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

Heartland is an investment firm that formerly held an ownership interest in Metaldyne, an automotive supplier. Leuliette is a co-founder of Heartland and was the CEO and Chairman of the Board of Metaldyne. Tredwell is also a Heartland co-founder and a Metaldyne Board member. In 2006, Heartland agreed to sell its interest in Metaldyne to Ripplewood. Metaldyne submitted an SEC “Schedule 14A and 14C Information” report that detailed the terms of the acquisition, but failed to mention that Metaldyne would owe plaintiffs, former executives, approximately $13 million as a result of the sale, under a change-of-control provision in Metaldyne’s “Supplemental Executive Retirement Plan,” in which Plaintiffs participated. The SERP is subject to Employee Retirement Income Security Act of 1974. Ripplewood threatened to back out of the deal when it found out about the obligation. In response, Leuliette and Tredwell persuaded Metaldyne’s Board to declare the SERP invalid without notifying Plaintiffs. The Ripplewood deal closed less than a month later. Leuliette personally collected more than $10 million as a result. Plaintiffs claimed tortious interference with contractual relations. The district court dismissed. The Sixth Circuit reversed, holding that the state law claims were not “completely preempted” under section 1132(a)(1)(B) of ERISA. View "Gardner v. Heartland Indus. Partners, LP" on Justia Law

Grigoleit supplied knobs for Whirlpool’s washing machines and dryers for several years, and sought to increase prices and amend the parties’ purchase contracts in 2004. The parties reached an amended agreement in 2005, which Whirlpool terminated later that year. When Grigoleit demanded final payment, Whirlpool sued, arguing the contract was unenforceable. The district court upheld the contract but found some aspects of it unconscionable. The Seventh Circuit agreed that the contract was enforceable. Under Michigan law both substantive and procedural unconscionability are required to hold an agreement unenforceable. Refusing to certify questions to the state’s supreme court, the Sixth Circuit reversed the holding that a $40,000 flat fee and 8% increase are unconscionable. Whirlpool created the urgent and unfavorable conditions under which it proposed these terms, and had ample time and opportunity to negotiate more favorable terms. Whirlpool had the resources, experience, and ability to avoid the terms entirely, yet chose not to do so. View "Whirlpool Corp. v. Grigoleit Co." on Justia Law

Conlin refinanced with a loan from Bergin, secured by a mortgage containing a provision that recognized MERS as a nominee for Bergin and Bergin’s successors. Bergin sold the note to the Real Estate Mortgage Investment Conduit, for which U.S. Bank was trustee. The mortgage was held by MERS, and serviced by GMAC. In 2008, MERS assigned the mortgage to “U.S. Bank National Association as trustee.” In 2010 Orlans sent Conlan notice (Mich. Comp. Laws 600.3205a), of default and of his ability to request loan modification, stating that it was sent on behalf of GMAC as “the creditor to whom your mortgage debt is owed or the servicing agent for the creditor.” In 2011, Orlans published notice of foreclosure sale, stating that “the mortgage is now held by U.S. Bank National Association as Trustee by assignment.” The notice was also posted on the property, which was sold at a sheriff’s sale on March 31. On October 28, 2011, Conlin sought damages and to have the foreclosure sale set aside. The district court dismissed. The Sixth Circuit affirmed. Even if the “robo-signed” assignment were invalid, Conlin was not prejudiced. He has not clearly shown fraud in the foreclosure process, as required for a challenge after expiration of the six-month redemption period. View "Conlin v. Mrtg. Elec. Registration Sys., Inc." on Justia Law

Martello, a doctor with a law degree, never passed the bar exam despite four attempts; in 1997 she passed the Multistate Professional Responsibility Examination. In 1991, Martello started reviewing medical malpractice cases for Santana, who paid an hourly rate. She alleges that they changed the arrangement for three cases and that Santana wrote that he would pay Martello 20 percent of his fee if the case settled before filing and 25 percent if the case settled after filing suit. Martello alleges that the document was intended to cover future cases. Later, Santana sent Martello a letter stating that: Kentucky canons of ethics prohibit the payment of your fees for assisting … on a contingency basis … you will be billing us on an hourly basis. Martello claims that Santana told her to fabricate time to earn the equivalent of what she would have received under the contract. Martello was dissatisfied with what she received and sued. The district court determined that Martello’s contract claims were barred because the contracts were void as against public policy, while her fraud claims, even accepting tolling agreements, were barred by the statute of limitations. The Sixth Circuit affirmed. View "Martello v. Santana" on Justia Law

Cogent sued, alleging that Hyalogic was disseminating false information regarding Cogent’s product Baxyl, an “oral, liquid HA supplement that is sold into the human natural products market.” Shortly after the filing, the parties entered into a settlement agreement. Cogent moved to enforce the settlement agreement, claiming that Hyalogic caused false and misleading videos to be uploaded to You Tube and by statements made at a conference. The district court found no breach of the settlement agreement and denied the motion. The Sixth Circuit affirmed. The contract unambiguously refers to a clear statement “about the other Party’s product.” Statements that refer to preservatives that can be found in a number of products, including Cogent’s products, are not statements “about the other Party’s products.” View "Cogent Solutions Grp, LLC v. Hyalogic, LLC" on Justia Law

The Whites were dealers of Kinkade’s artwork. The parties agreed to arbitrate disputes in accordance with the Commercial Arbitration Rules of the American Arbitration Association. In 2002, they commenced arbitration in which Kinkade claimed that the Whites had not paid hundreds of thousands of dollars, and the Whites counterclaimed that they had been fraudulently induced to enter the agreements. Kinkade chose Ansell as its arbitrator; the Whites chose Morganroth. Together Ansell and Morganroth chose Kowalsky as the neutral who would chair the panel. The arbitration dragged on; in 2006, Kinkade discovered that the Whites’ counsel, Ejbeh, had surreptitiously sent a live feed of the hearing to a hotel room. Ejbeh’s replacement departed after being convicted of tax fraud. The Whites did not comply with discovery requests, but after closing arguments and over objections, the panel requested that the Whites supply additional briefs. The Whites and their associates then began showering Kowalsky’s law firm with business. Kinkade objected, to no avail. A series of arbitration irregularities followed, all favoring the Whites. Kowalsky entered a $1.4 million award in the Whites’ favor. The district court vacated the award on grounds of Kowalsky’s “evident partiality.” The Sixth Circuit affirmed. View "Thomas Kinkade Co. v. White" on Justia Law

Pagliara, a licensed securities broker for more than 25 years, maintained a spotless record with the Financial Industry Regulatory Authority (FINRA) except for this case. Under a 2002 licensing agreement, Pagliara served both Capital Trust and NBC until 2008. During that time, Butler followed Pagliara’s recommendation to invest $100,000 in bank stocks that later lost value. Butler’s attorney threatened to sue NBC and Pagliara. NBC retained JBPR for defense. Unbeknownst to NBC and JBPR, Pagliara offered to settle the claim for $14,900, $100 below FINRA’s mandatory reporting threshold. Butler refused. Pagliara then informed NBC of his intent to defend the claim in FINRA Arbitration and objected to any settlement of the “frivolous claim.” NBC insisted that Pagliara not have any contact with Butler, based on the License Agreement signed by the parties, which stated that: “NBCS, at its sole option and without the prior approval of either [Capital Trust] or the applicable Representative, may settle or compromise any claim at any time.” JBPR finalized a $30,000 settlement without obtaining a release for Pagliara. Pagliara sued, alleging breach of fiduciary duty, violation of the Tennessee Consumer Protection Act, and intentional infliction of harm. The district court rejected the claims. The Sixth Circuit affirmed. View "Pagliara v. Johnston Barton Proctor & Rose, LLP" on Justia Law

In 2002 Brandeberry sold his phonebook business, AMTEL, to White, who in turn sold the business to Yellowbook, a national publisher of yellow-pages directories. In 2009, Brandeberry started a rival phonebook under the AMTEL name. Yellowbook brought a trademark-infringement suit. The district court found that when Brandeberry initially purchased the rights to the AMTEL mark the rights were transferred to both him individually and his corporation; since the sale to White did not involve Brandeberry in an individual capacity, Brandeberry retained his individual rights, and White received only a non-exclusive right to use the mark. The Sixth Circuit reversed, holding that the contract transferred exclusive ownership of the mark and, even if it did not, Brandeberry’s rights were abandoned. The initial contract cannot be read to create joint ownership, and trademark law would not permit joint ownership under the facts in this case. View "Yellowbook Inc. v. Brandeberry" on Justia Law

Glassman is a car dealer in Southfield, Michigan and an authorized Kia dealer, under an Agreement that states that Glassman’s rights are not exclusive. Glassman agreed to assume certain responsibilities in its Area of Primary Responsibility, an area undefined in the Agreement, but agreed “that it has no right or interest in any [Area of Primary Responsibility] that [Kia] may designate” and that “[a]s permitted by applicable law, [Kia] may add new dealers to … the [Area of Primary Responsibility].” Michigan’s Motor Dealers Act grants car dealers certain limited territorial rights, even when the dealer has a nonexclusive franchise, and requires manufacturers to provide notice to an existing dealer before establishing a new dealer within a certain distance of the existing dealer’s location. Receipt of notice gives the existing dealer a cause of action to challenge the proposed new dealer. Kia and Glassman entered into their Agreement in 1998, when the distance for notice was 6 miles. A 2010 amendment increased the distance to 9 miles. The district court found that the parties did not agree to comply with the 2010 Amendment and that the 2010 Amendment is not retroactive. The Sixth Circuit affirmed, holding that the 6-mile distance applies. View "Kia Motors Am., Inc. v. Glassman Oldsmobile Saab Hyundai, Inc." on Justia Law

Forrest Construction was the named insured on a commercial general liability policy with Cincinnati Insurance. In 2004, Forrest was hired toconstruct a home for the Laughlins. A dispute arose over the amount owed and Forrest filed suit. The Laughlins counter-sued based on alleged defects in the workmanship of the construction, particularly the foundation. Forrest notified Cincinnati Insurance of the counter-complaint and requested defense. Cincinnati Insurance based its denial on an exclusion in the policy for work done by the insured its position that the underlying complaint did not allege damage caused by a subcontractor, thereby rendering the subcontractor exception to the “your work” exclusion inapplicable. Forrest sued, alleging breach of contract, bad-faith denial, and violation of the Tennessee Consumer Protection Act. The district court found that Cincinnati Insurance had breached its contract. The Sixth Circuit affirmed, holding that Cincinnati Insurance was given sufficient notice of the facts giving rise to its obligation to defend and that, under Tennessee law, “property damage” occurs when one component (here, the faulty foundation) of a finished product (the house) damages another component. View "Forrest Constr., Inc. v. Cincinnati Ins. Co." on Justia Law