Justia U.S. 6th Circuit Court of Appeals Opinion Summaries

US Framing International LLC entered into a subcontract with Continental Building Company for framing services on two student-housing projects. Disputes arose, leading US Framing to leave the Knoxville project. Continental then filed an insurance claim alleging US Framing's breach of the subcontract. US Framing sued Continental and its officers, claiming insurance fraud under Tennessee law. The district court dismissed the case, stating US Framing failed to plead any injury directly caused by the alleged fraudulent insurance claim.The United States District Court for the Eastern District of Tennessee initially reviewed the case. The court granted Continental's motion to dismiss, concluding that US Framing did not demonstrate any direct injury resulting from Continental's insurance claim. US Framing then appealed the decision.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court affirmed the district court's dismissal, holding that US Framing did not plausibly allege any economic damages directly resulting from Continental's alleged insurance fraud. The court also determined that US Framing could not recover attorney's fees or statutory penalties, as it did not establish itself as a prevailing party entitled to such relief. The court's decision was based on the interpretation of Tennessee law, which requires a direct causal link between the alleged fraud and the claimed damages. View "US Framing International LLC v. Continental Building Co." on Justia Law

A certified class of Ohio landowners alleged that a Colorado-based mining company, Antero Resources Corporation, underpaid them $10 million in natural gas royalties. The landowners claimed that Antero improperly deducted costs for processing and fractionation from their royalties. Antero counterclaimed, seeking authority to deduct additional costs related to gathering, dehydrating, compressing, and transporting the unrefined natural gas. The district court certified the class, denied Antero's motion for summary judgment, granted the landowners' motion, and entered a final judgment after the parties stipulated damages.The United States District Court for the Southern District of Ohio ruled in favor of the landowners, finding that Antero improperly deducted processing and fractionation costs from the royalties. The court determined that these costs were necessary to transform the gas into marketable form and thus could not be deducted under the lease agreement.The United States Court of Appeals for the Sixth Circuit reviewed the case and affirmed the district court's decision. The court held that Antero could not deduct the costs of processing and fractionation from the landowners' royalties. The court found that the lease agreement's Market Enhancement Clause allowed deductions only for costs that enhanced the value of already marketable products, not for costs required to make the products marketable. The court concluded that the gas products first became marketable after processing and fractionation, and thus, these costs were not deductible. The court also noted that the Fourth Circuit had reached a similar conclusion in a related case involving the same defendant and lease terms. View "The Grissoms, LLC v. Antero Resources Corp." on Justia Law

Kevin Lavery, an ophthalmologist, invented a vision screening device and patented it. He entered into an agreement with Pursuant Health, a company developing vision screening kiosks, to transfer his patent in exchange for royalties on the sales of these kiosks. Lavery's patent expired in May 2021, and Pursuant Health ceased paying royalties. Lavery sued Pursuant Health, seeking a declaration that the royalty payments should continue indefinitely, damages for breach of the Contribution Agreement, and damages for unjust enrichment.The United States District Court for the Eastern District of Michigan granted summary judgment in favor of Pursuant Health, ruling that the expiration of Lavery's patent rendered the royalty agreement unenforceable. Lavery appealed the decision, challenging the grant of summary judgment on his breach of contract claim.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court held that the royalty provision in the Contribution Agreement was unenforceable after the expiration of Lavery's patent. The court found that the agreement did not specify any non-patent contributions that would justify continuing the royalty payments beyond the patent's expiration. The court also noted that the royalty was based on the sales of kiosks that incorporated Lavery's patent, and thus, the royalty provision improperly extended beyond the patent's 20-year term. Consequently, the Sixth Circuit affirmed the district court's decision to grant summary judgment in favor of Pursuant Health. View "Lavery v. Pursuant Health, Inc." on Justia Law

Employees of Mercedes-Benz Research and Development North America, Inc. accidentally set fire to a property leased from Airport Boulevard Associates, LLC (ABA) while transferring gasoline between vehicles. ABA's insurer, Pioneer State Mutual Insurance Company, paid ABA for the damages and sought reimbursement from Mercedes and its insurer, Allianz Global Risks US Insurance Company. Unable to resolve the matter, Pioneer filed a lawsuit in federal court.The United States District Court for the Eastern District of Michigan denied Pioneer's motion for summary judgment and granted summary judgment to Mercedes and Allianz. Pioneer appealed the decision.The United States Court of Appeals for the Sixth Circuit reviewed the case. The court affirmed the district court's decision regarding Allianz, holding that the No-Fault Act did not apply because the vehicle was exempt from registration and the Allianz policy did not provide property protection insurance. The court also rejected Pioneer's argument for apportionment of recovery between the insurers, as the policies insured different parties and risks.However, the court reversed the district court's decision regarding Mercedes. The court found that Mercedes potentially breached the lease by handling hazardous materials, specifically gasoline, on the property. This breach could allow Pioneer to recover damages despite the lease's waiver-of-subrogation clause. The case was remanded for further proceedings on the claims against Mercedes. View "Pioneer State Mut. Ins. v. HDI Global" on Justia Law

Following an accident, Jeremy Marchek sued his auto insurer, United Services Automobile Association (USAA), claiming that the company breached the terms of the policy it issued to him. Marchek argued that USAA wrongfully failed to compensate him for sales taxes and mandatory fees necessary to purchase a replacement vehicle after USAA declared his vehicle to be beyond repair. USAA paid Marchek the pre-accident value of his vehicle minus a deductible but did not include taxes and fees in the payment.The United States District Court for the Western District of Michigan dismissed Marchek’s complaint, ruling that USAA was not contractually obligated to compensate him for taxes and fees. The district court found that the insurance policy did not require USAA to cover these additional costs when calculating the actual cash value (ACV) of the vehicle.The United States Court of Appeals for the Sixth Circuit reviewed the case and reversed the district court’s decision. The appellate court held that the plain language of the insurance policy plausibly requires USAA to compensate Marchek for the sales taxes and mandatory fees necessary to purchase a replacement vehicle. The court found that the policy’s definition of ACV, which is “the amount that it would cost, at the time of loss, to buy a comparable vehicle,” does not unambiguously exclude taxes and fees. Therefore, the case was remanded for further proceedings to determine whether USAA breached the contract by not including these costs in its payment to Marchek. View "Marchek v. United Services Automobile Association" on Justia Law

An affiliate of Cambrian Holding Company held a lease to mine coal on land owned by Hazard Coal Corporation. During Cambrian's bankruptcy, it proposed selling its lease interest to American Resources Corporation, which falsely warranted it could obtain a mining permit. The bankruptcy court approved the lease assignment based on this false understanding. Hazard Coal later discovered American Resources could not lawfully mine coal and repeatedly tried to unwind the assignment, but the bankruptcy court rejected these attempts.The United States Bankruptcy Court for the Eastern District of Kentucky initially approved the sale of Cambrian's lease interest to American Resources. Hazard Coal did not object before the sale but later moved to reconsider the sale order, citing American Resources' permit-blocked status. The bankruptcy court denied this motion, stating Hazard Coal could have raised its objections earlier. Hazard Coal did not appeal this decision. Subsequently, Hazard Coal moved to compel American Resources to restore power to the mine or rescind the assignment, but the court again denied the motion, reiterating that Hazard Coal had forfeited its objections by not acting timely.The United States Court of Appeals for the Sixth Circuit reviewed the case. Hazard Coal appealed the bankruptcy court's declaration that Cambrian had validly assigned the lease to American Resources. The Sixth Circuit affirmed the bankruptcy court's decision, finding no abuse of discretion. The court held that the bankruptcy court reasonably interpreted its prior orders as barring Hazard Coal's challenge to the lease assignment due to its failure to timely assert its rights. The court emphasized that Hazard Coal's objections were forfeited because they were not raised in a timely manner. View "In re Cambrian Holding Co., Inc." on Justia Law

Michigan First Credit Union reimbursed its customers for unauthorized electronic fund transfers resulting from a SIM Swap scam involving T-Mobile USA, Inc. Michigan First sought to recover these funds from T-Mobile, claiming indemnification or contribution under the Electronic Fund Transfer Act (EFTA) and state law. The district court dismissed the complaint, ruling that Michigan First failed to state a claim for indemnification or contribution under both the EFTA and state law.The United States District Court for the Eastern District of Michigan dismissed Michigan First’s claims, finding no basis for indemnification or contribution under the EFTA or state law. Michigan First appealed, arguing that the EFTA implies a right to indemnification or contribution, that the Michigan Electronic Funds Transfer Act (MEFTA) is not preempted by the EFTA, and that its state common-law indemnification claim should stand.The United States Court of Appeals for the Sixth Circuit reviewed the case de novo. The court held that the EFTA does not imply a right to indemnification or contribution for financial institutions, as the statute is designed to protect consumers, not financial institutions. The court also found that the EFTA preempts the MEFTA and any state common-law claims for indemnification or contribution, as allowing such claims would conflict with the EFTA’s comprehensive regulatory scheme. Consequently, the Sixth Circuit affirmed the district court’s dismissal of Michigan First’s complaint. View "Michigan First Credit Union v. T-Mobile USA, Inc." on Justia Law

Avantax Wealth Management, Inc. (Avantax) entered into a contract with Marriott Hotel Services, Inc. (Marriott) to host its 2021 annual conference at the Gaylord Opryland Resort & Convention Center in Nashville, Tennessee. The contract included a force majeure clause allowing termination if circumstances beyond control made it illegal or impossible to use the hotel facilities. Due to COVID-19, local health authorities imposed restrictions on gatherings, which Avantax argued made it impossible to hold the conference as planned. Avantax terminated the contract in March 2021, citing these restrictions.The United States District Court for the Middle District of Tennessee granted summary judgment in favor of Avantax, concluding that Avantax had validly terminated the contract under the force majeure clause. The court found that the COVID-19 restrictions in place at the time made it impossible to hold the conference as specified in the contract. Marriott's motion for summary judgment was denied.The United States Court of Appeals for the Sixth Circuit reviewed the case and affirmed the district court's decision. The appellate court held that the force majeure clause allowed termination based on the prospective illegality or impossibility of performance, as determined at the time of termination. The court found that Avantax had reasonable grounds to conclude that the conference could not proceed as planned due to the COVID-19 restrictions forecasted by local health authorities. The court also determined that Avantax provided timely notice of termination within the required ten-day period after learning of the basis for termination. Thus, the district court's grant of summary judgment to Avantax was affirmed. View "Avantax Wealth Management, Inc v. Marriott Hotel Services, Inc." on Justia Law

The case revolves around a dispute between Diamond Transportation Logistics (Diamond) and The Kroger Company (Kroger). In 2010, the two companies entered into a transportation agreement, which was renewed in 2016, for Diamond to transport Kroger's goods. The agreement included an indemnity provision, which allowed Kroger to withhold payments from Diamond for claims against Diamond under certain conditions. In December 2015, a subcontractor of Diamond was involved in a fatal accident while transporting Kroger's goods. The family of the deceased sued both Diamond and Kroger for wrongful death, alleging negligence in Kroger's selection, hiring, and retention of Diamond as a shipper. Kroger demanded Diamond to cover its legal expenses based on the indemnity provision in their agreement. However, Diamond failed to reimburse Kroger, leading Kroger to withhold nearly $1.8 million in shipping payments from Diamond.The case was first heard in the United States District Court for the Southern District of Ohio, where Kroger filed a counterclaim for breach of the transportation agreement's indemnity provision. The district court ruled in favor of Kroger, awarding it $612,429.45 plus interest. Diamond appealed this decision to the United States Court of Appeals for the Sixth Circuit.The Sixth Circuit Court of Appeals affirmed the district court's decision. The main issue was whether the indemnity provision's exception for "liability...caused by the sole negligence or willful misconduct of Kroger" relieved Diamond of its obligation. The court held that the exception did not apply in this case because Kroger's liability for the family's negligent selection, hiring, and retention claim was not caused by its "sole negligence." The court reasoned that Diamond's negligence also played a part in Kroger's liability, and therefore, Diamond was required to cover Kroger's costs in settling the family's claim. View "Diamond Transp. Logistics, Inc. v. Kroger Co." on Justia Law

The case involves a group of bettors who sued Churchill Downs, Inc., and trainers Robert Baffert and Bob Baffert Racing, Inc., after the horse they bet on, Medina Spirit, was disqualified from the 2021 Kentucky Derby due to a failed post-race drug test. The bettors claimed that they would have won their bets under the new order of finish after Medina Spirit's disqualification. However, under Kentucky law, only the first order of finish marked "official" counts for wagering purposes. The plaintiffs brought claims for negligence, breach of contract, violation of the Kentucky Consumer Protection Act, and unjust enrichment.The case was initially heard in the United States District Court for the Western District of Kentucky, which granted the defendants' motions to dismiss and denied the plaintiffs leave to amend the complaint. The court found that the plaintiffs' claims were based on the theory that they had "unpaid winning wagers," but under Kentucky law, the first official order of finish is final. Therefore, the plaintiffs' wagers were lost, and the complaint failed to state a claim upon which relief could be granted.The case was then appealed to the United States Court of Appeals for the Sixth Circuit. The appellate court affirmed the lower court's decision, agreeing that the plaintiffs' claims were based on the theory that they had "unpaid winning wagers." However, under Kentucky law, the first official order of finish is final for wagering purposes. Therefore, the plaintiffs' wagers were lost, and the complaint failed to state a claim upon which relief could be granted. The court also found that the proposed amendment to the complaint did not cure this flaw, so the lower court properly denied leave to amend. View "Mattera v. Baffert" on Justia Law