Justia Contracts Opinion Summaries

The case concerns a dispute stemming from a loan agreement between Christopher Huber and Janet Currie. In 2019, Currie sought to purchase a hemp business and borrowed $185,000 from Huber, agreeing to repay $370,000 within approximately six months—an effective annual interest rate of 200%. The agreement also required Currie to provide a mortgage to secure the loan, which she did not do. After acquiring the business, Currie transferred the property to another entity she controlled without compensating Huber and failed to repay the loan. Huber sued Currie and related entities for breach of contract and fraudulent transfer, seeking the contract amount, interest, and an equitable lien on the property.The Vermont Superior Court, Addison Unit, Civil Division, granted partial summary judgment to Huber on the breach-of-contract claim because Currie did not contest the essential facts or substantiate her listed affirmative defenses, including usury, in her response to Huber’s motion. The court denied summary judgment on the fraudulent-transfer claim. Currie later moved to vacate the summary-judgment order, arguing that the contract was usurious under Vermont law. The court denied this motion, finding Currie had waived the usury defense by failing to raise it at the summary-judgment stage. The court awarded Huber $185,000 with interest at the legal rate and imposed an equitable lien, but did not rule on Currie’s third-party claims.On appeal, the Vermont Supreme Court affirmed the lower court’s judgment for Huber, holding that Currie procedurally waived the usury defense by not properly raising it in response to the summary-judgment motion, and that the trial court acted within its discretion in refusing to revisit the issue. The Court remanded the case for consideration of Currie’s outstanding third-party claims. View "Huber v. Currie" on Justia Law

A group of former shareholders of a reinsurance provider’s parent company acquired the provider’s rights to seek recourse against third parties for losses stemming from a failed reinsurance program. The losses occurred after the provider’s agent advised participation in a structurally unsound London Market program, resulting in significant financial harm. The shareholders, now plaintiffs, alleged that an insurance brokerage firm failed to properly notify the agent’s professional liability insurers of claims arising from these events, as required under agreements between the broker, the agent, and the insurers.After unsuccessful attempts to recover from the provider’s agent and its bankrupt parent company, the plaintiffs notified the agent’s insurers, who denied coverage due to untimely notice. The plaintiffs then filed suit against the brokerage firm in the Circuit Court of Cook County, Illinois, asserting claims for professional negligence and breach of contract. The suit was removed to the United States District Court for the Northern District of Illinois. The district court dismissed the negligence claim and granted summary judgment to the brokerage firm on the contract claim, finding the provider was not a third-party beneficiary to the relevant agreements and the broker owed no duty to the provider.The United States Court of Appeals for the Seventh Circuit reviewed the case and affirmed the district court’s judgment. The court held that the provider was not a third-party beneficiary of the agreements between the broker and the agent, as the contracts did not expressly manifest an intent to benefit the provider. The court also held that the broker owed no professional duty to the provider to notify the agent’s insurers of claims. Finally, it concluded that the claims were time-barred under Illinois law. View "Ferguson v Aon Risk Services Companies, Inc." on Justia Law

Underwood Towers Limited Partnership leased land from the city of Hartford to build apartment buildings and financed the project with a mortgage loan. After defaulting, Underwood executed additional notes and a second mortgage in favor of HUD. Following further defaults and transfers, LPP Mortgage Inc. acquired the second mortgage and notes but did not receive the original of one note—only a lost note affidavit. LPP Mortgage then brought a foreclosure action, seeking not only to foreclose the mortgage but also damages against Underwood and its management agent, CDC Management Corporation.The Superior Court, Complex Litigation Docket, denied Underwood and CDC’s motion to dismiss, ruling that LPP Mortgage had standing to foreclose as the owner of the debt, even without possession of the lost note, relying on New England Savings Bank v. Bedford Realty Corp. Judgment of strict foreclosure and damages was entered. On appeal, the Connecticut Appellate Court affirmed, concluding that LPP Mortgage had standing to pursue foreclosure as the debt owner, despite not being able to enforce the note under the UCC. The case was remanded for setting new law days. After remand, Underwood and CDC again moved to dismiss, arguing that the Connecticut Supreme Court’s later decision in Bank of New York Mellon v. Tope changed the law, requiring possession of the note to foreclose.The Connecticut Supreme Court reviewed the case after transfer from the Appellate Court. The Court held that res judicata barred Underwood and CDC from relitigating LPP Mortgage’s standing, as the issue had already been fully litigated and decided by the Appellate Court. The Supreme Court further held that Bank of New York Mellon v. Tope did not overrule Bedford Realty Corp., and thus the law had not changed. The trial court’s denial of the motions to dismiss was affirmed, and the case was remanded for further proceedings. View "LPP Mortgage Ltd. v. Underwood Towers Ltd. Partnership" on Justia Law

A woman and her husband, after marrying, received a parcel of real estate from her parents, which they held as tenants by the entirety in Massachusetts. They planned and undertook substantial renovations, initially funded by gifts from the husband’s parents. When those funds ran out, the husband’s parents provided over $1.5 million more, which was later documented as a loan in a promissory note signed only by the husband, not the wife. The couple’s marriage deteriorated, leading to divorce proceedings. During the divorce, the husband’s parents obtained a default judgment against the husband (but not the wife) for the loan and secured a writ of execution against his interest in the property, which was recorded. After the divorce, the family court awarded the property solely to the wife, free from any claim by the husband, and clarified that it could not adjudicate the parents’ rights under the promissory note.Subsequently, the husband’s parents transferred their judgment to a family trust, which noticed a sheriff’s sale of the husband’s purported interest in the property. The wife sued in state court to stop the sale, the case was removed to federal court, and both sides sought summary judgment. The United States District Court for the District of Massachusetts granted summary judgment to the wife, holding that the divorce and property distribution extinguished the creditor’s interest and that, even if the loan were valid, the wife was not jointly liable because the funds were not spent on “necessaries” under Massachusetts law.On appeal, the United States Court of Appeals for the First Circuit vacated the district court’s prediction of state law concerning the effect of divorce on a creditor’s interest and remanded for factual findings on the validity of the loan as to the wife. The court also found that neither preclusion nor the state’s domestic relations exception barred the wife’s challenge, and that factual disputes remained as to whether the loan was spent on necessaries. The court affirmed, reversed, and vacated in part, remanding for further proceedings. View "Cosel v. Wendt" on Justia Law

A software company operated an online payment portal used by residents, including the plaintiff, to pay rent for Maryland apartments. Each time the plaintiff paid rent through the portal, she was charged a convenience fee. To complete a transaction, users were required to check a box agreeing to the portal’s hyperlinked terms and conditions, which included an arbitration provision, a clause allowing unilateral changes to the agreement, and a notice provision stating that notices would be posted on the portal. The plaintiff, on behalf of herself and similarly situated individuals, filed a class action, alleging that the company unlawfully acted as an unlicensed collection agency by collecting these fees.After the action was removed to the U.S. District Court for the District of Maryland, the company moved to compel arbitration based on the terms and conditions. The plaintiff opposed, arguing that the arbitration agreement was unenforceable under Maryland law because the company’s ability to unilaterally change the terms without advance notice rendered its promise to arbitrate illusory. The district court agreed, finding that the contract was a browsewrap agreement and that the modification and notice clauses allowed the company to change terms at will without meaningful notice or an opportunity for users to opt out before changes became binding.On appeal, the United States Court of Appeals for the Fourth Circuit reviewed the district court’s denial of the motion to compel arbitration de novo. The Fourth Circuit held that, under Maryland law, the arbitration agreement was unenforceable for lack of consideration because the company’s promise to arbitrate was illusory. The court reasoned that the change-in-terms clause gave the company unfettered discretion to modify the agreement at any time, without advance notice, thus failing to bind the company meaningfully. The court affirmed the district court’s judgment. View "Trimble v. Entrata, Inc." on Justia Law

A dispute arose concerning the payment rate for a surgical procedure performed at an out-of-network facility. The patient receiving the surgery was covered by an ERISA-governed health plan provided by the employer and administered by an insurance company. Prior to the surgery, the facility contacted the plan administrator to verify coverage and was told that the plan would reimburse at the usual, customary, and reasonable (“UCR”) rate, not the lower Medicare rate. Relying on this representation, the facility performed the surgery. However, the plan later paid only at the Medicare rate, far less than the full billed amount. The facility’s successor in interest, having obtained the rights to the claim, sought to recover the unpaid balance.The action was first brought in California state court, then removed to the United States District Court for the Central District of California. The plaintiff asserted both ERISA and state law claims. The district court dismissed the ERISA claim for lack of derivative standing, as the plaintiff was not properly assigned the right to sue under ERISA. The court also dismissed the state law claims for negligent misrepresentation and promissory estoppel, holding that these claims were preempted by ERISA because they related to an ERISA-covered plan.The United States Court of Appeals for the Ninth Circuit reviewed the case. It affirmed the district court’s dismissal of the promissory estoppel claim, holding that, under circuit precedent, such claims are preempted by ERISA. However, the Ninth Circuit reversed the dismissal of the negligent misrepresentation claim. The appellate court held that ERISA does not preempt a negligent misrepresentation claim by a provider’s successor in interest when the claim arises from representations made by the plan administrator during a pre-service verification call. The court concluded that such a claim does not sufficiently “relate to” an ERISA plan to trigger preemption, as it is not based on an ERISA-regulated relationship or enforceable under ERISA’s civil enforcement mechanism. The case was remanded for further proceedings on the negligent misrepresentation claim. View "HEALTHCARE ALLY MANAGEMENT OF CALIFORNIA, LLC V. WSP USA, INC." on Justia Law

Paul Sorum and Jeff Martinson, as co-owners of Clean Crude, entered into written lease agreements with Big Sky Limited of Wyoming for the rental of several aboveground oil storage tanks. After Clean Crude failed to make required lease payments and left the tanks in poor condition, Big Sky sued Clean Crude, Sorum, and Martinson, seeking damages for breach of contract and related claims. Martinson ultimately settled, and Mike Sikorski, having acquired Big Sky’s interest, was substituted as plaintiff. During a bench trial, Sikorski testified that Sorum and Martinson personally guaranteed payment of the leases if Clean Crude could not pay, but Sorum was not allowed to testify about the alleged oral guarantee.The District Court of Campbell County found Clean Crude liable for breach of the lease agreements and found Sorum personally liable for damages based on the oral guarantee. The court initially awarded damages, but Sorum appealed, and the Wyoming Supreme Court, in Sorum v. Sikorski, 2024 WY 124, reversed in part and remanded solely to allow Sorum to testify regarding the alleged oral guarantee. On remand, the district court restricted evidence to the issue of the oral guarantee, allowed Sorum to testify, and reaffirmed its finding that Sorum had made and breached a personal oral guarantee, awarding the same damages.The Supreme Court of Wyoming reviewed the district court’s actions on remand, holding that the district court properly limited the scope of evidence to the oral guarantee, consistent with the mandate rule and law of the case doctrine. The Supreme Court further held that the district court did not clearly err in finding that Sorum made an enforceable oral guarantee to pay the leases with personal funds and breached that guarantee. The Supreme Court affirmed the district court’s judgment in its entirety. View "Sorum v. Sikorski" on Justia Law

In this case, the plaintiff, a student at Syracuse University, alleged that the university breached an implied-in-fact contract or was unjustly enriched by refusing to provide a partial refund of tuition and fees after transitioning to online-only education due to the COVID-19 pandemic. The student’s claims centered on the argument that he and other students paid for an in-person educational experience and associated campus services, which were not provided during the remote learning period. The university maintained that it was not obligated to provide refunds under the circumstances.The United States District Court for the Northern District of New York dismissed the complaint. The district court applied the law of the case from a previous, similar lawsuit (Poston v. Syracuse University) and, alternatively, held that the complaint failed to state a claim under Federal Rule of Civil Procedure 12(b)(6). The district court reasoned that the plaintiff had not alleged a sufficiently specific promise by the university to provide exclusively in-person instruction or services in exchange for the tuition and fees at issue.On appeal, the United States Court of Appeals for the Second Circuit noted a split between federal and New York state courts regarding what must be pleaded to state a claim for breach of contract in the context of COVID-19-related transitions to remote learning. Given this unresolved issue of New York law, the Second Circuit certified the following question to the New York Court of Appeals: whether a student seeking a tuition refund must allege a specific promise of exclusively in-person learning, or whether alleging a generally implied promise of in-person education and access to campus facilities is sufficient. The Second Circuit reserved decision on all claims pending the New York Court of Appeals’ response. View "Becerra-Paez v. Syracuse University" on Justia Law

The appellant operated businesses from two mixed-use properties in San Francisco for decades, but lost ownership of these properties through foreclosure in 2020. After foreclosure, he entered an agreement with the new owners allowing him to remain in possession, pay rent, and repurchase the properties for $10.5 million, with escrow deadlines extended multiple times via addenda. Ultimately, the final deadline to close escrow was set for September 29, 2022. The appellant failed to meet this deadline and then filed suit seeking declaratory relief, arguing that certain statutory disclosure requirements were conditions precedent to his performance, that he had the right to conduct a further environmental assessment required by his lenders, and that the sellers’ refusal to allow such testing excused his nonperformance.In the Superior Court of San Francisco County, the defendants repeatedly moved for judgment on the pleadings. The court granted these motions, initially with leave to amend, and ultimately dismissed the case without leave to amend. The operative complaint alleged four causes of action for declaratory relief, based on alleged failures by defendants to provide required disclosures and to permit environmental testing.The California Court of Appeal, First Appellate District, Division Two, reviewed the case. The court held that, even assuming statutory disclosures under Civil Code section 1102 were required, the parties’ contract and subsequent addenda made clear that such disclosures were not a condition precedent to the appellant’s obligation to perform. The court also found no allegation that the sellers had knowledge of hazardous substance releases requiring disclosure under Health and Safety Code section 25359.7. Further, the court concluded that the appellant was not entitled to suspend closing or to conduct additional environmental testing beyond the contract’s terms, and that the sellers’ refusal did not constitute breach. The appellate court affirmed the trial court’s judgment. View "Nasey v. Fell Holdings LLC" on Justia Law

A student enrolled in a respiratory therapy program at a public university in Georgia was disciplined following an incident during his clinical externship, where he was found responsible for endangering the health or safety of a patient. As a result, the university assigned him a failing grade in his clinical class. The student, who has attention deficit disorder, anxiety, and depression, alleged that university personnel were aware of his conditions. He claimed that prior to the disciplinary hearing, he was denied access to evidence and that the hearing procedures did not comply with the university’s written policies.After exhausting internal university appeals, the student filed a lawsuit in Georgia state court against the Board of Regents and several employees, asserting breach of contract and disability discrimination under the Americans with Disabilities Act and the Rehabilitation Act, among other claims. The case was removed to the United States District Court for the Middle District of Georgia. The district court dismissed the breach of contract claim on the basis of state sovereign immunity, finding no enforceable written contract that would waive immunity. The court also dismissed the disability discrimination claims for failure to state a claim, holding that the complaint did not plausibly allege adverse action taken because of the student’s disability.The United States Court of Appeals for the Eleventh Circuit reviewed the case. It held that neither the admission letter nor the student handbook, alone or together, constituted a written contract sufficient to waive Georgia’s sovereign immunity, as neither document set forth all essential terms, especially as to consideration. The court further held that the student’s complaint failed to plausibly allege that the university’s actions were taken because of his disabilities. Accordingly, the Eleventh Circuit affirmed the district court’s dismissal of the student’s breach of contract and disability discrimination claims. View "Waller v. Board of Regents of the University System of Georgia" on Justia Law