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

Falco sold insurance for Farmers, under a 1990 Agent Agreement, which provided that Falco would be paid Contract Value upon termination of the Agreement. As a Farmers agent, Falco was entitled to borrow money from the Credit Union. In 2006, Falco obtained a $28,578.00 business loan and assigned his interest in his Agreement receivables—including Contract Value—as security. The loan document gave the Credit Union authority to demand payments that Farmers owed Falco; it could tender Falco’s resignation to levy on Falco’s Contract Value. Falco failed to make payments and filed a Chapter 7 bankruptcy petition, listing the loan on his schedules. Falco received a discharge in February 2011, covering his liability under his Credit Union loan. In April 2011, the Credit Union notified Farmers that Falco had defaulted and exercised the power of attorney to terminate his Agent Agreement. Farmers notified Falco that the resignation had been accepted, calculated Contract Value as $104,323.30, paid the Credit Union $29,180.92, and paid the balance to Falco. The Eighth Circuit affirmed summary judgment in favor of defendants, finding that the Credit Union’s secured interest survived bankruptcy; it did not tortuously interfere with Falco’s Agreement because it had a legal right to terminate the Agreement; and Falco failed to show an underlying wrongful act or intentional tort as required under civil conspiracy. View "Falco v. Farmers Ins. Grp." on Justia Law

In 2011, a tornado struck and substantially damaged Midwest’s building and its contents. After the tornado, the medical practice was to relocate, which required substantial work. Until construction was complete, Midwest operated out of a temporary location, but was unable to operate at its normal capacity. Moving the repaired MRI machine to the new building required a crane; it was necessary to reinforce floors; replace exterior brick; and install pipe, specialized heating and air conditioning equipment, and copper shielding. The new location opened about a year after the tornado. Cincinnati Insurance paid Midwest the policy limit of $2,414,161.26 for the building; the policy limit of $388,000 for business personal property; and $828,081.75 for business income interruption and extra expenses. . Midwest requested “Extra Expense” reimbursement for the costs to repair and relocate the MRI machine and to replace the other specialty equipment necessary for normal operations. Cincinnati denied payment, contending the expenditures were covered under the Building or Business Personal Property provisions, for which it had paid the policy limits. The district court found the claimed expenses were recoverable under the Extra Expense provision. The Eighth Circuit affirmed, noting that the language of the Policy does not specifically exclude coverage under the Extra Expense provision if the expenses happen to fall under another coverage in the Policy. View "Midwest Reg'l Allergy Ctr., P.C. v. Cincinnati Ins. Co." 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

AVR, an Israeli corporation, and Interton, a Minnesota corporation, produce hearing aid technology, and entered into an Agreement, giving Interton a 20 percent interest in AVR. During negotiations, they discussed integrating AVR's DFC technology into Interton's products, and Interton's purchase of AVR's W.C. components. The Agreement incorporated terms indicating that the Agreement would be governed by the laws of the State of Israel and that “Any dispute between the parties relating to (or arising out of) the provisions of this Agreement … will be referred exclusively to the decision of a single arbitrator … bound by Israeli substantive law.” AVR commenced arbitration in Israel. Interton participated, but believed that disputes concerning DFC and W.C. were separate and not subject to arbitration. The Israeli Supreme Court rejected Interton's objection to the scope of arbitration, citing the "relating to (or arising out of)" language. An Israeli arbitrator awarded AVR $2,675,000 on its DFC and W.C. claims, plus fees and expenses. After the award became final in Israel, in accordance with the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 9 U.S.C. 201, AVR successfully petitioned the district court for recognition and enforcement in the US. The Eighth Circuit affirmed. The Convention does not allow Interton to relitigate the scope of arbitration in an American court. View "AVR Commc'ns, Ltd. v. Am. Hearing Sys., Inc." on Justia Law

Graham sold insurance for American Family from 1988 until 2011. In 1996, they entered into an Agent Agreement. In 2010, following a customer complaint, American Family concluded that Graham had increased coverage and added endorsements without customer permission, increasing premiums; improperly applied multi-vehicle discounts to accounts with only one car; and changed vehicle-rating symbols used to assign risk and determine appropriate premiums for automobile insurance. American Famly terminated the Agreement. Weeks later, Graham formed an independent agency and sent letters to approximately 1,500 of his former American Family customers telling them he no longer represented American Family and had signed an agreement not to solicit or induce former customers for one year, but was not prohibited from serving needs not covered by American Family. Graham stated he now represented over 50 companies and could offer clients “more choices, expanded coverage, and excellent rates” that might be “better suited for your needs.” If a former customer contacted Graham, the customer was asked to sign a “non-inducement form.” American Family sued. Graham counterclaimed for wrongful termination. American Family asserted that Graham’s conduct qualified as “dishonest,” obviating the need for notice under the Agreement. The Eighth Circuit affirmed enforcement of a stipulated damages clause in the Agreement, in favor of American Family. View "Am. Family Mut, Ins. Co. v. Graham" 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

Plaintiffs own mineral interests in Chalybeat Springs and granted 21 oil and gas leases based on those interests. EnerQuest and BP America are the lessees. The property interests in Chalybeat, including the leases at issue, are subject to a Unit Agreement that establishes how the oil and gas extracted from certain formations will be divided and provides for a unit operator with the exclusive right to develop the oil and gas resources described in the Unit Agreement. In the late 1990s, PetroQuest became the operator of the Chalybeat Unit. Unhappy with the level of extraction, lessors filed suit against EnerQuest and BP, seeking partial cancellation of the oil and gas leases on the ground that EnerQuest and BP breached implied covenants in the leases to develop the oil and gas minerals. The district court granted the companies’ motion for summary judgment, reasoning that the lessors had not provided EnerQuest and BP with required notice and opportunity to cure a breach. The Eighth Circuit affirmed, rejecting an argument that the plaintiffs’ earlier effort to dissolve the Chalybeat Unit constituted notice. View "Lewis v. Enerquest Oil & Gas, LLC" on Justia Law

Lariat and Tenant entered into a 10-year lease for operation of a restaurant. Debtor personally guaranteed Tenant's performance. Tenant was evicted in 2010 and obtained a judgment of $2,224,237.00, plus interest and attorney fees. In 2011, Lariat filed an involuntary chapter 7 petition against Debtor, which was dismissed by agreement. The same creditors filed suit against Debtor's wife. After the involuntary petition was dismissed, they added Debtor as a codefendant. The court held Debtor and his wife liable for fraudulent transfers ($795,098.00) and awarded interest and costs. In 2013, Debtor sued Lariat; the court dismissed, based on collateral estoppel. Appeal is pending. In 2014 Tenant filed a chapter 11 petition and an adversary proceeding against Lariat. The bankruptcy court dismissed the adversary proceeding. On the Trustee's motion, Tenant’s chapter 11 case was dismissed. Debtor filed his own chapter 11 petition. Lariat filed a proof of claim for $1,734,539.00. Debtor objected on grounds that the amount sought based on Debtor's personal guaranty under the lease exceeded the amount allowable under 11 U.S.C. 502(b)(6) and the amount sought based on fraudulent transfers was duplicative of, and subject to the same limitation as, sought based on thatl guaranty. Lariat filed an amended proof of claim for $1,610,787.00. The court capped Lariat's claim at $445,272.93. The Eighth Circuit Bankruptcy Appellate Panel remanded for recalculation of damages under the lease and of fees and expenses, but agreed that damages for fraudulent transfers were duplicative. View "Lariat Co., Inc. v. Wigley" on Justia Law

In 2003, the governors of Cedar Rapids Lodge obtained the rights to build an AmericInn franchise. The company used Lightowler as the project architect. Lightowler used a standard form agreement that specified that its terms would be governed by the law of North Dakota. After changes requested by the Fire Marshal and for compliance with franchise standards, Lightowler submitted revised plans in February, 2004. Construction began in January 2004. In July, 2004, Lidberg of AmericInn led a construction site visit attended by the governors, and Olson, a Lightowler engineer. Lidberg and Olson prepared reports detailing deficiencies. The last act performed by Lightowler on the project was a response to the contractor in September, 2004. Lidberg led a second site visit in October, 2004, produced a report identifying additional deficiencies, and sent it to Siebert and Lightowler. The hotel opened for business in December, 2004, but problems continued. In December, 2009 Cedar Rapids Lodge brought claims against its former governors and others involved in the hotel project and alleging professional negligence by Lightowler. The Eighth Circuit affirmed summary judgment in favor of Lightowler, concluding that the claim was barred by the statute of limitations under either North Dakota or Iowa law. View "Cedar Rapids Lodge & Suites, LLC v. Lightowler Johnson Assocs., Inc." on Justia Law