Justia U.S. 1st Circuit Court of Appeals Opinion SummariesArticles Posted in Business Law
T G Plastics Trading Co., Inc. v. Toray Plastics (America), Inc.
After T G Plastics Trading Co., Inc. (“National Plastics”) allegedly fell behind on payments owed to Toray Plastics (America), Inc., Toray filed suit. The parties settled the lawsuit, and the terms of the settlement were memorialized in a Settlement Agreement. The Settlement Agreement provided that Toray would sell certain materials exclusively through National Plastics and pay National Plastics a twelve percent commission on all sales generated by National Plastics. When the parties began to dispute several aspects of the application of the Settlement Agreement, National Plastics sued Toray. The original complaint did not contain a jury demand. After two years of settlement negotiations, National Plastics amended its complaint to request a jury trial. A jury found Toray liable for breach of the Settlement Agreement and awarded National Plastics more than $2 million in damages. The First Circuit affirmed, holding (1) the district court did not err in allowing National Plastics to amend its complaint to add a jury demand, as National Plastics did not waive its right to a jury trial by a belated demand; and (2) the evidence was sufficient to support the jury’s finding of liability and its calculation of damages. View "T G Plastics Trading Co., Inc. v. Toray Plastics (America), Inc." on Justia Law
Foodmark, Inc. v. Alasko Foods, Inc.
Alasko Foods, Inc. (“Alasko”), a Canadian corporation that sells frozen produce to retail outlets, and Foodmark, Inc. (“Foodmark”), a Massachusetts corporation that assists food manufacturers in marketing branded-label and private-label products to retailers, entered into a “U.S. Representation Agreement [and] Sales Management Agreement” wherein Alasko retained Foodmark to market Alasko’s products in the United States. Five years later, Alasko terminated the Agreement. Foodmark filed a complaint against Alasko, alleging that Alasko’s refusal to pay the “Non-Renewal Termination Fee” contemplated by the Agreement constituted a breach of the Agreement and of its covenant of good faith and fair dealing. A federal district court entered summary judgment for Foodmark and awarded $1.1 million in damages. The First Circuit affirmed, holding that there were no genuine issues of fact, and Foodmark was entitled to a termination fee in the amount calculated by the district court. View "Foodmark, Inc. v. Alasko Foods, Inc." on Justia Law
MAZ Partners LP v. PHC, Inc.
Plaintiffs, holders of PHC, Inc. stock, filed separate but similar class actions suits in Massachusetts, alleging that an announced merger between PHC and Acadia Healthcare Company, Inc. was the result of an unfair process that provided them with too little compensation. A federal district court consolidated the two cases and, after the merger was consummated, granted summary judgment for Defendants, concluding that Plaintiffs were unable to demonstrate that they suffered an actual injury. The First Circuit vacated the judgment of the district court, holding that the court abused its discretion by not allowing discovery before ruling on the motion for summary judgment. Remanded.View "MAZ Partners LP v. PHC, Inc." on Justia Law
OMJ Pharms., Inc. v. United States
At issue in this appeal was a tax credit that offset federal tax owed on income earned in the operation of a business in Puerto Rico. The credit remained available to taxpayers under section 936 of the Internal Revenue Code during the ten-year transition period after section 936 was repealed. During the transition period, the taxable income an eligible claimant could claim in computing its credit was capped at an amount approximately equal to the average of the amounts it had previously claimed, but the cap could be adjusted for a taxpayer’s purchases and sales of businesses that had generated credit-eligible income. In this case, Appellant-corporation, a U.S. taxpayer, sold a line of businesses in Puerto Rico to a foreign corporation that did not pay U.S. corporate income taxes. Appellant argued it was not required to reduce its cap because the buyer had no credit cap to increase. The district court granted summary judgment for the government. The First Circuit reversed, holding (1) the reduction in a seller’s cap as a result of the sale of a business line is appropriate only in the event of a corresponding increase in the buyer’s cap; and (2) therefore, the transfers did not reduce Appellant’s credit cap. View "OMJ Pharms., Inc. v. United States" on Justia Law
Valsamis v. Gonzalez-Romero
Defendant, a citizen and resident of Puerto Rico, borrowed $700,000 from Plaintiff, a citizen and resident of Greece. Plaintiff’s loan was not evidenced by "even a single scrap of paper." The parties subsequently disputed who the borrower was, whether Caribbean Carrier Holding (Panama), Inc., as Defendant claimed, or Defendant, as Plaintiff claimed. When the parties could not agree on the identity of the borrower, Plaintiff brought a collection action against Defendant in the United States District Court for the District of Puerto Rico. The district judge ruled that Plaintiff had not sustained his burden of proof and entered judgment for Defendant. The First Circuit Court of Appeals affirmed, holding that the district judge (1) substantially complied with the requirements of Fed. R. Civ. P. 52(a)(1), and (2) applied the correct substantive law standard in adjudicating Plaintiff’s claim. View "Valsamis v. Gonzalez-Romero" on Justia Law
W Holding Co., Inc. v. AIG Ins. Co. – P.R.
After Westernbank of Puerto Rico was ordered closed in the late 2000s and the Federal Deposit Insurance Corporation (“FDIC”) was appointed receiver, the FDIC discovered that certain bank directors and officers had breached their fiduciary duty by jeopardizing the bank’s financial soundness, causing over $176 million in damages to the bank. The directors and officers asked their insurer, Chartis Insurance Company, to confirm coverage under a directors’ and officers’ liability-insurance policy issued by Chartis to Westerbank’s owner, W Holding Company, Inc. Chartis denied coverage. The directors and officers and the FDIC sued Chartis. In this “procedurally complicated” case, a district judge eventually issued an order requiring Chartis to advance defense costs to the directors and officers. The First Circuit Court of Appeals affirmed, holding (1) the Court had jurisdiction to hear the parties; and (2) the district judge did not err in making its cost-advancement ruling. View "W Holding Co., Inc. v. AIG Ins. Co. - P.R." on Justia Law
HSBC Realty Credit Corp. v. O’Neill
HSBC Realty Credit Corporation loaned Brandywine Partners, LLC $15.9 million pursuant to a property-loan agreement for the purchase and development of industrial property in Delaware. J. Brian O’Neill, a principal of Brandywine, signed an absolute personal guaranty for the loan. O’Neill’s liability was capped at $8.1 million. After Brandywine defaulted on its repayment obligations, HSB filed suit on the guaranty agreement. O’Neill filed several defenses and counterclaims essentially asserting that HSBC must first recover any amount owed by Brandywine by proceeding against the Delaware property before turning to O’Neill’s personal guaranty. The district judge struck O’Neill’s defenses and counterclaims, granted HSBC judgment on the pleadings, and denied O’Neill’s request to replead. The First Circuit Court of Appeals affirmed, holding that the district court judge did not commit reversible error in granting HSBC judgment on the pleadings or in denying O’Neill leave to replead, as O’Neill did not provide any additional facts which, if repled, would permit him to make out a plausible claim for relief when matched up against the guaranty’s express language. View "HSBC Realty Credit Corp. v. O'Neill" on Justia Law
Ortiz-Bonilla v. Federacion de Ajedrez de P.R., Inc.
The parties in this case were a group of chess players and their opponent, the Puerto Rico Chess Federation. The chess players filed suit against the chess federation in Puerto Rico court, alleging violations of their rights under the United States and Puerto Rico constitutions and Puerto Rico law. The chess federation successfully removed the case to federal court. The chess players subsequently filed a second case, again in Puerto Rico court, excluding any claims under federal law. The federation also removed this case. The district court consolidated the two cases and declared jurisdiction over the second case under the All Writs Act. Ultimately, the district court granted summary judgment in favor of the federation on all claims. The First Circuit Court of Appeals affirmed in part and reversed in part, holding (1) the district court had federal subject matter jurisdiction over the first case but did not have subject matter jurisdiction over the second case; and (2) the district court incorrectly granted summary judgment to the federal on some of the chess players' Commonwealth law claims. View "Ortiz-Bonilla v. Federacion de Ajedrez de P.R., Inc." on Justia Law
Sun Capital Partners III, LP v. New England Teamsters & Trucking Indus. Pension Fund
This case concerned the withdrawal liability for a pro rata share of unfunded vested benefits to a multiemployer pension fund of Scott Brass, Inc. (SBI), a bankrupt company. SBI had withdrawal pension obligations to the multiemployer pension fund (TPF), which sought to impose the obligations on two private equity funds (Plaintiffs). Plaintiffs asserted they were passive investors that indirectly controlled SBI and sought a declaratory judgment against the TPF. The TPF counterclaimed and sought payment of the withdrawal liability at issue. The district court entered summary judgment for Plaintiffs. The First Circuit Court of Appeals affirmed in part, reversed in part, and vacated in part, holding (1) at least one of the private equity funds that operated SBI sufficiently operated and was advantaged by its relationship with SBI, and further factual development was necessary as to the other equity fund; (2) the district court erred in entering summary judgment for Plaintiffs under the "trades or businesses" aspect of a two-part "control group" test under 29 U.S.C. 1301(b)(1); and (3) the district court correctly entered summary judgment for Plaintiffs on TPF's claim of liability on the ground that the funds had engaged in a transaction to evade or avoid withdrawal liability. Remanded. View "Sun Capital Partners III, LP v. New England Teamsters & Trucking Indus. Pension Fund" on Justia Law
Fed. Deposit Ins. Corp., as receiver for R-G Premier Bank of P.R. v. Estrada-Rivera
Appellant signed a loan agreement with Bank for a line of credit for his business (Business). Appellant later defaulted on the loan, and Bank brought a collection action against Appellant, his wife, their conjugal partnership, and Business. The FDIC subsequently took over the Bank as receiver and obtained summary judgment in its favor on the collection action. The district court also dismissed Appellants' counterclaim for lack of jurisdiction, finding that Appellants had not timely taken the steps necessary to maintain an action against the FDIC. The First Circuit Court of Appeals affirmed, holding (1) summary judgment was properly granted on the collection action because factual disputes did not remain concerning Bank's role in causing Appellants to breach their loan agreement and whether Appellants should be released from their obligations under that agreement; and (2) the district court correctly dismissed Appellants' counterclaims on jurisdictional grounds, as the Bank had insufficient assets to make any distribution on the claims of general unsecured creditors, including Appellants if they prevailed on their counterclaim, and therefore, the claim was not redressable. View "Fed. Deposit Ins. Corp., as receiver for R-G Premier Bank of P.R. v. Estrada-Rivera" on Justia Law