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

The Lapideses renewed a loan from Venture Bank secured by a third mortgage on their home. Howard subsequently filed for Chapter 7 bankruptcy. After Howard’s personal debts were discharged, the Lapideses executed two “Change in Terms Agreements,” each of which extended the maturity date of the loan for six months. When Howard ceased making payments under these agreements, Venture Bank sought a declaratory judgment that the agreements were valid and enforceable. Howard counterclaimed that Venture Bank’s efforts to obtain payments after his discharge violated the discharge injunction under 11 U.S.C. 524(a)(2). The bankruptcy court denied Venture Bank’s claim for a declaratory judgment and awarded Howard damages and attorney’s fees. The district court and Eighth Circuit affirmed, upholding a finding that Howard’s payments were not voluntary within the meaning of section 524(f) and did not comply with the requirements of a reaffirmation agreement under section 524(c). The post-discharge agreements served no purpose other than reaffirmation agreements in which Howard agreed to repay all of his discharged personal debt and lacked consideration. View "Venture Bank v. Lapides" on Justia Law

American manufactures and Southland sells iron castings. After operating under a verbal agreement for years, the companies entered into a written “Exclusive Representation Agreement” in 2010. American was aware Southland represented other foundries. The contract incorporated lists of American’s active and potential customers and identified the companies with which Southland had an existing relationship, but did not define covered “products.” Both agreed to noncompete clauses. In 2011, Southland obtained $32.5 million in new sales —80% of American’s total new sales. In 2012, American CEO Fuller began advocating for replacement of Southland with an internal sales team. Fuller later determined that Southland was providing quotes that he considered to be a breach of the contract, but did not immediately address the issue. American began to organize an internal sales force. Meanwhile, Southland continued seeking orders and obtained $24 million in new business for American. After several months, American notified Southland that American considered Southland in breach and sent a termination letter. American did not explain and discontinued paying commissions. Southland sued, alleging American breached the contract by not providing adequate notice of breach or the opportunity to cure and by not paying continuing commissions. American alleged Southland had committed an incurable breach such that notice and the opportunity to cure were not necessary. The district court denied summary judgment, finding the contract ambiguous with respect to the terms “Products” and “compete.” The Eighth CIrcuit affirmed findings that American breached the contract and owed Southland $3.8 million in damages based on the sales during the post-termination period. View "Southland Metals, Inc. v. Am. Castings LLC" on Justia Law

Creative, an Iowa corporation, designs and sells beauty products. LF, a Hong Kong corporation, with its principal place of business in Hong Kong, provides services, including product development, shipping oversight, and production planning. LF contacted Unger, President of Creative, in Iowa, seeking to manage Creative’s operations in China and e-mailed a presentation describing proposed services. Unger traveled to Hong Kong to execute the contract. LF managed Creative’s supply chain; the companies communicated extensively electronically and by telephone for two years. As required by the contract, LF shipped pre-production and production samples (made in China by third party factories) to Iowa. LF received payments from Creative’s customers on its behalf, and sent proceeds, less deductions, to Iowa. No LF agents or employees visited Iowa and LF has no connection with Iowa outside of this business relationship. Creative filed suit in Iowa, alleging that LF breached the contract by sending samples that could not be used because they were defective. The district court dismissed for lack of personal jurisdiction. The Eighth Circuit reversed, stating that a reasonable jury could find that LF had sufficient contacts with Iowa to justify the exercise of personal jurisdiction and that the exercise of jurisdiction would not offend traditional notions of fair play and substantial justice. View "Creative Calling Solutions Inc v. LF Beauty Ltd." on Justia Law

FedEx contracts with operators to take packages from its terminals to homes and businesses. FedEx assigns each territory to an operator. Former operators claim that FedEx defrauded them as to their employment status, denying them benefits, such as overtime pay and workers’ compensation. Operators were paid based on the numbers of packages and stops serviced and were not required to drive personally; they could hire others, subject to FedEx’s qualifications. Operators received a proprietary interest in their territories, which they could sell, subject to approval. FedEx could not fire the operators at will during their contract terms, but could fire them for cause, and could choose not to renew their contracts for any reason. Operators provided their own vehicles. FedEx managers could ride along on four delivery runs per year. Contracts stated that an operator made deliveries “strictly as an independent contractor, and not as an employee,” but FedEx required that operators’ vehicles bear FedEx’s logo and be painted “FedEx White.” Operators had to provide proof of inspection and maintenance. Drivers had to wear a FedEx uniform and meet FedEx personal appearances standards. Drivers were subject to background, credit, and drug checks. They had to use FedEx package scanners. The district court granted plaintiffs partial summary judgment, finding no genuine dispute that they were FedEx employees, even though under Missouri law employment status is an issue of fact. The Eighth Circuit reversed, finding that a reasonable jury could disagree. View "Gray v. FedEx Ground Package Sys., Inc." on Justia Law

Siouxland, a group practice of obstetrician-gynecologists, terminated Hagen, its President and an equity owner, invoking the for-cause termination provision in Hagen’s 1993, Employment Agreement, after an incident during which Hagen yelled at Dr. Eastman (another Siouxland doctor) and hospital staff, accusing them of neglecting a patient, resulting in a stillbirth. Hagen also reported the incident to hospital administration and told the Siouxland partners that he was considering reporting to the Iowa state medical board. Hagen advised the patient to sue for malpractice. Hagen filed suit, alleging wrongful retaliatory discharge in violation of Iowa public policy. The other doctors testified about Hagen’s history of workplace conflicts and outbursts and about concern that his suspension by the hospital would hurt the reputation of the practice. A jury awarded Hagen $1,051,814 in compensatory damages. The Eighth Circuit reversed, holding that Hagen failed to prove he was an at-will employee who may assert a tort claim for wrongful discharge in violation of public policy. The exclusive remedy of a medical professional practicing under Hagen’s Employment Agreement would be a breach of contract claim, which would permit inquiry into the professional conduct the district court found separately protected by the tort of wrongful termination in violation of public policy. View "Hagen v. Siouxland Obstetrics & Gynecology, PC" on Justia Law

Toy Box, an LLC organized to operate storage facility sales businesses, distributed an Offering Circular that stated that investors’ funds would be held in escrow and not released unless a minimum of $500,000 in capital was deposited in 2008. If Toy Box did not raise minimum capital by the deadline, the offering would terminate and Toy Box would return investors' funds . Doud executed a subscription agreement and invested $100,000. In June 2008, Toy Box amended its offering, lowering the minimum capital requirement to $350,000. Doud agreed to the amendment. By July 11, 2008, Toy Box had raised $200,000, including Doud’s investment; a manager authorized release of the escrow funds. Days later, Toy Box represented to investors that it had "achieved its threshold funding level and exited escrow with $425,000 in place." In 2011, Toy Box suffered substantial financial losses. Doud lost his investment and sued, alleging breach of the investment agreement and violation of the Securities Exchange Act (15 U.S.C. 78j(b)); SEC Rules 10b-5 and 10b-9; and the Iowa Uniform Securities Act. The Eighth Circuit affirmed that Toy Box had breached its agreement by releasing escrow funds before reaching the minimum threshold of funding; that its conduct violated both SEC Rules and the Uniform Securities Act; that Doud had established scienter; and rejecting a claim of good faith. View "Doud v. Toy Box Dev. Co." on Justia Law

Burlington purchased more than $8 million worth of cast vinyl film products from Ritrama to manufacture graphic decals for customers in the recreational vehicle (RV) industry. No later than early 2008, Burlington reported to Ritrama that RV owners were experiencing issues with the graphics. In September, 2008, Burlington sent Ritrama a spreadsheet detailing three claims for monetary damages based on the product failures, which totaled $53,219.37. The companies discussed settlement. In early 2009, Ritrama purchased a commercial general liability insurance policy from Gerling that provided coverage for claims made between March 31, 2009, and March 31, 2010. The policy did not define “claim.” On July 17, 2009, Ritrama advised its insurance agent of its issues with Burlington. The insurance agent sent a "notice of occurrence" to Gerling. Ritrama claims that the notice was not an acknowledgment of a claim, but merely a notification of a "customer having problems." Ritrama failed to meet Burlington's demands. The Eighth Circuit affirmed summary judgment in favor of Gerling. Burlington demanded money in 2008 and, before inception of the Policy, Ritrama attempted to settle existing and future claims for damages based on the RV adhesive issues. Although these communications did not involve an attorney or expressly refer to litigation, Burlington clearly demanded compensation. View "Ritrama, Inc. v. HDI-Gerling Am. Ins. Co." on Justia Law

The Schmidts operate a farm Worthington, Minnesota. Madison hosted a sleepover party at the family farm to celebrate her twelfth birthday. A guest, 10-year old Alyssa, was driving the Schmidts' ATV around the property when the ATV struck a tree. Alyssa died as a result of the accident. The Schmidts tendered defense of a wrongful death action to Grinnell under their farm policy, which provided $300,000 in coverage. Grinnell initially informed the Schmidts the policy appeared to provide coverage, but reserved its right to dispute coverage and sought a declaratory judgment. The wrongful death action settled for $462,500. Both parties agree the coverage dispute turns on whether Jerome or Kelly – the named insureds – gave Alyssa "express permission" to operate the ATV within the meaning of an exclusion contained in the Select Recreational Vehicle Limited Liability Coverage endorsement. The Eight Circuit affirmed summary judgment in favor of the Schmidts. While the Schmidts observed the girls on the ATV and did not object, Alyssa never “expressly” sought permission, so her conduct did not fall within the exclusion. View "Grinnell Mut. Reinsurance v. Schmidt" on Justia Law

Duit, an Oklahoma highway contractor, contracted with the Arkansas State Highway and Transportation Department (ASHTD) to reconstruct I-30 between Little Rock and Benton. Duit encountered soil conditions that, it alleges, differed materially from information provided by the ASHTD during bidding. Duit’s claims for compensation were denied by the ASHTD, the Arkansas State Claims Commission, and the General Assembly. Duit sued under 42 U.S.C. 1983, citing the “in re Young” exception to Eleventh Amendment immunity. Duit alleged violations of the Federal Aid Highway Act, 23 U.S.C. 101, and the Due Process and Equal Protection clauses and sought to “enjoin Defendants from accepting federal aid … until . . . they fully comply with the federally mandated differing site clause.” The court dismissed the FAHA claim because that statute is enforced exclusively by an executive agency, dismissed the due process claim because Duit’s interest in future highway contracts is not a protected property interest and because the state appeals process for claim denials satisfies procedural due process requirements. The court declined to dismiss the equal protection claim, concluding Duit sufficiently alleged that the Commission treated out-of-state-contractor Duit differently from similarly situated in-state contractors without a rational reason. The Eighth Circuit held that Duit lacks standing to bring its equal protection claim and that the court erred in not dismissing that claim. View "Duit Constr. Co. Inc. v. Bennett" on Justia Law

Tipton, Gilbert, and Padgett worked for Treadway, under agreements that contained a noncompete provision: when you leave Treadway’s employ, for whatever reason, you will not compete with Treadway … by soliciting or accepting business from Treadway’s customers within your territory … for at least one (1) year after leaving; and . . . you will not solicit the employment of any Treadway representatives for at least one (1) year after leaving. Irby bought Treadway with an assignment of Treadway’s contracts, in 2012. Tipton, Gilbert, and Padgett became Irby employees, keeping essentially the same benefits and seniority. In 2013, the three left Irby to work for Wholesale. Tipton apparently spoke to Gilbert and Padgett about the move in advance. Irby sued, asserting claims for breach of fiduciary duty, breach of contract, civil conspiracy, and tortious interference with a contract. The district court granted summary judgment and awarded the defendants in excess of $200,000 in attorneys’ fees and costs. The Eighth Circuit reversed, finding genuine disputes of material fact about whether Wholesale recruited and hired Tipton, Gilbert, and Padgett so that they would solicit or accept business from Irby customers in their former territory within one year. View "Stuart C. Irby Co., Inc. v. Tipton" on Justia Law