One More for the Road: Why Congress Must Impeach Donald Trump (Again)

DEAN FALVY

Dean Falvy, a lecturer at the University of Washington School of Law in Seattle, makes the case for impeaching Donald Trump again, after the failed insurrection of January 6. Falvy describes three possible ways to disempower Trump from undermining democracy in our nation and explains why immediate impeachment by the House and removal by the Senate is the most appropriate course of action.

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JTH Tax, Inc. v. Aime

Court: US Court of Appeals for the Fourth Circuit

Dockets: 19-1746, 19-1792

Opinion Date: January 4, 2021

Judge: Roger L. Gregory

Areas of Law: Business Law, Civil Procedure, Contracts

Defendant was a successful franchise operator of several tax preparation businesses under the umbrella of JTH Tax, Inc. and SiempreTax+ LLC (together, "Liberty Tax"). In this case, Liberty Tax requested that defendant assign it the leases for the franchise properties, as provided for by the Purchase and Sale Agreement (PSA). However, the parties could not agree to terms for the assignment. Liberty Tax subsequently filed suit and defendant countersued. Defendant largely prevailed and was awarded a significant sum of damages. The Fourth Circuit vacated a substantial portion of the damages award but upheld the judgment in defendant's favor. On remand, the district court recalculated damages based on the Fourth Circuit's instructions and then, on defendant's motion, subsequently amended the judgment, increasing the damages based on purportedly new evidence. Both parties appealed again. The Fourth Circuit found no error in the district court's denial of defendant's arguments for reinstatement of much of the original damages. The court explained that the district court did not err in concluding that the Rule 59(e) standard and the mandate rule precluded defendant's disgorgement theory. However, the court found error in the district court's conclusion that defendant met the standard for relief based on newly discovered evidence and in the award of nominal damages. The court concluded that, in the declaration and now on appeal, defendant does not show he exercised reasonable due diligence during the three years of litigation to discover and present evidence of unpaid rent on the Burnside property. Furthermore, nominal damages were unavailable because defendant was awarded compensatory damages to remedy Liberty Tax's breach of contract, regardless of the finding that Liberty Tax also breached the contract by breaching the implied covenant. Accordingly, the court affirmed in part, reversed and vacated in part, and remanded with instructions to recalculae damages.

EPLET, LLC v. DTE Pontiac North, LLC

Court: US Court of Appeals for the Sixth Circuit

Docket: 20-1434

Opinion Date: January 5, 2021

Judge: Richard Allen Griffin

Areas of Law: Bankruptcy, Business Law, Commercial Law, Contracts, Environmental Law

In 2007, GM sold a power plant to DTEPN, which leased the land under the plant for 10 years. DTEPN agreed to sell utilities produced at the plant to GM, to maintain the plant according to specific criteria, and to address any environmental issues. DTEPN’s parent company, Energy, guaranteed DTEPN’s utility, environmental, and maintenance obligations. Two years later, GM filed for bankruptcy. GM and DTEPN agreed to GM’s rejection of the contracts. DTEPN exercised its right to continue occupying the property. An environmental trust (RACER) assumed ownership of some GM industrial property, including the DTEPN land. DTEPN remained in possession until the lease expired. RACER then discovered that DTEPN had allowed the power plant to fall into disrepair and contaminate the property. The district court dismissed the claims against Energy, reasoning that RACER’s allegations did not support piercing the corporate veil and Energy’s guaranty terminated after GM rejected the contracts in bankruptcy. The Sixth Circuit reversed. Michigan courts have held that a breach of contract can justify piercing a corporate veil if the corporate form has been abused. By allegedly directing its wholly-owned subsidiary to stop maintaining the property, Energy exercised control over DTEPN in a way that wronged RACER. DTEPN is now judgment-proof because it was not adequately capitalized by Energy. RACER would suffer an unjust loss if the corporate veil is not pierced. Rejection in bankruptcy does not terminate the contract; the contract is considered breached, 11 U.S.C. 365(g). The utility services agreement and the lease are not severable from each other. Energy guaranteed DTEPN’s obligations under the utility agreement concerning maintenance, environmental costs, and remediation, so Energy’s guaranty is joined to DTEPN’s section 365(h) election.

Sterling National Bank v. Block

Court: US Court of Appeals for the Seventh Circuit

Dockets: 19-2300, 19‐3122, 19‐3235

Opinion Date: January 5, 2021

Judge: HAMILTON

Areas of Law: Business Law, Contracts, Corporate Compliance

Sterling Bank purchased Damian Services. The stock purchase agreement set up a two-million-dollar escrow to resolve disputes arising after the purchase and established comprehensive rights, obligations, remedies, and procedures for resolving disputes. After the purchase, a former Damian employee called some of Damian’s clients to tell them of a billing practice that the sellers had instituted years earlier. When Sterling learned of the situation, it investigated with the help of a forensic accountant. Sterling concluded that under the sellers’ management, Damian had overcharged its clients by over one million dollars. Sterling refunded the overpayments to its current clients, then unsuccessfully demanded indemnification from the escrow, claiming that the sellers had misrepresented Damian’s liabilities and vulnerability to litigation. The district court granted the sellers summary judgment, reasoning that Sterling missed the deadline for claiming indemnification under the stock purchase agreement. The court denied the sellers’ request for statutory interest on the escrow money. The Seventh Circuit reversed. Whether Sterling’s demand for indemnification was late depends on disputed facts. Even if the demand was late, however, the agreement’s elaborate terms provide that any delay could be held against Sterling only “to the extent that [sellers] irrevocably forfeit rights or defenses by reason of such failure.” Undisputed facts show that the sellers have not irrevocably forfeited any claims or defenses.