Justia Securities Law Opinion Summaries

Articles Posted in Commercial Law
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Debtor Maureen Roberson filed a petition under Chapter 13 of Title 11 of the Bankruptcy Code, alleging that Ford Motor Credit Company wrongfully repossessed her car in the wake of her prior Chapter 7 bankruptcy charge and seeking to recover damages from Ford. During the proceedings, Ford filed a motion for summary judgment. Before the court could rule on the motion, Roberson filed a motion seeking certification of the question of whether a secured creditor is permitted under Maryland law to repossess in a car in which it maintains a security interest when the debtor has filed a bankruptcy petition and has failed to reaffirm the indebtedness, but has otherwise made timely payments before, during, and after bankruptcy proceedings. The Bankruptcy Court granted the motion. The Supreme Court answered the certified question in the positive because the parties agreed that Ford elected Section 12-1023(b) of the Credit Grantor Closed End Credit Provisions, Commercial Law Article, Maryland Code, to govern the retail installment contract in the present case.View "Ford Motor Credit Co., L.L.C. v. Roberson" on Justia Law

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Olsen's Mill, a grain elevator, and BNP Paribas, the elevator's largest creditor, entered into a voluntary assignment agreement for the benefit of creditors under Wis. Stat. 128 after Olsen's Mill defaulted on its obligations to Paribas. The circuit court approved of the assignment and ordered the sale of certain assets free and clear of Paribas's security interest without its consent. The court of appeals affirmed the order. On review, the Supreme Court reversed the judgment of the court of appeals, holding (1) the circuit court erred by ordering the sale of Paribas's collateral free and clear of Paribas's security interest without its consent; and (2) the court contravened the statute by approving an offer that circumvented the order of distribution mandated by Ws. Stat. 128.17(1). Remanded for a determination of what remedy was available under the circumstances.View "BNP Paribas v. Olsen's Mill, Inc." on Justia Law

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Platte Valley Bank (PVB), a banking corporation, claimed a perfected security interest in certain equipment owned by Heggem Construction, Inc. In 2008, Heggem sold the equipment in a sale and leaseback transaction to Tetra Financial Group, LLC. Tetra later transferred the equipment to Republic Bank, Inc. (with Tetra, Appellees). PVB sued Appellees, claiming Appellees converted the equipment and the collateral proceeds of the sale. The district court granted summary judgment in favor of Appellees, finding the undisputed facts in the record did not support PVB's conversion claims. The Eighth Circuit affirmed, holding (1) the district court did not err in concluding any interference by Appellees with PVB's right in the equipment was not so serious or important as to constitute conversion; and (2) because PVB failed to articulate any significant harm it suffered as a result of Appellees' action with respect to its deposit account, the district court did not err in concluding no conversion occurred. View "Platte Valley Bank v. Tetra Fin. Group, LLC" on Justia Law

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Griffin, a futures commission merchant, went bankrupt in 1998 after one of its customers, Park, sustained trading losses of several million dollars and neither Park nor Griffin had enough capital to cover the obligations. The Bankruptcy Court first relied on admissions by the controlling Griffin partners that they failed to block a wire transfer, allowing segregated customer funds to be used to help cover Park’s (and thus Griffin’s) losses. On remand, the court reversed itself and held that the trustee failed to establish that the partners actually caused the loss of customer funds and failed to establish damages. The district court affirmed, applying the Illinois version of the Uniform Commercial Code to a series of transactions that was initiated by the margin call that caused Griffin’s downfall. The Seventh Circuit affirmed, stating that there is no reason why the transactions at issue (which involved banks in England, Canada, France, and Germany, but not Illinois) would be governed by Illinois law. The Bankruptcy Court’s first decision appropriately relied on the partners’ admission that they failed in their obligation to protect customer funds, which was enough to hold them liable for the entire value of the wire transfer. View "Inskeep v. Griffin" on Justia Law

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A class representing purchasers of securities sued the company and two high-ranking officers, alleging that the company issued false or misleading public statements about demand for its products in violation of the Securities Exchange Act of 1934, 15 U.S.C. 78j(b), and related regulations. The district court granted summary judgment to the company. The First Circuit affirmed. Once a downward trend became clear, the company explicitly acknowledged that its forecasts had been undermined. Whether it was negligent to have remained too sanguine earlier, there was no evidence of anything close to fraud. View "OK Firefighters Pension v. Smith & Wesson Holding Corp." on Justia Law

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Plaintiff appealed the district court's grant of summary judgment to defendant on his claim of malicious prosecution under Arkansas law. The district court held that plaintiff failed to present evidence sufficient to withstand summary judgment on two of the five elements necessary to sustain his claim. The court held that the district court erred in holding that the evidence was insufficient as a matter of law to sustain plaintiff's claim that defendant brought suit against him on the guaranty without probable cause. The court also held that a jury must decide what was defendant's motive or purpose in suing plaintiff if it in fact understood it had no reasonable chance of prevailing on the merits of its claim against plaintiff. View "Stokes v. Southern States Cooperative, Inc." on Justia Law

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In 1991, Carpenter pled guilty to aggravated theft and bank fraud. He served jail time and was disbarred. Between 1998 and 2000, he ran a Ponzi scheme, selling investments in sham companies, promising a guaranteed return. A class action resulted in a judgment of $15,644,384 against Carpenter. Plaintiffs then sued drawee banks, alleging that they violated the UCC "properly payable rule" by paying checks plaintiffs wrote to sham corporations, and depositary banks, alleging that they violated the UCC and committed fraud by depositing checks into accounts for fraudulent companies. The district court dismissed some claims as time-barred and some for failure to state a claim. After denying class certification, the court granted defendant summary judgment on the conspiracy claim, based on release of Carpenter in earlier litigation; a jury ruled in favor of defendant on aiding and abetting. The Sixth Circuit affirmed. Claims by makers of the checks are time-barred; the "discovery" rule does not apply and would not save the claims. Ohio "Blue Sky" laws provide the limitations period for fraud claims, but those claims would also be barred by the common law limitations period. The district court retained subject matter jurisdiction to rule on other claims, following denial of class certification under the Class Action Fairness Act, 28 U.S.C. 1332(d). View "Metz v. Unizan Bank" on Justia Law

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Debtor Maureen Roberson filed a petition under Chapter 13 of Title 11 of the Bankruptcy Code, alleging that Ford Motor Credit Company wrongfully repossessed her car in the wake of her prior Chapter 7 bankruptcy charge and seeking to recover damages from Ford. During the proceedings, Ford filed a motion for summary judgment. Before the court could rule on the motion, Roberson filed a motion seeking certification of the question of whether a secured creditor is permitted under Maryland law to repossess in a car in which it maintains a security interest when the debtor has filed a bankruptcy petition and has failed to reaffirm the indebtedness, but has otherwise made timely payments before, during, and after bankruptcy proceedings. The Bankruptcy Court granted the motion. The Supreme Court answered the certified question in the positive because the parties agreed that Ford elected Section 12-1023(b) of the Credit Grantor Closed End Credit Provisions, Commercial Law Article, Maryland Code, to govern the retail installment contract in the present case.

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Enron Creditors Recovery Corp. (Enron) sought to avoid and recover payments it made to redeem its commercial paper prior to maturity from appellees, whose notes were redeemed by Enron. On appeal, Enron challenged the district court's conclusion that 11 U.S.C. 546(e)'s safe harbor, which shielded "settlement payments" from avoidance actions in bankruptcy, protected Enron's redemption payments whether or not they were made to retire debt or were unusual. The court affirmed the district court's decision and order, holding that Enron's proposed exclusions from the reach of section 546(e) have no basis in the Bankruptcy Code where the payments at issue were made to redeem commercial paper, which the Bankruptcy Code defined as security. Therefore, the payments at issue constituted the "transfer of cash ... made to complete [a] securities transaction" and were settlement payments within the meaning of 11 U.S.C. 741(8). The court declined to address Enron's arguments regarding legislative history because the court reached its conclusion based on the statute's plain language. View "In Re: Enron Creditors Recovery Corp. v. Alfa, S.A.B. de C.V., et al." on Justia Law

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The borrowers, former high-level employees, participated in the company’s shared investment program by purchasing company stock. The entire purchase price was funded by personal loans from banks. The company guaranteed the loans, received loan proceeds directly from the banks, and held the shares. Some participants made a profit, but in 2001 the company filed for bankruptcy. After settling with the lenders, the bankruptcy trustee filed actions against the borrowers. The district court ruled in favor of the trustee. The Seventh Circuit vacated and remanded. The borrowers may have enough evidence to satisfy the "in the business of supplying information" element of a negligent misrepresentation defense. The borrowers may raise margin Regulations G and U as an affirmative excuse-of-nonperformance defense; it is not clear whether the borrowers, the banks, the company, or the plan violated those regulations. Summary judgment on the Securities and Exchange Act Section 10(b) and Section 17(a) illegality defenses was also in error.View "Costello v. Grundon" on Justia Law