Corporation & Enterprise Law

[11/20] New York Guangdong Fin. Inc. v. Comm'r. of Int'l. Rev.
In an appeal from a tax court's judgment sustaining in part the Commissioner of Internal Revenue's notice of deficiency for withholding tax deficiencies and additions to tax, the order is affirmed where: 1) the Commissioner did not act arbitrarily when it relied on information provided to it by petitioner under penalties of perjury; 2) the Agreement for the Avoidance of Double Taxation and the Prevention of Tax Evasion With Respect to Taxes on Income did not exempt interest paid to a Chinese corporation from withholding tax; and 3) the record contained no evidence that petitioner relied on the advice of a competent professional in deciding not to file the Forms 1042 for the years in question.

[11/20] Curia v. Nelson
In parties' dispute over the terms of a stock purchase agreement entered into in 1989 and several modification of the agreement over the next decade involving a small number of shares in two automobile dealerships and whether the contract also gave plaintiff option to purchase remaining shares, summary judgment in plaintiff's favor is reversed as extrinsic evidence is required to clarify what the parties meant because the contract as modified is reasonably susceptible to both parties' interpretation and is therefore ambiguous regarding the survival of the options.

[11/20] Scruggs v. Garst Seed Co.
In an action raising claims of retaliation and a hostile work environment, summary judgment in favor of plaintiff's former employer is affirmed where: 1) the company did not retaliate against plaintiff for filing the discrimination charge when it eliminated her position as it was eliminated by a company-wide restructuring; 2) although plaintiff claims that the company also retaliated against her when it did not hire her for one of the open positions after the restructuring, it hired the person who had previously held the position; and 3) the relatively isolated gender-based comments and remarks plaintiff's supervisor directed toward her were not sufficiently severe or pervasive to rise to the level of a hostile work environment.

[11/19] Go v. Pac. Health Serv., Inc.
In plaintiff's suit seeking involuntary dissolution of defendant-company, of which she had been a director and shareholder, trial court's decree providing for the winding up and dissolution of the corporation unless defendants made payment to the plaintiff for her shares, in the specified amount, within the specified time, is affirmed with respect to the alternative decree issued by the trial court as it followed the statutory requirements set forth in the plain language of section 2000.

[11/18] Boyer v. Crown Stock Distrib., Inc.
In Chapter 7 bankruptcy proceedings in which the trustee filed an adversary action against the defendants claiming fraudulent conveyance under the section 4(a)(2) of the Uniform Fraudulent Transfer Act, judgment in favor of the trustee is affirmed in part and reversed in part where: 1) bankruptcy court did not commit clear error in finding that the statutory condition for a fraudulent conveyance was satisfied; and 2) district court's ruling with respect to the dividend is reversed as the trustee is entitled to the dividend because it was an integral part of the leveraged buy-out.

[11/17] Epic Communications, Inc. v. Richwave Tech., Inc.
In an action by a Taiwanese corporation and its California subsidiary seeking damages for misappropriation of intellectual property involving a Design Services Agreement of a silicon-germanium power amplifier for use in wireless networking devices, trial court's order quashing service of summons is reversed where: 1) a refusal by California courts to exercise jurisdiction cannot be justified by the mere fact that a claim arising from California contacts is prosecuted by a nonresident; and 2) subjecting the defendant to local jurisdiction comports with fair play and substantial justice as, here the two Taiwanese defendants engaged in conduct in California, and caused effects in California, that made it readily foreseeable that they would be haled into court here in the event of a dispute of the present type.

[11/17] Nutragenetics, LLC v. Sup. Ct.
In plaintiff's suit against the defendants alleging he was defrauded into investing in their company, defendants' petition for writ of mandate is denied as trial court properly found plaintiff's peremptory challenge to the judge to be timely where: 1) the second lawsuit involves a different defendant and different causes of action asserted against that defendant; and 2) the second lawsuit does not arise from conduct in, or involve enforcement or modification of an order in, the first lawsuit.

[11/17] 1680 Prop. Trust v. Newman Trust
In plaintiffs' suit against the defendant-Newman Trust for breach of fiduciary duty based on fraud, summary judgment for defendant is affirmed as the Code of Civ. Proc. section 366.2 period of limitations is applicable to fraud claims based on statements of the decedent on behalf of a trust of which he was trustor and trustee, even though the action is against the successor trustee.

[11/12] State of Arizona v. Yuen
Grant of defendant's motion to vacate a sister state judgment and denial of Arizona's motion for reconsideration, arising from defendant's incorporation of a company in Arizona at her husband's request, is affirmed as the trial court did not abuse its discretion in finding that: 1) defendant had no notice of the Arizona administrative proceedings; 2) defendant did not retain the lawyer as her attorney; and 3) defendant never signed a written waiver of the lawyer's conflict of interest in representing clients with opposing interests.

[11/10] Jackson v. Yarbray
In plaintiffs' malicious prosecution action against defendants involving an ealier case that arose from unsuccessful efforts to merge with businesses owned by defendants, trial court's finding that defendants are liable for the malicious prosecution of a civil action and award of $700,000 in general damages for emotional distress and $2.41 million in punitive damages to plaintiffs is affirmed in part and reversed in part where: 1) the judgment as to defendant's counsel who had represented them for part of the time the action was pending is affirmed in its entirety as the trial court did not err in concluding plaintiffs failed to meet their burden of proving counsel had acted with malice; 2) portion of the judgment awarding compensatory damages is reversed in part and remanded to determine the amount of attorney fees and costs properly recoverable as special damages by the plaintiffs as the trial court erred in precluding any recovery by the plaintiffs for attorney fees incurred in defending the underlying action; and 3) judgment of the trial court is affirmed in all other respects.

[11/06] Ferro Corp. v. Cookson Group, PLC
In plaintiff's suit against defendant for breach of its duty to defend and indemnify arising from antitrust lawsuits brought against plaintiff, summary judgment for defendants and dismissal of all of plaintiff's claims is affirmed as there are no allegations made against plaintiff in the antitrust complaints or amended complaints based on principles of successor liability, and the antitrust cases do not state claims that potentially or arguably fall within the purview of the asset purchase agreement duty to defend.

[10/29] In Re: Constar Int'l Inc. Sec. Litig.
In plaintiffs' securities class action arising from their purchase of defendant's registered shares , district court's grant of the class certification is affirmed where the Rule 23 class certification standard applied by the district court was proper.

[10/29] Berg & Berg Enters., LLC. v. Boyle
In plaintiff's breach of fiduciary duty against defendants, trial court's sustaining of defendant's demurrers to the third amended complaint is affirmed as plaintiff failed to plead a cognizable claim for breach of fiduciary duty against the individual directors. Furthermore, even if a cognizable claim had been alleged, on the pleaded facts, the business judgment rule insulated the directors from personal liability on the alleged claims for breach of fiduciary duty as a matter of law.

[10/28] Marriott Int'l. Resorts, LP. v. US
In a partnership-taxation case involving Marriott, United States Court of Federal Claims' grant of summary judgment in favor of the government is affirmed in its determination that in 1994 the obligation to close a short sale qualified as a liability under I.R.C. section 753 and that the IRS properly adjusted the outside basis of the Marriott partners for the 1994 tax year to account for the partnership's assumption of the obligation to close certain short sales.

[10/27] Delay v. Rosenthal Collins Group, LLC
In plaintiff's action against his former employer, seeking indemnification for legal expenses incurred in successfully defending a prior suit brought against him under the Commodities Exchange Act (CEA), dismissal of his claim on the ground that it was preempted by federal law is vacated and remanded as Congress did not intend to displace the state-law indemnification rights, if any, of parties found not to have violated the CEA.

[10/26] G-I Holdings v. Reliance Ins. Co.
In plaintiff's action involving coverage under a directors and officers insurance policy brought against defendant Hartford, who had taken over claims administration for defendant-Reliance (liquidated insurer) and assumed some of its liabilities, district court's grant of summary judgment in favor of Hartford is affirmed where: 1) the Hartford policy period does not include the amended Reliance policy period, and there is no basis to conclude that plaintiff could have reasonably expected its policy with Hartford to cover the Reliance policy; 2) the interrelated wrongful acts provision applies to bar coverage for the CCR and Claimants Committee actions under the Hartford policy; 3) other agreements do not make Hartford directly liable for fraudulent conveyance actions; and 4) judicial estoppel does not apply to Hartford's invoking of the interrelated wrongful acts provision.

[10/23] Aguas Lenders Recovery Grp. LLC v. Suez, S.A.
In an action to recover on a defaulted loan, dismissal of the action on forum non conveniens grounds is reversed where a non-signatory to an agreement may be bound by a forum selection clause and forum non conveniens waiver contained in contracts entered into by an entity alleged to be a predecessor in interest.

[10/22] US v. McGeehan
District court's conviction of a publicly-funded non-profit organization's president and vice-president for honest services mail and wire fraud, arising from personal use of funds that were to be used for a Navy project, is affirmed in part and reversed in part where: 1) the district court did not err in denying plaintiffs' motion to dismiss the Ben Franklin Technology Center (BFTC) counts because a superseding indictment made out the necessary elements of honest services fraud; and 2) district court erred in denying the motion to dismiss the Navy counts as there are no allegations in the indictment suggesting the presence of legally cognizable fiduciary duties owed by BFTC to the Navy.

[10/21] US v. Rigas
In a case involving the founder of Adelphia and his son, denial of defendants' motion to dismiss conspiracy charges in a Pennsylvania indictment, claiming that their conviction for conspiracy and substantive fraud counts in the Southern District of New York violated their right to be free from double jeopardy, is remanded as 18 U.S.C section 371 creates a single statutory offense and defendants established a prima facie case that there was only one conspiratorial agreement. However, denial of defendants' motion to dismiss tax evasion charges in the Pennsylvania Indictment is affirmed.

[10/21] Fannon v. Guidant Corp.
In plaintiffs' consolidated securities action against defendants alleging fraud in connection with a merger, the judgment of the district court is affirmed where it did not abuse its discretion: 1) in dismissing the case with prejudice as the plaintiffs had a number of opportunities to craft a complaint that complied with the Private Securities Litigation Reform Act; 2) in denying plaintiffs' motion to vacate the judgment pursuant to Rule 59(e); and 3) in denying the plaintiffs' motion to file an amended complaint.

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