Justia Contracts Opinion Summaries

This case involves a dispute among Players Recreation Group, LLC, an Alabama limited-liability company, three of its members, Jason L. McCarty, Felix McCarty, and Doyle Sadler, and S&M Associates, Inc., a company owned by Sadler. The LLC, established in 1999, owns and operates a bowling alley known as 'the Super Bowl.' In 2003, S&M, a company owned by Sadler, loaned the LLC $150,000, which is evidenced by a promissory note. In 2006, the Super Bowl began incurring substantial losses, and the LLC ultimately defaulted on the promissory note payable to S&M. In July 2015, S&M and Sadler sued the LLC and the other members of the LLC, asserting a breach-of-contract claim and a claim seeking an accounting. In August 2015, the LLC, Jason, and Felix filed an answer and a counterclaim, alleging that Sadler had breached his duty of loyalty and his duty of care to the LLC.The case proceeded to a bench trial. The parties initially stipulated that the LLC owed S&M a total of $310,139.66 on the promissory note; the trial court ultimately entered a judgment against the LLC for that amount based on the parties' stipulation. The case was then tried solely on the counterclaims asserted against Sadler by the LLC, Jason, and Felix. The trial court entered a judgment against Sadler on the counterclaims, based on its findings that Sadler had breached not only a duty of loyalty and a duty of care to the LLC, but also the implied covenant of good faith and fair dealing owed to the LLC. The trial court assessed damages against Sadler in the amount of $368,167.92.On appeal to the Supreme Court of Alabama, Sadler argued that the trial court erred insofar as it entered a judgment against him on the counterclaims asserted against him by the LLC, Jason, and Felix. The Supreme Court of Alabama agreed and reversed the judgment entered against Sadler on the counterclaims asserted against him because there was no evidence to support findings that Sadler had breached the duty of loyalty and the duty of care owed to the LLC or the implied covenant of good faith and fair dealing, and remanded the case to the trial court for the entry of a judgment consistent with this opinion.On remand, S&M and Sadler filed a motion for attorney's fees, costs, and expenses. The trial court denied the motions for attorney's fees, costs, and expenses. The trial court also found that the LLC had incurred $2,713,230.33 in expenses without contribution by Sadler or Scott Montgomery. That finding was not disturbed on appeal and has become the law of the case. The trial court took judicial notice that Jason and Felix McCarty have perfected, as the remaining members of the LLC, that claim or debt by filing a second mortgage with the Probate Court of Jefferson County, which second mortgage is inferior to the mortgage held by the late Ferris Ritchey’s real estate company, and the perfection of this claim makes it a priority over and superior to the claims of other creditors, including S&M.S&M and Sadler appealed the trial court's order on remand. The Supreme Court of Alabama affirmed the trial court's order on remand insofar as it denied S&M's and Sadler's requests for attorney's fees and costs, reversed the order insofar as it addressed the LLC's mortgage executed in favor of Jason and Felix and its purported priority, and remanded this case with instructions for the trial court to set aside that portion of its order that addressed the LLC's mortgage and its purported priority. View "S&M Associates, Inc. v. Players Recreation Group, LLC" on Justia Law

The case involves a dispute between the San Jacinto River Authority (SJRA) and the cities of Conroe and Magnolia, Texas. The SJRA and the cities had entered into contracts obligating the cities to buy surface water from the SJRA. When a disagreement over fees and rates arose, the cities stopped paying their full balances, leading the SJRA to sue the cities for recovery of those amounts. The cities claimed immunity from the suit as government entities.Previously, the trial court had granted the cities' plea to the jurisdiction, and the court of appeals affirmed this decision. The court of appeals held that the SJRA had not engaged in pre-suit mediation as required by the contracts, and therefore, the cities' immunity was not waived.The Supreme Court of Texas disagreed with the lower courts' decisions. The court held that contractual procedures for alternative dispute resolution, such as pre-suit mediation, do not limit the statutory waiver of immunity for contractual claims against local government entities. The court also found that the mediation requirement did not apply to the SJRA's claims. Furthermore, the court rejected the cities' argument that the agreements did not fall within the waiver because they failed to state their essential terms.Consequently, the Supreme Court of Texas reversed the lower courts' decisions and remanded the case back to the trial court for further proceedings to resolve the SJRA's claims on the merits. View "San Jacinto River Authority v. City of Conroe" on Justia Law

The case involves a dispute between a developer, Campbellton Road, Ltd., and the City of San Antonio, specifically the San Antonio Water System (SAWS). The developer entered into a contract with SAWS in 2003, which included an option for the developer to participate in and fund the construction of off-site oversized infrastructure for a municipal water system. The developer planned to develop two residential subdivisions and needed sewer service for them. The contract stated that if the developer decided to participate in the off-site oversizing project, a contract would form, and the developer would earn credits that could be used to satisfy some or all of the collection component of assessed impact fees.The Court of Appeals for the Fourth District of Texas concluded that the Local Government Contract Claims Act did not apply, and therefore did not waive immunity, because there was no agreement for providing services to the system. The court held that the system had no contractual right to receive any services and would not have “any legal recourse” if the developer “unilaterally decided not to proceed.”The Supreme Court of Texas disagreed with the lower court's decision. The Supreme Court held that the Act waived the system’s immunity from suit because the developer adduced evidence that a contract formed when the developer decided to and did participate in the off-site oversizing project. The court found that the contract stated the essential terms of an agreement for the developer to participate in that project, and the agreement was for providing a service to the system that was neither indirect nor attenuated. The Supreme Court reversed the court of appeals’ judgment and remanded the case to the trial court for further proceedings. View "Campbellton Road, Ltd. v. City of San Antonio" on Justia Law

Sedric Ward, an Army reservist, worked at the Shelby County Jail. In 2015, the County fired Ward but later entered into a settlement agreement in which Ward released “any and all claims whatsoever” related to his termination. Despite this, Ward later sued the County under the Uniformed Services Employment and Reemployment Rights Act (USERRA). The central issue was whether the settlement agreement effectively released Ward’s claim under the Act.The district court ruled in favor of Ward, asserting that the release’s scope—namely, “any and all claims whatsoever”—did not reach his USERRA claim. The case went to trial, and the jury found in Ward’s favor. The district court eventually ordered the County to pay Ward more than $1.5 million.The United States Court of Appeals for the Sixth Circuit disagreed with the district court's reasoning. The appellate court found that the release provision in the settlement agreement clearly encompassed Ward’s USERRA claim. However, the court also noted that USERRA imposes a second requirement for the release of a claim under the Act. Specifically, the Act requires that the agreement “establish” rights that are “more beneficial” for the servicemember than the ones he gives up. The court found that whether a particular settlement agreement provides greater benefits than a USERRA claim is for the servicemember to decide. Given the circumstances, the court concluded that a reasonable jury could find that Ward’s decision to enter into the agreement reflected a considered decision on his part, or instead that it reflected only desperation. The appellate court vacated the district court’s judgment and remanded the case for further proceedings. View "Ward v. Shelby County" on Justia Law

The case involves Dennis Neate, a former employee of the James B. Oswald Company (Oswald), an insurance firm. Neate left Oswald to work for Hylant Group, Inc., another insurance firm, and some of his clients followed him. Oswald accused Neate of violating his non-solicitation agreement and sued in federal district court. The court issued a preliminary injunction ordering Neate and others to comply with Oswald’s non-solicitation agreement. Neate appealed.Previously, the district court granted a preliminary injunction after an evidentiary hearing. The injunction prohibited Neate and others from violating their agreements with Oswald, retaining or using Oswald's confidential information, and soliciting or accepting business from Oswald's clients. The injunction also required all defendants to return all of Oswald's property.The United States Court of Appeals for the Sixth Circuit vacated and remanded the case. The court found that the district court failed to properly apply Ohio law in determining the reasonableness of the non-solicitation agreement. The court also found that the injunction did not meet the specificity requirements of Federal Rule of Civil Procedure 65(d)(1), as it incorporated the non-solicitation agreement by reference. However, the court agreed with the district court that Oswald had shown a likelihood of success on its trade-secrets claims. View "James B. Oswald Co. v. Neate" on Justia Law

Yasmin Varela filed a class action lawsuit against State Farm Mutual Automobile Insurance Company (State Farm) after a car accident. Varela's insurance policy with State Farm entitled her to the "actual cash value" of her totaled car. However, she alleged that State Farm improperly adjusted the value of her car based on a "typical negotiation" deduction, which was not defined or mentioned in the policy. Varela claimed this deduction was arbitrary, did not reflect market realities, and was not authorized by Minnesota law. She sued State Farm for breach of contract, breach of the covenant of good faith and fair dealing, unjust enrichment, and violation of the Minnesota Consumer Fraud Act (MCFA).State Farm moved to dismiss the complaint, arguing that Varela's claims were subject to mandatory, binding arbitration under the Minnesota No-Fault Automobile Insurance Act (No-Fault Act). The district court granted State Farm's motion in part, agreeing that Varela's claims for breach of contract, breach of the covenant of good faith and fair dealing, and unjust enrichment fell within the No-Fault Act's mandatory arbitration provision. However, the court found that Varela's MCFA claim did not seek the type of relief addressed by the No-Fault Act and was neither time-barred nor improperly pleaded, and thus denied State Farm's motion to dismiss this claim.State Farm appealed, arguing that Varela's MCFA claim was subject to mandatory arbitration and should have been dismissed. However, the United States Court of Appeals for the Eighth Circuit dismissed the appeal for lack of jurisdiction. The court found that State Farm did not invoke the Federal Arbitration Act (FAA) in its motion to dismiss and did not file a motion to compel arbitration. The court concluded that the district court's order turned entirely on a question of state law, and the policy contained no arbitration provision for the district court to "compel." Therefore, State Farm failed to establish the court's jurisdiction over the interlocutory appeal. View "Varela v. State Farm Mutual Automobile Insurance Co." on Justia Law

The case revolves around a contract dispute over roofing work done in conjunction with the purchase of a house. The appellant, Carl Fleig, had purchased a house from homeowners who had contracted with the appellee, Landmark Construction Group, to replace a hail-damaged roof. After the purchase, the new roof leaked, causing damage to the house. Landmark refused to address the leaks, arguing that any warranty given to the prior homeowners did not transfer to Fleig. Fleig sued Landmark, asserting theories of implied warranty, contractual warranty, and fraud.The case was initially heard by two trial judges and was appealed twice. The trial court granted Landmark's motion for a directed verdict and awarded Landmark $5,000 in attorney fees. Fleig appealed, and the Court of Civil Appeals affirmed the trial court. The Supreme Court of the State of Oklahoma vacated the Court of Civil Appeals opinion and remanded the matter to the trial court. After a second bench trial, the trial court entered an award against Landmark for $2,725. Fleig appealed again, and the Court of Civil Appeals affirmed the trial court in part, reversed it in part, and remanded the cause.The Supreme Court of the State of Oklahoma granted certiorari to address whether the trial court's order awarding attorney fees evidenced that the trial court complied with the directives of State ex rel. Burk v. City of Oklahoma City. The court held that it did not. The court found that the trial court order awarding attorney fees did not set forth with specificity the facts and computation to support the award. The court held that the trial court must make findings of fact incorporated into the record regarding the hours spent, reasonable hourly rates, and the value placed on additional factors. The court vacated the Court of Civil Appeals opinion in part, reversed the trial court in part, and remanded the cause for proceedings consistent with its opinion. View "Fleig v. Landmark Construction Group" on Justia Law

Frederic P. Zotos, an attorney residing in Cohasset, Massachusetts, filed a qui tam complaint against the Town of Hingham and several of its officials. Zotos alleged that the town and its officials posted speed limit signs and advisory speed plaques that did not comply with applicable federal and state laws and regulations. He further claimed that the town applied for and received reimbursements for these signs and plaques from both the federal government and the Commonwealth of Massachusetts. Zotos asserted that the town fraudulently induced the federal government to pay it roughly $3,300,000 and the Commonwealth to pay it approximately $7,300,000.The United States District Court for the District of Massachusetts dismissed Zotos's complaint for failure to state a claim upon which relief could be granted. The court concluded that the qui tam action was not barred by either claim or issue preclusion. However, it found that Zotos's claims fell short of the False Claims Act (FCA) and Massachusetts False Claims Act's (MFCA) requirements. Specifically, it ruled that Zotos failed to sufficiently plead that the alleged misrepresentations were material to the federal government's and the Commonwealth's respective decisions.On appeal, the United States Court of Appeals for the First Circuit affirmed the district court's decision. The appellate court found that Zotos's complaint did not adequately allege that the defendants' purported misrepresentations were material. It noted that the essence of the bargain under the Federal-Aid Highway Program (FAHP) and the Chapter 90 program was that the defendants incurred permissible costs on projects that were duly reimbursed. The court concluded that Zotos's allegations amounted to ancillary violations that, without more, were insufficient to establish materiality. View "United States ex rel. Zotos v. Town of Hingham" on Justia Law

The case involves Alabama Relocation Services, Inc. ("ARS") and Patricia Buchannan, who filed a complaint against COWS USA, LLC ("COWS"), Trailpods Acceptance Corporation ("Trailpods"), Michael Frank, Ana Frank, and Leonard Rosenberg ("the COWS defendants"). ARS is a moving and storage company based in Mobile, Alabama, and Buchannan is its vice president. COWS is a Florida-based company that sells portable storage containers. ARS and Buchannan allege that they entered into a dealership agreement with COWS, which required them to lease equipment from Trailpods and finance the purchase of COWS equipment through Ascentium Capital, LLC ("Ascentium"). However, they claim that despite making payments, the promised equipment was never delivered.The COWS defendants filed a motion to dismiss the claims, arguing that the dealership agreement contained a forum-selection clause requiring disputes to be brought in Miami-Dade County, Florida. The Mobile Circuit Court denied their motion to dismiss. The COWS defendants then petitioned the Supreme Court of Alabama for a writ of mandamus, seeking an order directing the Mobile Circuit Court to vacate its order denying their motion to dismiss and to enter an order dismissing the claims.The Supreme Court of Alabama granted the petition. The court found that the dealership agreement's forum-selection clause clearly required actions between the parties to be brought in Miami, Florida. The court concluded that ARS and Buchannan failed to clearly establish that enforcement of the forum-selection clause would be unreasonable. The court directed the Mobile Circuit Court to vacate its order denying the COWS defendants' motions to dismiss and to enter a new order dismissing the claims against the COWS defendants, without prejudice. View "Ex parte Cows USA, LLC" on Justia Law

The United States Department of Justice (DOJ) initiated an investigation into potentially anti-competitive practices in the real estate industry by the National Association of Realtors (NAR). In November 2020, the DOJ and NAR reached a settlement, and the DOJ sent a letter to NAR stating that it had closed its investigation and that NAR was not required to respond to two outstanding investigative subpoenas. However, in July 2021, the DOJ withdrew the proposed consent judgment, reopened its investigation, and issued a new investigative subpoena. NAR petitioned the district court to set aside the subpoena, arguing that its issuance violated a promise made by the DOJ in the 2020 closing letter. The district court granted NAR’s petition, concluding that the new subpoena was barred by a validly executed settlement agreement.The United States Court of Appeals for the District of Columbia Circuit disagreed with the district court's decision. The court held that the plain language of the disputed 2020 letter permits the DOJ to reopen its investigation. The court noted that the closing of an investigation does not guarantee that the investigation would stay closed forever. The court also pointed out that NAR gained several benefits from the closing of the DOJ’s pending investigation in 2020, including relief from its obligation to respond to the two outstanding subpoenas. Therefore, the court reversed the judgment of the district court. View "National Association of Realtors v. United States" on Justia Law