Justia U.S. 8th Circuit Court of Appeals Opinion Summaries

By quitclaim deed, 27 acres in Branson passed to Tori, Inc. Tori was dissolved, and, by quitclaim transactions, Rea acquired the land. Rea quitclaimed to Missouri Branson. Coverdell also claims ownership, based on a 1999 quitclaim from Tori. Coverdell's claim spurred state lawsuits, funded by Elfant, a businessman, who operates a Delaware LLC, Nekome, from his Florida home. In 2013, Missouri state courts rejected Coverdell's claim. In 2014, Nekome acquired Missouri Branson, days after receiving tax advice that merging Missouri Branson into an out-of-state corporation would avoid Missouri state taxes. Nekome became the sole member in a newly form company, Florida Branson. Missouri Branson merged into Florida Branson, transferring Missouri's claim of ownership to Florida. Days later, Florida Branson filed suit in federal court asserting diversity jurisdiction based on its Florida citizenship and the defendants’ Missouri citizenships, and alleging that the city, the electric company, and developers infringed on its rights by breaking ground on its land in 2004, to develop Branson Landing, a mixed-use retail, residential, and entertainment complex. Elfant admits that the only business that Florida Branson conducts consists of directing and funding the lawsuits." The Eighth Circuit affirmed dismissal, finding that Florida Branson's corporate maneuvers were done to manufacture diversity in violation of 28 U.S.C. 1359 and that the purported tax purpose for merging was pretextual. View "Branson Label, Inc. v. City of Branson" on Justia Law

Knickel approached Macquarie Bank about a loan to develop North Dakota oil and gas leases, providing confidential information about leased acreage that he had assembled over 10 years. Macquarie entered agreements with Knickel’s companies, LexMac and Novus. His other company, Lexar was not a party. Macquarie acquired a mortgage lien and perfected security interest in the leases and in their extensions or renewals. Royalties and confidential information—reserves reports on the acreage, seismic data, and geologic maps—also served as collateral. The companies defaulted. Because of the lack of development or production, many leases were set to expire. Knickel claims he agreed to renew only leases that included automatic extensions. Macquarie claims that Knickel promised to renew all leases serving as collateral in the names of LexMac and Novus. Upon the expiration of the leases without automatic extensions, Knickel entered into new leases in the name of Lexar, for development with LexMac and Novus, since they owned the confidential information. A foreclosure judgment entered, declaring that LexMac and Novus’s interest in the leases would be sold to satisfy the debt: $5,296,252.29,. Marquarie filed notice of lis pendens on Lexar’s leases, leased adjoining acreage, used the confidential information to find a buyer, and sold the leases at a profit of about $7,000,000. Marquarie filed claims of deceit, fraud, and promissory estoppel, and alleged that the corporate veil of the companies should be pierced to hold Knickel personally liable. The defendants counterclaimed misappropriation of trade secrets and unlawful interference with business. The Eighth Circuit affirmed summary judgment on all but one claim and judgment that Macquarie had misappropriated trade secrets. View "Macquarie Bank Ltd. v. Knickel" on Justia Law

In 2009, Paramount contracted with the RSAs, cellular-service providers: Paramount would provide billing services and the RSAs would pay Paramount $1.05 per month for each customer billed. The contract had an initial three-year term, with continual renewal for two-year terms, unless a party gave six months’ notice. The RSAs could end the agreement before the end of a term, but would have to pay Paramount “all projected monthly fees based on the number of unexpired months remaining on” the term. The contract did not guarantee a minimum number of billings, nor did it require the RSAs to use Paramount exclusively. In 2011, the RSAs sent Paramount a letter explaining that they were switching billing companies and would want assistance. The RSAs would “send an official notice … when [they] want[ed] the system shut down.” For a year, Paramount continued to serve the RSAs while helping them transfer records. Before the transfer was finished, the initial, three-year term ended, and the contract renewed. In 2013, the RSAs stopped using Paramount, with a year remaining on the renewed term. The RSAs sought a declaratory judgment, Paramount counterclaimed for breach of contract. The Eighth Circuit affirmed summary judgment in favor of Paramount, finding that the RSAs owe about $260,000 in liquidated damages. View "RSA 1 Ltd. P'ship v. Paramount Software Assocs." on Justia Law

H & Q and the Doll Companies owned membership units of Double D Excavating, LLC. The Doll Companies opened account 121224 in the name of "Double D Excavating" and deposited a check payable to the LLC and opened account 119992 in the name of David Doll. The Doll Companies deposited into Account 121224 multiple payments that LLC customers made to the LLC and then transferred funds from Account 121224 to Account 119992, commingled funds from Account 119992 with funds belonging to the Doll Companies, and used those funds to pay Doll Companies' expenses. H&Q claims that the Doll Companies failed to give notice or obtain consent for any of those activities and represented to H&Q that the LLC was struggling financially and needed additional financial assistance. The Doll Companies contributed a portion of the funds from Account 119992 back to the LLC and, according to H&Q, represented to H&Q that these were fresh capital contributions. H&Q also invested additional capital. After discovering the Doll Companies' alleged conduct, H&Q filed suit asserting state law claims and claims under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1961. The Eighth Circuit affirmed dismissal, agreeing that the complaint did not sufficiently allege any racketeering activity. View "H & Q Props, Inc. v. Doll" on Justia Law

Eighteen years after Nissan and Wayzata entered into an agreement which established Wayzata as an authorized Nissan dealer, Nissan informed Wayzata that it intended to establish a new dealership in Eden Prairie, eight miles from Wayzata. Nissan sought a declaratory judgment that the Eden Prairie dealership neither violated their dealer agreement nor infringed Wayzata's "relevant market area" under Minn. Stat. 80E.14. One month later, Wayzata sued Nissan in Minnesota state court, alleging the new dealership violated its dealer agreement and the statute, and moved to dismiss the federal action for lack of subject matter jurisdiction. The district court granted the motion to dismiss after concluding that the parties were not diverse under 28 U.S.C. 1332. The Eighth Circuit affirmed. A district court may dismiss or stay a declaratory judgment action when it determines that the question in controversy would be better handled in state court. It would be duplicative and uneconomical for a federal court to decide a case substantially similar to one which has been pending for over a year in state court. View "Nissan N. Am., Inc. v. Wayzata Nissan, LLC" on Justia Law

Wild is the sole member of Braveheart, LLC, which is one of two members of another limited liability company, Catalyst. In 2008, Catalyst borrowed $500,000 from Laurus. Wild signed a personal guaranty as security for Catalyst's loan. The guaranty did not expressly extend Wild's promise to Laurus's "successors and assigns," but it also did not expressly prohibit assignment of the guaranty. Years later, Laurus assigned the Catalyst promissory note to Avnet as part of a forbearance agreement on a debt Laurus owed to Avnet. An attorney for Avnet contacted Catalyst demanding payment of the $500,000 loan plus interest. When Catalyst did not make any payments, Avnet's attorney contacted Wild and demanded that he honor his personal guaranty. When Wild did not honor the guaranty, Avnet filed suit. Catalyst did not respond; a $770,065.80 default judgment entered against the company. Wild contended his guaranty was a "special guaranty" (directed solely to a specific creditor) rather than a "general guaranty" and that a special guaranty could not be assigned under Iowa law. After examining Iowa law, the district court determined the Iowa Supreme Court would allow enforcement of Wild's personal guaranty by Avnet. The Eighth Circuit affirmed. View "Avnet, Inc. v. Wild" on Justia Law

Stonebridge, an engraver of promotional pocket knives, sued its former distributor Cutting-Edge and its members; competitor knife engraver TaylorMade and its sole member and manager Taylor, a former Stonebridge employee; and Massey, a TaylorMade employee and former Stonebridge employee, arising from Massey’s copying Stonebridge’s computer files and using those files to solicit business from Stonebridge customers. Stonebridge brought claims under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961-1968; the Arkansas Deceptive Trade Practices Act (ADTPA), Ark. Code 4-88-101; and Arkansas common law. The district court partially found for Stonebridge on its fraud and conversion claims, dismissed the remaining eight claims, and denied the parties’ motions for attorney fees. The Eighth Circuit upheld: the finding that defendants converted the copies of certain files created by Stonebridge; an award of damages for unjust enrichment; a finding Stonebridge did not establish the existence of a business expectancy under Arkansas law; a finding Cutting-Edge fraudulently induced Stonebridge to send sample knives while intending to employ TaylorMade as its engraver on the orders placed as a result of seeing the samples; and dismissal of the RICO and ADTPA claims. View "Stonebridge Collection, Inc. v. Carmichael" on Justia Law

Farmer owned Arkat Nutrition, which owned the Plant One feed mill in Arkansas. Arkat Land owned Plant Two, which was leased to Arkat Nutrition, which produced animal feed. In 2007, a tornado damaged Plant One. Arkat decided not to repair the plant because its equipment had little useful life remaining. Debris from the tornado was removed, leaving scrap with potential value. Friedman made an oral contract with Farmer to act as a broker for the remaining Plant One equipment. Arkat Nutrition says that it was understood that it could also continue to attempt to find a buyer on its own. Friedman disagrees. Friedman sold some equipment and received a commission of $25,000. In 2010, Arkat Nutrition and Arkat Land transferred assets to a new company, Animal Nutrition, the equity interests of which were sold to Dad’s Products, which was not to be responsible for any investor or third-party claims against Animal Nutrition. Farmer claims that sale was planned since 2002. Dad’s later changed its name to Ainsworth and hired a third-party to remove remaining Plant One scrap. Friedman sued. The Eighth Circuit affirmed summary judgment in favor of the defendants, rejecting alter-ego claims and claims of unjust enrichment and promissory estoppel, and noting the limitations period. View "Friedman v. Farmer" on Justia Law

United operates a nationwide household goods moving network with more than 400 independently owned and operated agents. Since 1993, Chavis has been a full-service United agent. The parties' relationship is governed by a 2007 Agency Agreement. Chavis filed suit for breach of contract, alleging that United breached the Agency Agreement by unilaterally changing the roles that United agents play in servicing shipments by not assigning Chavis to certain roles in the chain of interstate shipments. According to Chavis, it should have been assigned the roles of origin agent and destination agent, based on its status as the "local" or "authorized" agent in the case of non-military shipments, i.e., its status as the agent closest to the original or destination address, and based on its designation as the United agent "authorized" to service Shaw Air Force Base in South Carolina for military shipments. The district court entered summary judgment for United, finding the Agreement unambiguous. The Eighth Circuit affirmed. None of the documents that Chavis identified supported its argument that it is the only "authorized" agent for its home market for non-military shipments or the exclusive agent for military shipments to and from Shaw AFB. View "Chavis Van & Storage of Myrtle Beach, Inc. v. United Van Lines, LLC" on Justia Law

Robl and Homoly formed the Company to develop real estate. Robl held a 60% share and Homoly held 40%. Steve Robl was the tax matters partner; his wife, accountant Vera Robl, assisted with financial records; Homoly was a project manager. From 2006-2011, the Company operated at a loss. Robl periodically advanced money. The operating agreement required the consent of both members before “creation of any obligation or commitment of the Company, including the borrowing of funds, in excess of $10,000; [and] . . . . Any act which would cause a Member, absent such Member’s written consent, to become personally liable for any debt or obligation of the Company.” Vera notified Homoly that the Company needed “to make a capital call or increase loans on existing inventory,” that Robl had “put in $71,500 so if you go the route of capital call, your share to get caught up would be $47,666.” Homoly responded, “I would prefer the money from Robl to be considered a loan ... If Steve would rather me put in a capital call, however, I will … write the check.” In 2011, Robl sued for breach of contract, seeking $172,617.61. The district court entered summary judgment, finding that Homoly did not personally guarantee any loan. The Eighth Circuit reversed. The record showed that the parties genuinely dispute whether Homoly authorized Robl’s loan and personally guaranteed repayment. View "Robl Constr., Inc. v. Homoly" on Justia Law