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

Under a consent decree in a lawsuit relating to employee retirement benefits, Navistar contributes to a Supplemental Benefit Trust managed by SBC. The size of its contributions is determined by a formula based on Navistar’s economic performance. Navistar must regularly provide data to the SBC to permit it to evaluate whether Navistar is applying the formula correctly. The agreement provides for arbitration before an accounting firm if SBC disputes the “information or calculations” Navistar provides. SBC claimed that Navistar was improperly classifying aspects of its business activities and structuring its business to evade its profit-sharing obligations under the agreement. Navistar claimed that under the accountant arbitration mechanism, which applies to disputes over the “information or calculations” provided by Navistar, SBC’s claims were subject to arbitration. The district court held that the claims were subject to arbitration, but that Navistar’s conduct before and during litigation waived its right to arbitrate the claims. The Sixth Circuit held that the claims were subject to arbitration and that Navistar had not waived its right. While Navistar may bear some responsibility for the long duration of its dispute with the SBC, its behavior with regard to arbitration does not satisfy the particular elements of waiver. View "Supplemental Benefit Comm. v. Navistar, Inc." on Justia Law

American Express sent Wise a credit card and “Agreement.” Wise accepted the offer by using the credit card. The Agreement provides that it is governed by the laws of Utah and provides that, upon default: “You agree to pay all reasonable costs, including reasonable attorneys’ fees, incurred by us.” Wise defaulted on the account, and American Express retained a law firm, which filed suit in Ohio state court. Wise filed for bankruptcy, staying that lawsuit, then filed a putative class action lawsuit against the attorneys, seeking to represent consumers from whom they demanded attorney’s fees. Noting that Ohio law bars contracts that would require payment of attorney’s fees on the collection of consumer debt, Wise alleged violation of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692,and the Ohio Consumer Sales Practices Act (OCSPA), Ohio Rev. Code 1345.02, 1345.03. The district court applied Utah law and determined that: the case fell outside the scope of the arbitration clause; OCSPA did not apply; Utah law allowed for the collection of attorney’s fees: and there was no FDCPA violation. The Sixth Circuit reversed in part. The pleadings do not resolve which law would govern the attorney’s-fee question. On the state law claim, the court affirmed. View "Wise v. Zwicker & Assocs., PC" on Justia Law

Plaintiff offered to sell 3 million pounds of scrap copper to the defendant. The defendant negotiated the core terms of the sale but did not object to a fee-shifting provision: “In the event purchaser shall default in his obligations hereunder, purchaser shall be liable for [the plaintiff]’s costs of collection, including attorney’s fees.” The contract was negotiated between two experienced and sophisticated commercial entities. There was no duress. In a suit between the two, the otherwise victorious plaintiff appealed the district court’s ruling that the unilateral fee-shifting clause for attorney’s fees was unenforceable under Ohio law as a matter of public policy. The district court relied on Sixth Circuit precedent, holding that the Ohio Supreme Court would not enforce similar fee-shifting clauses. The Sixth Circuit reversed, noting that the Ohio Supreme Court has since clarified that it would enforce such unilateral or one-sided fee-shifting contract provisions. View "Allied Indus. Scrap, Inc. v. OmniSource Corp." on Justia Law

Under a 2007 “Purchase Agreement – Public Sale” Eagle agreed to pay $4,812,874.65 to purchase Louisville property owned by the Kentucky Transportation Cabinet. Eagle paid a good faith deposit of $962,574.93 to “KY STATE TREASURER.” The Agreement was assigned by Eagle to Shelbyville Road Shoppes, the debtor. Two days before the expiration of an 18-month extension to close the transaction, the debtor filed a voluntary Chapter 7 petition. The bankruptcy trustee unsuccessfully sought return of the good faith deposit from the Cabinet. The bankruptcy court found that neither the Agreement nor state law granted the debtor the right to have the deposit returned. The district court affirmed, finding: that the debtor had no right to possess or use the deposit prior to filing for relief, so the trustee had no right to request turnover under section 542; that the deposit was not held in escrow; that the transaction was not a contract for deed; and that the debtor did not retain an equitable right to the deposit as a vendee. The Sixth Circuit affirmed. The debtor did not possess either a legal or an equitable property interest in the deposit at the time of the Chapter 7 petition. View "Lawrence v. Kentucky" on Justia Law

In 2006, Thompson signed a $354,800 mortgage note with AME as the lender. Several sections of the note and deed of trust noted AME’s intent to transfer the note. Its signature page contains a signed, undated stamp memorializing AME’s transfer to Countrywide and another signed, undated endorsement from Countrywide to blank. BOA purchased Countrywide and has the note. In 2012, BOA offered to short-sell her house in lieu of foreclosure. Thompson requested modification of her repayment terms under the HAMP program (Emergency Economic Stabilization Act, 12 U.S.C. 5201), that gives lenders incentives to offer modifications to borrowers with a payment-to-income ratio over 31%. Thompson claims that she complied with numerous document requests. BOA never granted her application. She sued BOA, Mortgage Electronic Registration Systems, and unidentified persons she believes to be the note’s true owners, claiming: that BOA falsely induced her to sign the mortgage by pretending it was an actual lender; that her title is clouded by the note’s transfer; and that BOA fraudulently induced her to seek modification, knowing it lacked authority to modify her terms or intending to drive her into foreclosure. The district court dismissed for failure to comply with pleading standards. The Sixth Circuit affirmed. View "Thompson v. Bank of Am., N.A." on Justia Law

After Stratton stopped making payments on her credit card, GE “charged off” Stratton’s $2,630.95 debt, as uncollectible. GE stopped charging Stratton interest. By charging off the debt and ceasing to charge interest GE could take a bad-debt tax deduction, I.R.C. 166(a)(2), and avoid the cost of sending Stratton statements. A year later, GE assigned Stratton’s charged-off debt to PRA, a “debt buyer.” Two years later, PRA filed suit in state court, alleging that Stratton owed interest during the 10 months after GE charged off her debt, before GE sold that debt, and that Stratton owed 8% interest rather than the 21.99% rate established in her contract with GE. The 8% rate is the default rate under Kentucky’s usury statute, KRS 360.010. Stratton filed a putative class action, alleging that PRA’s attempt to collect 8% interest for the 10-month period violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692, in that the 8% interest was not “expressly authorized by the agreement creating the debt or permitted by law,” that PRA had falsely represented the “character” of Stratton’s debt and the “amount” owed, and that PRA’s suit was a “threat” to take “action that cannot legally be taken.” The district court dismissed. The Sixth Circuit reversed. Under Kentucky law a party has no right to statutory interest if it has waived the right to collect contractual interest; any attempt to collect statutory interest when it is “not permitted by law” violates the FDCPA. View "Stratton v. Portfolio Recovery Assocs., LLC" on Justia Law

In 2010, GM sold its subsidiary Saab to Spyker: Spyker acquired a majority interest in Saab, and GM retained a minority interest through preferred shares. The parties entered into an agreement under which GM granted Saab a license to make certain Saab models using GM intellectual property. It prohibited Saab from assigning or transferring its rights without GM’s prior written consent until 2024. In 2010-2011, Saab faced financial hardship and attempted to enter into investment arrangements with Youngman, a Chinese automobile manufacturer. GM refused to approve any agreements that involved Chinese ownership or control of its licensed technology. Saab filed for voluntary reorganization under Swedish law. Saab and Youngman negotiated an agreement and circulated an unexecuted copy: Youngman would provide Saab an immediate cash infusion as a loan, which would be converted into an equity interest in Saab after Saab ceased using GM technology. A GM spokesperson made statements indicating that the agreement was not materially different than what was previously proposed. Based on GM’s position, Youngman backed out; Saab went into bankruptcy. Saab sued for tortious interference with economic expectancy. The district court dismissed, finding that Plaintiffs failed to establish a valid business expectancy and intentional interference by GM. The Sixth Circuit affirmed. View "Saab Automobile AB v. General Motors Co." on Justia Law

The prior owner of the 300-acre STEW Farm in Pickaway County contracted with Watershed Management for construction of waterways and received a subsidy from the Natural Resources Conservation Service (NRCS), a USDA agency, 7 U.S.C. 6962. Kohli, an employee of the Pickaway County Soil and Water Conservation District supervised by NRCS, designed the waterways, and, after certified that they were designed and constructed properly. NRCS also certified the waterways, which allowed the owner to receive the federal reimbursement. The owner failed to pay Watershed, claiming that there was a ridge at the edge of the grass waterways that prevented proper draining. In 2009, Watershed sued for breach of contract; the owner counterclaimed for breach of contract and breach of warranty. A state court granted summary judgment against the owner for failure to prove damages. The new owner then filed a federal suit. The district court dismissed, reasoning, as to NRCS, that STEW Farm had not identified a separate source of federal substantive law and failed to establish a waiver of sovereign immunity because there are no “clear guidelines” which show that the NRCS actions were not committed to agency discretion. As to Watershed, the court concluded that there was no federal cause of action nor did the state claims implicate significant federal issues. As to PCSWCD, STEW Farm alleged only state-law claims that did not implicate significant federal issues. As to PCSWCD and Kohli, the claims were time barred under Ohio’s two-year statute of limitations. The Seventh Circuit affirmed.View "Stew Farm, Ltd. v. Natural Res. Conservation Serv." on Justia Law

McCarthy worked at Ameritech, a wholly owned subsidiary of AT&T, until her position was terminated in 2008 as part of a reduction in forces. She sought to retire at that time to care for her ailing husband, but Ameritech allegedly told her that she was not eligible to receive post-retirement healthcare benefits, on which her husband depended. She elected to continue working through the company’s Employment Opportunity Pool for another nine months, until she turned 65 and retired with benefits. She then filed suit alleging, among other things, age and sex discrimination. After Ameritech admitted that McCarthy was, in fact, entitled to post-retirement healthcare benefits when it terminated her position in 2008, she amended her suit to add a claim for fraudulent inducement. The district court awarded summary judgment, rejecting the merits of each claim. The Sixth Circuit reversed in part. McCarthy may present her fraudulent-inducement claim to a jury. The district court properly awarded summary judgment to the defendants on each of the other claimsView "McCarthy v. Ameritech Publ'g, Inc." on Justia Law

As a Solvay employee Moyer participated in Solvay’s ERISA- governed Long Term Disability Plan. In 2005 MetLife initially approved Moyer’s claim for benefits. MetLife reversed its decision in 2007 after determining that Moyer retained the physical capacity to perform work other than his former job. In an administrative appeal, MetLife affirmed the revocation on June 20, 2008. Moyer’s adverse benefit determination letter included notice of the right to judicial review but failed to include notice that a three-year contractual time limit applied. The Summary Plan Description failed to provide notice of either Moyer’s right to judicial review or the applicable time limit. On February 20, 2012, Moyer sued MetLife, seeking recovery of unpaid plan benefits under 29 U.S.C. 1132(a)(1)(B). The district court held that the plan’s limitations period barred Moyer’s claim, noting that the plan documents—which were not sent to participants unless requested—stated that there was a three-year limitations period for filing suit, so that MetLife provided Moyer with constructive notice of the contractual time limit. The Sixth Circuit reversed. Exclusion of the judicial review time limits from the adverse benefit determination letter was inconsistent with ensuring a fair opportunity for review and rendered the letter not in substantial compliance.View "Moyer v. Metropolitan Life Ins. Co" on Justia Law