirmed the district court’s rulings. The Court of Appeals held that the manufacturer’s claims were barred by res judicata based on the settlement and state court order, as the language of the agreement and the parties’ intent encompassed the intellectual property claims. The appellate court also found no abuse of discretion in the district court’s evidentiary rulings, its reconsideration of summary judgment, or the conduct of the trial, and affirmed the judgment in full. View "Clear Touch Interactive, Inc. v. The Ockers Company" on Justia Law

GAC Equipment, doing business as Austin Crane Service, hired Diamond Hydraulics to repair a crane’s cylinder, which later bent during a lifting operation. Each party blamed the other: Diamond argued that improper maintenance and operation by Austin Crane caused the failure, while Austin Crane claimed Diamond’s repairs were improper and used unsuitable materials. The dispute intensified during discovery, particularly over Diamond's ability to inspect the cylinder, and both parties made late expert witness designations. As trial approached, Diamond’s designated expert, Dr. Macfarlan, left his job, moved out of state, and refused to testify. Diamond attempted to substitute another expert, Dr. Hoerner, who had participated in preparing the expert report. Austin Crane objected, and the district court denied Diamond’s request to substitute its expert and to continue the trial.The 425th Judicial District Court in Williamson County, Texas, proceeded with the trial without Diamond’s causation expert. The jury found in favor of Austin Crane on both breach of contract and breach of warranty claims. Diamond appealed, arguing that the district court abused its discretion by not allowing the late expert substitution. The Court of Appeals for the Third District of Texas affirmed the trial court’s decision.The Supreme Court of Texas reviewed the case, focusing on whether Diamond showed good cause for its late expert designation under Texas Rule of Civil Procedure 193.6. The Supreme Court held that Diamond demonstrated good cause: the unavailability of Diamond’s original expert was beyond its control, Diamond acted promptly and in good faith to substitute an expert, and the excluded testimony was critical to its case. The Supreme Court concluded that the district court abused its discretion and that disparate treatment was given to the parties’ late designations. The Supreme Court of Texas reversed the court of appeals’ judgment and remanded the case for a new trial. View "DIAMOND HYDRAULICS, INC. v. GAC EQUIPMENT, LLC" on Justia Law

The dispute arose from a contract signed on May 12, 2021, under which Kindra Cooper agreed to purchase a house from Highland Rim Investments, LLC. Delays in closing led the parties to enter into three extensions, but the sale never concluded. Cooper then sued for specific performance, declaratory judgment, and damages, later amending her complaint to add additional defendants and claims, including various forms of misrepresentation and a request to pierce Highland Rim’s corporate veil. During litigation, certain claims were dismissed, and after a jury trial, the jury awarded Cooper compensatory and punitive damages against Highland Rim and Monique Dollone, but found for other defendants on the misrepresentation claims.The Madison Circuit Court entered judgment on the jury's verdict, awarded Cooper attorney fees, granted her motion to pierce the corporate veil as to one defendant, and later appointed a receiver over Highland Rim to preserve its fiscal health until the judgment was satisfied. The defendants moved for post-judgment relief, which was denied, and then appealed both the judgment and the receivership order.The Supreme Court of Alabama reviewed the appeals. It found that the trial court erred by requiring the parties to strike the jury from a list of only 21 prospective jurors, rather than the 24 required by Alabama Rule of Civil Procedure 47(b). This procedural error mandated reversal. The Supreme Court of Alabama held that the trial court’s judgment in favor of Cooper and its order appointing a receiver over Highland Rim must be reversed. The cases were remanded for further proceedings consistent with this opinion. View "Highland Rim Investments, LLC v. Cooper" on Justia Law

The plaintiffs, who were long-time friends of the defendants, invested significant sums in a biopharmaceutical company controlled by the defendants. The defendants did not disclose that the company was in serious financial distress, under a substantial obligation to a lender, and prohibited from incurring additional debt. The investment was structured through promissory notes, which included false warranties regarding the company’s financial status and claimed the formation of a new entity that never materialized. Instead of funding a new venture, the defendants used the investment to pay off existing company debt. Less than two years later, the company declared bankruptcy, making the notes essentially worthless.The plaintiffs brought claims under federal and Massachusetts securities laws, the Massachusetts consumer protection statute, and for common law fraud and negligent misrepresentation in the United States District Court for the District of Massachusetts. The defendants moved to dismiss the action, relying on a forum selection clause in the promissory notes requiring litigation in Delaware courts. The district court granted the motion and dismissed the case without prejudice, concluding that the clause applied to the plaintiffs’ claims.On appeal, the United States Court of Appeals for the First Circuit reviewed the dismissal de novo. The plaintiffs argued that their claims did not “arise out of” the notes and that the forum selection clause was unenforceable as contrary to Massachusetts public policy. The First Circuit rejected both arguments, holding that the claims arose from the notes and that the plaintiffs did not meet the heavy burden required to invalidate the clause on public policy grounds. The First Circuit affirmed the district court’s dismissal without prejudice, leaving the plaintiffs free to pursue their claims in the contractually designated Delaware courts. View "Manzo v. Wohlstadter" on Justia Law

Two lender plaintiffs provided a large loan to several special purpose entities (“Borrowers”) under a Loan and Security Agreement, which secured the loan with the Borrowers’ assets. The ultimate parent companies of the Borrowers (“Guarantors”) guaranteed repayment of the loan but did not pledge any of their own assets as collateral. After the lenders received information suggesting the Borrowers’ collateral was insufficient or encumbered, they accelerated the loan and demanded immediate payment of over $609 million. When neither the Borrowers nor the Guarantors could pay, the lenders filed suit for breach of contract and requested a temporary restraining order and preliminary injunction to freeze the assets of both the Borrowers and the Guarantors, expressing concern that these assets would be dissipated before a judgment could be enforced.The United States District Court for the Southern District of New York granted the injunction, including against the Guarantors’ assets. The Guarantors and related parties argued that, under Grupo Mexicano De Desarrollo, S.A. v. Alliance Bond Fund, Inc., the District Court lacked authority to freeze their assets because the plaintiffs had no lien or equitable interest in them. The District Court found Grupo Mexicano distinguishable and declined to modify the injunction.On appeal, the United States Court of Appeals for the Second Circuit held that the lenders did not have a lien or equitable interest in the Guarantors’ assets, as their claim was for contract damages and not for relief giving rise to an equitable interest in specific property. The court concluded that Grupo Mexicano precluded the freezing of the Guarantors’ assets under these circumstances. The Second Circuit vacated the portion of the District Court’s preliminary injunction restraining the Guarantors’ assets and remanded for further proceedings. The court made no ruling regarding the Borrowers’ assets, as that part of the injunction was not challenged. View "Leadenhall Capital Partners LLP v. Advantage Capital Holdings, LLC" on Justia Law

A dispute arose between an investment banker and the firm where he was employed regarding his status and compensation. Initially, the banker joined the firm under an employment offer letter that set out specific compensation terms. Over time, both sides attempted to negotiate changes to this arrangement, exchanging draft agreements and addenda. They met to discuss these terms but left with differing understandings. The banker believed an oral partnership agreement had been reached, while the firm contended only his compensation as an employee was modified. When the banker later made a demand for access to certain records, the firm denied his request, asserting he was not a partner.The case was first addressed by the Court of Chancery of the State of Delaware, which found after trial that no oral partnership agreement had been formed, meaning the banker was not a partner entitled to records access under Delaware law. The court also noted that questions about the banker’s compensation as an employee would be determined in a separate, subsequent action. Following this, the banker filed counterclaims in the ongoing plenary action seeking relief based on his employment letter, but the Court of Chancery dismissed most of these counterclaims. It held that they were barred by collateral estoppel because they relied on facts the court had found against the banker in the earlier proceeding.On appeal, the Supreme Court of the State of Delaware reviewed whether collateral estoppel properly barred the banker’s counterclaims about his compensation. The Supreme Court concluded that the earlier factual findings about the banker’s compensation were not essential to the judgment that he was not a partner. The Supreme Court reversed the Court of Chancery’s dismissal of the banker’s counterclaims relating to his compensation as an employee and remanded the case for further proceedings. View "Handler v. Centerview Partners Holdings LP" on Justia Law

An Ohio company that manufactures merchandise brought a lawsuit against an Arkansas toy company in the United States District Court for the Western District of Arkansas, alleging breach of a loan agreement and, later, breach of a contract for the sale of a large quantity of plush toys. The Arkansas company denied the allegations and filed counterclaims, asserting that it had paid for plush toys that were never delivered. The district court dismissed the plaintiff’s claims regarding the loan agreement. On the remaining claims, the court granted summary judgment to the Arkansas company on the breach of contract claim after determining that no contract for the sale of 250,000 plush toys ever existed between the parties, but allowed the counterclaims to proceed to trial. Following a bench trial, the court ruled in favor of the Arkansas company on its breach of contract counterclaim and awarded damages.After these rulings, the Arkansas company moved for attorney’s fees and expenses under Arkansas law. The district court awarded a reduced amount in fees and expenses, rejecting the Ohio company’s arguments that the fee request was untimely and that fees for successfully defending the breach of contract claim were not recoverable. The Ohio company appealed the fee award to the United States Court of Appeals for the Eighth Circuit.The United States Court of Appeals for the Eighth Circuit held that the district court did not abuse its discretion by finding the fee motion timely under the local rules, nor by awarding fees related to the successful “no contract” defense. The appellate court concluded that Arkansas law permits such an award, and that precedent cited by the appellant did not require a different result. The judgment of the district court was affirmed. View "Just Funky, LLC v. Think 3 Fold, LLC" on Justia Law

An employee of a major defense contractor, serving in a senior internal audit role, claimed to have discovered fraudulent activity involving government contracts for military aircraft. The contractor, which assembles aircraft using parts supplied by numerous subcontractors, is subject to detailed regulatory requirements intended to ensure fair pricing, including the Truth in Negotiations Act (TINA), the Federal Acquisition Regulation (FAR), and the Defense Federal Acquisition Regulation Supplement (DFARS). The plaintiff alleged that the contractor systematically ignored and concealed fraudulent inflation of cost and pricing data by its subcontractors, resulting in overbilling the government.The plaintiff brought a qui tam action under the False Claims Act (FCA), which allows private individuals to sue on behalf of the government. Previously, another relator had filed a separate FCA action against the same contractor, alleging a different fraudulent scheme: obtaining parts in bulk at a discount but charging the government full price. The United States District Court for the Northern District of Texas dismissed the plaintiff’s suit for lack of subject matter jurisdiction, ruling that the FCA’s “first-to-file” bar applied because the earlier action covered the same essential elements of fraud.The United States Court of Appeals for the Fifth Circuit reviewed the district court’s decision. The appellate court found that the two complaints alleged distinct fraudulent schemes: one involving bulk pricing manipulation, and the other involving the submission of inflated subcontractor cost data. The Fifth Circuit held that the first-to-file bar under the FCA did not apply because the plaintiff’s complaint was based on a different mechanism of fraud, not merely additional details or locations of the same scheme. The court reversed the district court’s dismissal and remanded the case for further proceedings. View "Ferguson v. Lockheed Martin" on Justia Law