Justia Contracts Opinion Summaries

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Certain minority shareholders filed suit in a Texas court alleging dilution of equity interests. Defendants responded by invoking a forum-selection clause designating Delaware as the proper forum for disputes arising out of a shareholders agreement. The court of appeals reversed the trial court’s grant of Defendants’ motion to dismiss, concluding that the forum-selection clause did not control because the shareholders’ extracontractual claims did not allege noncompliance or interference with any rights or obligations derived from the shareholders agreement. The Supreme Court reversed and dismissed the shareholders’ claims in part, holding (1) the shareholders’ statutory and common-law tort claims evidence a “dispute arising out of” the shareholders agreement; and (2) the shareholders’ noncontractual claims fell within the forum-selection clause’s scope. View "Pinto Technology Ventures, LP v. Sheldon" on Justia Law

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Respondent was a party to an oil and gas lease that restricted its use of the surface estate and required it to drill from off-site locations when feasible. Briscoe Ranch, Inc. owed an adjacent surface estate and agreed that Respondent could use horizontal drilling to drill from the surface of the Ranch in order to produce minerals from Respondent’s lease. The lessee of the minerals underlying the Ranch (Petitioner) was not a party to the agreement and sought to enjoin Respondent from drilling on the Ranch and asserted claims for both trespass and tortious interference with a contract. Petitioner claimed that its consent was necessary before Respondent could drill through the Ranch’s subsurface covered by its mineral lease. The district court dismissed the claim. The Supreme Court affirmed, holding (1) the loss of minerals Petitioner will suffer by a well being drilled through its mineral estate is not a sufficient injury to support a claim for trespass; and (2) Respondent’s drilling plans did not tortiously interfere with Petitioner’s contractual lease rights. View "Lightning Oil Co. v. Anadarko E&P Onshore, LLC" on Justia Law

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Janice M. Hinrichsen, Inc. (JMH) had a judgment against Risk Assessment and Management, Inc. (RAM) in a previous action. In the instant action brought under the Uniform Fraudulent Transfer Act (UFTA), JMH alleged that RAM had fraudulently transferred certain assets to Messersmith Ventures, LLC. The district court entered judgment in favor of JMH in the amount of $250. The Supreme Court affirmed in part and reversed in part, holding (1) the district court did not err when it implicitly found that, under the UFTA, a fraudulent transfer of assets had occurred; and (2) the monetary judgment awarded by the district court was not appropriate relief under the UFTA in this case, as the court instead should have ordered that MJH may levy execution on the assets that were transferred to Messersmith Ventures or the proceeds of such assets. View "Janice M. Hinrichsen Inc. v. Messersmith Ventures, LLC" on Justia Law

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Family Security Credit Union ("FSCU") appealed the trial court's denial of its motions to compel arbitration in eight separate but closely related cases. Action Auto Sales ("Action Auto") was a car-financing group that financed the vehicle inventory of Pine City Auto ("Pine City"), a used-car dealership. Action Auto held titles to the vehicles in inventory, and released a title only when a vehicle was sold, and Pine City paid off a proportional amount of the inventory financing. Pine City eventually went out of business without paying off the inventory financing on some of the vehicles it had sold. Action Auto sued Pine City and the purchasers of eight vehicles who had purchased vehicles from Pine City and financed those purchases through FSCU. Action Auto sought possession of the vehicles and money damages. The purchasers each filed counterclaims and cross-claims against Action Auto and Pine City and third-party claims against FSCU, alleging negligence, wantonness, and conspiracy. The purchasers' third-party claims against FSCU were based on FSCU's alleged failure to perfect its security interest in the vehicles before financing the purchasers of the vehicles. FSCU moved for each of those third-party claims to be submitted to arbitration. The purchasers opposed the motions to compel arbitration, but they did not submit any evidence. After review, the Alabama Supreme Court concluded the trial court erred in denying FSCU's motions to compel arbitration in each of the eight cases, and remanded all for further proceedings. View "Family Security Credit Union v. Etheredge" on Justia Law

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Lamar Ragland appeals the dismissal of his bad-faith claim against State Farm Mutual Automobile Insurance Company. Ragland sought punitive damages from State Farm based on State Farm's alleged bad-faith failure to pay and related failure to subject his claim for underinsured-motorist ("UIM") benefits to a cognitive review. State Farm moved to dismiss Ragland's claims, because Ragland had filed a separate civil action in 2014 that had not yet been resolved. After review, the Alabama Supreme Court dismissed Ragland's claim as being from a nonfinal judgment. View "Ragland v. State Farm Mutual Automobile Ins. Co." on Justia Law

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Julie Gerstenecker borrowed money from her mother-in-law Janice Gerstenecker, for help in repaying her student loans. According to Janice, Janice agreed to repay Julie's student loans and Julie agreed to repay Janice by "pay[ing] [Janice] $700 a month until [Julie and Adam's child] turned one. And then the payments would rise to $1,000." Janice testified that the terms of the agreement between her and Julie were not reduced to writing. Julie testified that she had never borrowed money from Janice and that she does not recall Janice telling her that Janice would lend her money to repay her student loans. Adam Gerstenecker, Janice's son and Julie's husband, also testified at trial; his testimony supported his mother's version of the agreement. Adam and Julie would eventually divorce. Some repayments were made, but ultimately Janice sued Julie for the balance owed. The trial court found Julie breached the agreement she had with Janice. However, the Alabama Supreme Court found the trial court erred in reading an acceleration-of-payments clause into the agreement between Janice and Julie. The Supreme Court reversed the trial court's damages award and remanded this case for the trial court to determine the amount owed based on the accrued payments as of the date of the judgment and not the full amount of the outstanding loan balance. View "Gerstenecker v. Gerstenecker" on Justia Law

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Fee-sharing provisions in otherwise valid retainer agreements between clients and two separate law firms are not unenforceable simply because the primary service performed by one firm is the referral of the clients to the other and the agreements fail to specifically notify clients that each firm has assumed joint financial responsibility for the representation. In 2007-2010, Plaintiff, a Gurnee law firm, was retained by 10 clients for representation under the Workers’ Compensation Act. Plaintiff contracted with attorney Esposito for assistance in representing the clients before the Workers’ Compensation Commission. A letter of understanding was drafted by defendant, confirming that the cases had been referred to defendant by plaintiff, outlining the parties’ respective responsibilities regarding representation of the clients, and specifying that the attorney fees obtained in each case would be split between Plaintiff and Esposito. The agreements did not specifically notify the clients that the lawyers in each firm had assumed joint financial responsibility for the representation. Plaintiff’s breach of contract suit against Esposito was dismissed. The Illinois Supreme Court affirmed the appellate court’s reversal, rejecting an argument that the agreements’ lack of an express statement that the attorneys assumed joint financial responsibility violated Rule 1.5(e) of the Illinois Rules of Professional Conduct and thereby rendered the agreements invalid. View "Ferris, Thompson & Zweig, Ltd. v. Esposito" on Justia Law

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The circuit court determined that appropriations made by ordinances or resolutions of the cities of Little Rock and North Little Rock (Appellants) to the cities’ chambers of commerce and related economic development entities were in violation of article 12, section 5 of the Arkansas Constitution. The court concluded that Appellants had appropriated city funds to private corporations using “service contracts” that violated article 12, section 5 and were invalid due to lack of consideration and absence of benefits to the taxpayers. The court permanently enjoined Appellants from passing such ordinances or resolutions. The Supreme Court remanded the case to the circuit court with instructions to lift the injunction and dismiss Appellees’ complaint, holding that an amendment to article 12, section 5 rendered the basis for the circuit court’s injunction moot. View "Stodola v. Lynch" on Justia Law

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In 2009, Jacquelyn Jacks bought a manufactured home from CMH Homes, Inc., on an installment plan. The purchase was financed through CMH Homes under a manufactured home retail installment contract. The contract contained an arbitration agreement, which provides that all disputes arising from, or relating to, the contract would be resolved by binding arbitration. By its terms, the agreement also covered all co-signors and guarantors, and any occupants of the manufactured Home (as intended beneficiaries of the arbitration agreement. Jacks moved into the home with her husband and their children. Five years later, the Jacks family sued CMH Homes, CMH Manufacturing, and Vanderbilt Mortgage and Finance (not a party to this appeal). They claimed: (1) CMH negligently installed and repaired the manufactured home’s water system, which caused toxic mold to grow; (2) the manufactured home was unreasonably dangerous at the time it left the control of CMH; (3) the manufactured home was not fit for habitation. Jacks also sought to rescind her purchase of the manufactured home, along with her agreement to pay Vanderbilt Mortgage and Finance the indebtedness incurred to purchase the home. The CMH defendants removed the case from state to federal court and moved to compel arbitration and stay the court proceedings. The district court granted the motion to compel as to the claims of Jacks, but denied the motion as to the remaining plaintiffs who were not parties to the installment contract. Defendants had argued that Jacks’ husband and their children were likewise bound by the arbitration agreement, even though they never signed the contract. The district court held that “the single sentence in the Arbitration Agreement generically referencing ‘any occupants of the Manufactured Home (as intended beneficiaries of this Arbitration Agreement)’ was not sufficient to make the nonsignatory plaintiffs third party beneficiaries of the Arbitration Agreement and subject to being compelled to arbitration. The district court also rejected Defendants’ contention that the nonsignatory plaintiffs were “bound to arbitrate their claims” under “the doctrine of equitable estoppel.” Defendants timely appealed the district court’s partial denial of their motion to stay and to compel arbitration. The Tenth Circuit found no reversible error in the district court’s judgment and affirmed it. View "Jacks v. CMH Homes" on Justia Law

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In 2013, Herman Kauk, Sr. and Cletis Kauk ("Sellers") contracted to sell land to Herman Kauk, Jr. and Christy Kauk ("Buyers"). The property was known to the parties as “Walter’s Quarter.” The Buyers had their attorney draft a new version of the Sellers’ contract. This version was entitled "Extension of Purchase Agreement" and specified the new closing date. Notably, the new version removed language that granted an option to sell another piece of property, “Katie’s Quarter.” The parties signed the contract. Shortly thereafter, the Sellers sent the Buyers a letter “Notice of Cancellation of Option to Purchase Additional Land." The Sellers executed a Notice of Contract for Deed with the county recorder naming a third party as grantee of the option property. The Buyers filed a complaint on August 10, 2015 requesting a declaratory judgment that the option to purchase "Katie's Quarter" was still valid. Both Buyers and Sellers testified at trial. At trial, both parties acknowledged the first contained an incorrect legal description for the land in the option paragraph, "Katie's Quarter." The "Notice of Cancellation of Option" letter contained the same legal description appearing in that original contract. However, the Notice of Contract for Deed contained the correct legal description for "Katie's Quarter." The district court ultimately found the option was enforceable because it was supported by adequate consideration and nothing in the revised contract revoked the option from the original. The court indicated it was clear "Katie's Quarter" was incorrectly identified in the contract. The Sellers appealed when the district court reformed the contract and ruled in the Buyers’ favor. The Sellers also contended the district court "exceeded its authority when it ruled the issue of reformation was not res judicata" and claims the district court abused its discretion by ordering the same. The North Dakota Supreme Court, after review of the district court record and the Sellers' arguments, found “a structural problem with the district court's orders that this Court cannot ignore.” Concluding the district court abused its discretion by granting declaratory relief, the Supreme Court reversed the district court's orders and remanded for entry of an order of dismissal. View "Kauk v. Kauk" on Justia Law