Case Summaries

Corporation & Enterprise Law

[09/03] Superior Seafoods, Inc. v. Tyson Foods, Inc.
District court's denial of plaintiff's Rule 60(d)(3) motion to vacate an underlying consent judgment involving a series of trademark-related actions stemming from plaintiff's sale of a seafood-products business to defendant is affirmed as, given the facts, and given the equitable requirement that the party seeking relief be free from negligence and fault, the district court clearly did not abuse its discretion in finding equitable relief inappropriate in this case.

[08/30] Metavante Corp. v. Emigrant Savings Bank
In plaintiff's suit for breach of contract against defendant-bank for nonpayment of fees under the parties' Technology Outsourcing Agreement, judgment of the district court is affirmed where: 1) an expert's testimony was both relevant and reliable; 2) district court correctly determined that plaintiff did not breach the Agreement's performance warranty and its duty of good faith; 3) district court did not err in concluding that any reliance by defendant on the alleged misrepresentations of plaintiff was not reasonable; 3) district court committed no reversible error in determining that defendant's fraud claims were without merit; 4) district court determined correctly that defendant's success on the in-house issue does not render it a "prevailing party" within the meaning of the contract; and 5) the district court acted within the bounds of its discretion in determining that no additional guarantee of reasonableness was required.

[08/30] Flood v. ClearOne Communications, Inc.
In defendant's appeal from a preliminary injunction requiring defendant-corporation to advance attorney fees and costs to its former CEO, who was then facing a criminal trial, the order is vacated where the district court misread the parties' contract as a matter of law, disregarding express conditions to advancement specified in their agreement.

[08/30] HCM Healthcare, Inc. v. California Ins. Guarantee Ass'n
In a residential nursing facility's suit against California Insurance Guarantee Association (CIGA) for breach of contract and for violating the Insurance Code for refusing to provide plaintiffs with defense counsel and indemnification for underlying lawsuits for elder abuse, judgment in favor of defendant is affirmed where: 1) as a creature of statute, and not of contract, in some instances CIGA may not be responsible for an insured loss to the same extent as the insolvent insurer might be under the terms of its insurance contract; and 2) Pennsylvania's liquidation order imposed a June 30, 2005 deadline for filing against an insurer and because plaintiff did not meet the deadline, CIGA may not honor their claims.

[08/27] Paloian v. Lasalle Bank, N.A.
In a debtor-hospital's trustee's action to recover, as fraudulent conveyances, some loan payments made during the last years before hospital entered bankruptcy, judgment of the district court is vacated and remanded where: 1) LaSalle Bank is an "initial transferee" as an entity that receives funds for use in paying down a loan, or passing money to investors in a pool, is an "initial transferee" even though the recipient is obliged by contract to apply the funds according to a formula; 2) because the hospital was solvent in August 1997, the ensuing months' debt service cannot be recaptured as a fraudulent conveyance; and 3) on remand, the bankruptcy court is instructed to determine whether the transfer of the accounts receivable to MMA Funding was a true sale, such that MMA Funding served as the bankruptcy-proofing intermediary that the lenders desired.

[08/27] Russell v. Comm'r of Internal Rev.
In taxpayers' appeal from the tax court’s decision that several loans did not constitute "indebtedness of the S corporation to the shareholder" such that taxpayers could claim losses incurred by the Missouri River Royalty Corporation (MMRC), the order is affirmed where the court's review of the record revealed no error in the tax court's rulings.

[08/25] Waldner v. Carr
In a breach of contract action arising from failed negotiations for the acquisition and management of a financially struggling trucking company, summary judgment for defendants is affirmed where: 1) the alleged contract was merely an agreement to agree in the future and did not constitute a valid contract because the necessary Stock Purchase Agreement was never signed by the parties; and 2) because the memorandum explicitly stated that it was not the final contract, plaintiff could not have justifiably relied on its contents.

[08/24] Quinn v. Anvil Corp.
In a derivative action seeking damages from Anvil Corporation, its board of directors, and others for breach of fiduciary duty, breach of contract, and negligence, dismissal of the action for lack of standing is affirmed where, lacking shares, plaintiff lost standing to assert claims derivatively on behalf of the corporation under Federal Rule of Civil Procedure 23.1's continuous ownership requirement.

[08/24] Worldmark, The Club v. Wyndham Resort Dev. Corp.
Trial court's denial of a nonprofit mutual benefit corporation's petition to set aside a member's section 8330 demand on the ground that it had satisfied its statutory obligations in proposing an alternative is affirmed and modified where: 1) the information the member seeks, including email addresses, shall be made available to him in electronic form at his option and no further written demand is necessary; 2) if any member's address is not in electronic form, the corporation shall provide a written copy of such address to the member; 3) the member or his appointed representative must acknowledge in writing his agreement not to use or allow use of the membership information for commercial or other purposes not reasonably related to the affairs of the corporation.

[08/20] Lustgraaf v. Behrens
In an action for damages arising out of a Ponzi scheme perpetrated by a registered representative of one defendant and general agent of another, the dismissal of the complaint is affirmed in part where the complaint did not allege the additional facts necessary to demonstrate that defendant actually exercised control over its subsidiary's general operations rather than merely possessing the ability to do so. However, the order is reversed in part where plaintiffs met their burden of alleging falsity under the Private Securities Litigation Reform Act.

[08/20] Schleicher v. Wendt
In a securities-fraud suit against some managers of a large, publicly traded financial-services holding company, district court's conclusion that investors can use the fraud-on-the-market doctrine as a replacement for person-specific proof of reliance and causation in granting the class certification is affirmed as, the district court assured itself that the market for the company's stock was thick enough to transmit defendants' statements to investors by way of the price, and as such, the district court did not commit a legal error, or abuse of discretion, in deciding that the fraud-on-the-market doctrine should not be conscripted to serve some other function.

[08/19] US v. Kottwitz
Defendants' convictions for tax fraud-related charges are affirmed in part where the circumstantial evidence was sufficient for the jury to have concluded beyond a reasonable doubt that defendants entered into the charged conspiracy. However, the convictions are vacated in part where: 1) the district court erred in refusing to give defendants' requested special instruction to the jury on their good faith reliance on their accountant's advice; and 2) the evidence was insufficient for a properly instructed jury to convict on the charge of aiding and assisting in the filing of a materially false corporate tax return.

[08/18] US v. Agosto-Vega
Conviction of a company in San Juan, Puerto Rico, and its owner and principal officer for violating criminal provisions of the Clean Water Act is vacated where: 1) district court committed a structural error by excluding the public from the courtroom during the selection of the jury; and 2) the government proved the charges against defendants by sufficient evidence to establish their guilt beyond a reasonable doubt.

[08/16] ParkCentral Global, L.P. v. Brown Inv. Mgmt., L.P.
In defendant's appeal from the Vice Chancellor's order requiring defendant to provide its list of limited partners to plaintiff, the order is affirmed where plaintiff complied with the Partnership Agreement, and limited partners were not "third parties" to the partnership.

[08/16] OSS Nokalva, Inc. v. European Space Agency
In a software corporation's suit against the European Space Agency (ESA), for breach of contract relating to license agreements and corresponding software maintenance agreements, district court's judgment is affirmed based on reasons other than those relied on by the district court as, in light of the "same immunity" language in the International Organizations Immunities Act (IOIA), it is unreasonable to assume that those international organizations that were established under the IOIA after foreign sovereign immunity had been altered by the Foreign Sovereign Immunity Act (FSIA) would still be subject to that level of immunity enjoyed by foreign governments and international organizations in 1945. Therefore, ESA is not entitled to immunity as it stood for foreign sovereigns in 1945.

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