Case 1

In Montana, Mike Lyons incorporated Lyons Concrete, Inc., but did not file its first annual report, so the state involuntarily dissolved the firm in 1996. Unaware of the dissolution, Lyons continued to do business as Lyons Concrete. In 2003, he signed a written contract with William Weimar to form and pour a certain amount of concrete on Weimar's property for $19,810.

Weimar was in a rush to complete the entire project, and he and Lyons orally agreed to additional work on a time-and-materials basis. When scheduling conflicts arose, Weimar had his employees set some of the forms, which proved deficient. Weimar also directed Lyons to pour concrete in the rain, which undercut its quality. Mid-project, Lyons submitted an invoice for $14,389, which Weimar paid. After the work was complete, Lyons billed Weimar for $25,731, but he refused to pay, claiming that the $14,389 covered everything. To recover the unpaid amount, Lyons filed a mechanic's lien as "Mike Lyons d/b/a Lyons Concrete, Inc." against Weimar's" property. Weimar filed a suit to strike the lien, and Lyons filed a counterclaim. [Weimar v. Lyons, 338 Mont. 242, 164 P.3d 922 (2007)] (See Formation and Financing.) (580, Miller)

1. Before the trial, Weimar asked for a change of venue on the ground that a sign on the courthouse lawn advertised "Lyons Concrete." How might the character affect a trial on the parties' dispute? Should the court grant this request?
2. Weimar asked the court to dismiss the counterclaim that the state had dissolved Lyons Concrete in 1996. However, Lyons immediately filed new articles of incorporation for "Lyons Concrete, Inc." Under what doctrine might the court rule that Weimar could not deny the existence of Lyons Concrete? What ethical values underlie this doctrine? Should the court make this ruling?
3. At the trial, Weimar argued, in part, that there was no "fixed price" contract between the parties and that even if there was, the poor quality of the work, which required repairs, amounted to a breach, excusing Weimar's further performance. Should the court rule in Weimar's favor on this basis?

Case 2

Melvin Lyttle told John Montana and Paul Knight about a "Trading Program" that purportedly would buy and sell securities in deals that we're fully insured, as well as monitored and controlled by the Federal Reserve Board. Without checking the details or even verifying whether the Program existed, Montana and Knight, with Lyttle's help, began to sell interests in the Program to investors.

For a minimum investment of $1 million, the investors were promised extraordinary rates of returnfrom 10 percent to as much as 100 percent per weekwithout risk. They were also told that the Program would "utilize banks that can ensure full bank integrity of The Transaction whose undertaking[s] are in complete harmony with international banking rules and protocol and who guarantee maximum security of a Funder's Capital Placement Amount." Nothing was required but the investors' funds and their silencethe Program was to be kept secret. Over four months, Montana raised nearly $23 million from twenty-two investors. The promised gains did not accrue, however. Instead, Montana, Lyttle, and Knight depleted the investors' funds in high-risk trades or spent the funds on themselves. [SEC v. Montana, 464 F.Supp.2d 772 (S.D.Ind. 2006)] (See Securities Exchange Act of 1934.) (605, Miller)

1. The Securities and Exchange Commission (SEC) filed a suit against Montana alleging violations of Section 10(b) and SEC Rule 10b-5. What is required to establish a breach of these laws? Explain how and why the facts, in this case, meet or fail to meet these requirements.
2. Ultimately, about half of the investors recouped the amount they had invested. Should the others be considered at least partly responsible for their losses? Discuss.