Justia Contracts Opinion Summaries

Loews Corporation created a publicly traded master limited partnership, Boardwalk Pipeline Partners, LP, to operate natural gas pipelines. The partnership agreement included a call-right provision allowing the general partner, controlled by Loews, to acquire all public limited partnership units if certain conditions were met. In 2018, following proposed policy changes by the Federal Energy Regulatory Commission (FERC) that could affect pipeline profitability, Loews sought legal opinions to justify exercising the call right. Although Boardwalk's internal analysis suggested minimal impact from the FERC changes, Loews’ outside counsel issued an opinion that the policy shift was reasonably likely to have a material adverse effect on Boardwalk’s rates, satisfying a key condition for the call right. After obtaining a second law firm’s endorsement of the opinion’s acceptability, Loews exercised the call right, acquiring public units at a price that unitholders alleged was artificially depressed.The Court of Chancery initially found that the legal opinion used to trigger the call right was not rendered in good faith, meaning a contractual condition for exercising the call right had not been fulfilled. As a result, the court held that Boardwalk’s general partner breached the partnership agreement and awarded damages to the unitholders. The court stayed the remaining claims, which included breach of the implied covenant of good faith and fair dealing, tortious interference, and unjust enrichment.On appeal, the Supreme Court of the State of Delaware first held that the general partner was exculpated from monetary liability for breach of contract under the partnership agreement, reversing the damages judgment and remanding for consideration of the non-exculpated claims. Upon remand, the Court of Chancery dismissed those remaining claims, concluding that the Supreme Court’s prior decision foreclosed them. On further appeal, the Supreme Court of Delaware held that the lower court misunderstood the scope of its prior ruling; it affirmed dismissal of most claims but reversed as to tortious interference, remanding that claim for further proceedings. View "Bandera Master Fund LP v. Boardwalk Pipeline Partners, LP" on Justia Law

This case concerns a contractual dispute between two companies engaged in the purchase and sale of natural gas. In 2010, the parties entered into a base contract using a standard industry form that governed their future transactions, with specific delivery obligations detailed in transaction confirmations executed in October 2020. Under these confirmations, one party was required to deliver fixed and variable amounts of gas to the other at agreed prices. During Winter Storm Uri in February 2021, significant disruptions in natural gas supply occurred, and the seller delivered far less gas than contracted over a six-day period. The seller invoked the contract’s force majeure provision, citing weather-related supply loss and declarations by its affiliates. The buyer, however, disputed the sufficiency and applicability of this claim, asserting the seller could have obtained gas from other sources.After the seller initiated a declaratory judgment action in Texas state court, the case was removed to the United States District Court for the Southern District of Texas. The district court granted partial summary judgment to the seller, holding that force majeure excused its nonperformance, and found the contract did not require the purchase of replacement gas. The question of how to allocate delivered gas between the two contracts (with differing prices) went to a jury, which found for the buyer, concluding that available gas should be allocated first to the fixed-price contract.Upon appeal, the United States Court of Appeals for the Fifth Circuit reviewed the case. The court reversed the district court’s summary judgment on force majeure, finding factual disputes about the seller’s gas supply and its reasonable efforts to avoid nonperformance. The court affirmed the jury’s verdict regarding allocation, holding that trade usage could supplement the contract and sufficient evidence supported the jury’s finding. The case was remanded for further proceedings on force majeure. View "MIECO v. Targa Gas Marketing" on Justia Law

The case centers on a bakery and deli operator, Bagelmania Holdings, LLC, which leased property from Somerset Property, LLC. Together, they renovated the building for Bagelmania’s restaurant, hiring RDH Interests, Inc. as architect, JEM Associates West, Inc. as contractor, and Turpin & Rattan Engineering, Inc. for HVAC mechanical engineering. Following the renovation, Bagelmania and Somerset alleged construction defects and sued these entities for breach of contract, breach of the implied covenant of good faith and fair dealing, and negligence, with both plaintiffs represented by the same attorney.Prior attempts to initiate litigation were dismissed for failing to comply with Nevada’s NRS 11.258 requirements, which mandate an attorney affidavit of merit and supporting expert reports in nonresidential construction defect cases. The plaintiffs then filed a joint complaint supported by one affidavit and a set of expert reports. The defendants argued that each plaintiff was required to file separate affidavits and expert reports, and the Eighth Judicial District Court, Clark County, agreed, dismissing the case with prejudice for failure to comply with NRS 11.258, also awarding attorney fees, costs, and interest to the defendants.On appeal, the Supreme Court of the State of Nevada considered whether a single affidavit and set of expert reports sufficed under NRS 11.258 when coplaintiffs, represented by the same attorney, jointly brought identical claims arising from the same alleged defects. The Supreme Court held that, under such circumstances, separate affidavits and expert reports are not required. The Court found that the plaintiffs complied with the statute’s plain language and purpose and that the affidavit and reports met the statutory requirements. The Supreme Court reversed the district court’s dismissal, vacated the post-judgment award of fees, costs, and interest, and remanded for further proceedings. View "Bagelmania Holdings, LLC v. RDH Interests, Inc." on Justia Law

A dispute arose from the design and installation of cabinetry in a luxury home in Charleston, South Carolina. Design Gaps, Inc., owned by David and Eva Glover, had a longstanding business relationship with Shelter, LLC, a general contractor operated by Ryan and Jenny Butler. After being dissatisfied with Design Gaps’ performance, the homeowners, Dr. Jason and Kacie Highsmith, and Shelter terminated their contract with Design Gaps and hired Distinctive Design & Construction LLC, owned by Bryan and Wendy Reiss, to complete the work. The Highsmiths and Shelter initiated arbitration against Design Gaps, which led to the arbitrator ruling in favor of the homeowners and Shelter on their claims, and against Design Gaps on its counterclaims, including those for copyright infringement, tortious interference, and unfair trade practices.After the arbitration, Design Gaps sought to vacate the arbitration award in the United States District Court for the District of South Carolina, but the court instead confirmed the award. Concurrently, Design Gaps filed a separate federal lawsuit against several parties, including some who were not part of the arbitration. The defendants moved to dismiss, arguing that res judicata and collateral estoppel barred the new claims, or alternatively, that the claims failed on other grounds such as the statute of limitations and laches. The district court agreed, dismissing most claims based on preclusion or other legal bars, and granted summary judgment on the remaining claims.The United States Court of Appeals for the Fourth Circuit reviewed the district court’s decisions. The court held that res judicata and collateral estoppel applied to bar most of Design Gaps’ claims, even against parties not directly involved in the arbitration but in privity with those who were. For the remaining claims, the court found they were properly dismissed on grounds such as the statute of limitations, waiver, or laches. The Fourth Circuit affirmed the district court’s judgment in full. View "Design Gaps, Inc. v. Distinctive Design & Construction LLC" on Justia Law

A manufacturer of aircraft engines contracted with both the federal government and commercial clients. The contracts at issue were cost-plus agreements, requiring the government to reimburse the manufacturer for a share of overhead costs, calculated under federal Cost Accounting Standards (CAS), specifically CAS 418. The manufacturer used unique “collaboration agreements” with suppliers, involving payments tied to program revenues rather than direct part costs. A central dispute arose over whether certain costs, known as “Drag”—representing amounts paid by collaborators to compensate the manufacturer for shared expenses—should be included in the pool of overhead costs to be allocated, and over how to measure the material costs of parts for allocation purposes.After protracted disagreements and administrative decisions dating back to the 1990s, a contracting officer in 2013 determined that the manufacturer’s accounting violated CAS 418 and that Drag amounts should be excluded from the overhead pool. The manufacturer appealed to the Armed Services Board of Contract Appeals. The Board held in part for each side: it found the Drag agreement between the parties valid, so Drag need not be excluded, but rejected the manufacturer’s method for calculating material costs, settling on a “net revenue share” approach. The Board remanded to the parties to negotiate quantum (the amount owed), retaining jurisdiction if they failed to agree.The United States Court of Appeals for the Federal Circuit reviewed the case. It held that it lacked jurisdiction to review the Board’s decision on the material cost allocation base (CAS 418 Claim) because no final determination of quantum had been made. However, the court found the Board’s decision on the Drag Claim was final and reviewable. The Federal Circuit held that the Drag agreement was unenforceable against the government because it did not comply with required federal regulations for advance agreements, and therefore reversed the Board’s ruling on that point. The case was remanded for further proceedings. View "SECRETARY OF DEFENSE v. PRATT & WHITNEY" on Justia Law

A Texas truck driver was injured while making roadside repairs in Iowa when his parked semi was struck by another vehicle. After the accident, the driver retained a Texas attorney to pursue his personal injury claim. That attorney negotiated with the insurer for the other driver, ultimately agreeing to a settlement of $125,000 and requesting a release. However, the client did not sign the release and later replaced his attorney, claiming he had not authorized the settlement. The client then filed a lawsuit in Iowa, seeking additional compensation and naming the driver, the driver’s employer, and others as defendants.The defendants responded by moving to enforce the settlement agreement in the Iowa District Court for Warren County. The district court, acting as factfinder with no objection from either party, held a hearing, accepted evidence, and considered the client’s affidavit. The court found that the attorney was presumed to have settlement authority and that the client had not rebutted this presumption with clear and convincing evidence. The court enforced the settlement and dismissed the case upon payment of the agreed sum. The client’s motion to reconsider was denied, and he appealed.The Iowa Court of Appeals affirmed, finding the district court’s factual findings were supported by substantial evidence. The Iowa Supreme Court granted further review. The Supreme Court held that, because the client did not object to the district court’s procedure, the court properly acted as factfinder. The Supreme Court further held that the district court’s finding—that the attorney had authority to settle—was supported by substantial evidence, and thus the settlement agreement was enforceable. The court affirmed the decisions of the lower courts. View "Recio v. Fridley" on Justia Law

Two brothers operated a farming and cattle partnership, with one managing the finances and records and the other handling outside operations. The financial brother, assisted by his daughter, maintained control over the partnership’s handwritten ledgers and inventory records, while the other brother relied on the information provided. Over several years, the managing brother made false entries in the ledgers, diverted partnership income into personal accounts, and concealed certain ownership interests in partnership assets from his brother. Suspicious discrepancies surfaced when the outside-operating brother noticed substantial errors affecting his reported net worth, prompting him to seek dissolution of the partnership and to sue for damages.The District Court for Thurston County conducted a bench trial, hearing evidence from the parties and expert witnesses. It found that the managing brother and his daughter had exclusive control over the partnership’s finances and intentionally concealed information. The court concluded that the outside-operating brother could not reasonably have discovered the wrongdoing earlier, given his lack of access to original records and his trust in the managing brother. The court awarded damages to the plaintiff under several theories, including breach of fiduciary duty, fraudulent concealment, fraudulent and negligent misrepresentation, conversion, unjust enrichment, and breach of contract, and imposed joint and several liability on both defendants.Upon appeal, the Nebraska Supreme Court reviewed the district court’s factual findings for clear error and legal questions de novo. It held that the claims for fraudulent misrepresentation and concealment were not barred by the statute of limitations, as discovery of the fraud occurred within the allowed period. The Supreme Court affirmed the lower court’s determinations regarding liability, damages, and the denial of post-trial motions, upholding the judgment in favor of the plaintiff. The court specifically affirmed the joint and several liability for both defendants and the calculation of damages, rejecting the appellants’ arguments regarding settlements, contract defenses, and the statute of limitations. View "Sebade v. Sebade" on Justia Law

A municipal water and gas board entered into four contracts with a contractor to replace and expand gas lines in and around a city. The total project cost exceeded $4 million, and the contractor began work after being the sole bidder for each project phase. After paying the contractor over $2.8 million, the board ceased payments, leaving over $800,000 due for completed work. The board asserted it could not continue payments because the advertisement for sealed bids had not strictly complied with the version of the applicable Alabama statute in effect at the time the bids were solicited. The contractor then sued the board for breach of contract and other claims.The Franklin Circuit Court granted summary judgment for the board, finding, in effect, that strict compliance with the statutory advertising requirements was necessary and that the contracts were void due to noncompliance. The trial court denied the contractor’s postjudgment motion, and the contractor appealed.The Supreme Court of Alabama reviewed the case de novo. It held that substantial compliance, rather than strict compliance, with the advertising requirements for public works contracts under the relevant statute can satisfy the law’s objectives. The court distinguished this situation from prior precedent where there was a complete absence of competitive bidding and evidence of favoritism or corruption. Here, there was no such evidence, and the board had taken affirmative steps to advertise, including publication and online postings. The court concluded that the contractor presented substantial evidence of substantial compliance, creating a genuine issue of material fact. The Supreme Court of Alabama reversed the summary judgment and remanded the case for further proceedings. View "Pinpoint Locating, Inc. v. The Water Works and Gas Board of the City of Red Bay" on Justia Law

Two financial advisors entered into two agreements as part of a business transaction: an operating agreement establishing them as members of a wealth management firm and a purchase-and-sale contract under which one advisor would gradually buy out the other's ownership interest. The operating agreement contained a noncompete clause and provisions for mediation and arbitration. After the buyout concluded, the selling advisor remained employed with the company and could only be terminated for cause. In January 2024, he was terminated for cause and immediately began working at a competing firm within the restricted radius specified in the noncompete provision.Following his termination, the company and the buying advisor filed suit in the Circuit Court of Forrest County, alleging breach of contract and seeking, among other relief, a temporary restraining order and preliminary injunction to enforce the noncompete clause. The trial court granted the injunction and denied the selling advisor’s motions to dissolve the restraining order, to deny the injunction, and to compel mediation and/or arbitration. The trial court found that the noncompete clause remained binding and that the parties had not shown a clear intent to compel mediation or arbitration for this dispute, given specific contractual language.On appeal, the Supreme Court of Mississippi reviewed whether the noncompete provision was enforceable, whether the trial court erred in issuing the preliminary injunction, and whether the denial of the motion to compel mediation/arbitration was proper. The Court held that the noncompete provision was binding based on the evidence at the preliminary injunction stage, that the trial court did not err in granting the preliminary injunction, and that the mediation/arbitration provisions were not clearly applicable to this dispute. The Supreme Court of Mississippi affirmed the trial court’s order in all respects. View "Wiggins v. Southern Securities Group, LLC" on Justia Law

Jet Oilfield Services was formed in 2018 by three individuals, with Brian Owen later acquiring a substantial membership interest. Jet’s governing agreement required Owen to obtain consent from at least one other member before entering transactions on Jet’s behalf. In 2022, Owen signed an agreement with Spin Capital, L.L.C., under which Jet would sell $4,500,000 of future receivables for $3,000,000. Spin attempted to confirm Owen’s authority by reviewing Jet’s bank statements and tax returns, noting Owen’s access to the company’s accounts and his designation as “Partnership Representative” and “General Partner or LLC member-manager,” though the tax return was unsigned by a member-manager. Jet subsequently filed for bankruptcy, and Spin filed a proof of claim based on this agreement and pursued related litigation.The United States Bankruptcy Court for the Western District of Texas held a trial on Jet’s counterclaims against Spin. The court found that Owen lacked both actual and apparent authority to bind Jet in the Spin Agreement and that Jet received no consideration for the contract. As a result, the bankruptcy court determined Spin’s claim was unenforceable. Spin appealed to the United States District Court for the Western District of Texas. Initially, the district court dismissed the appeal for an insufficient record but later reinstated it, allowing supplemental briefing. When Spin declined to submit further briefing, the district court dismissed the appeal with prejudice.On review, the United States Court of Appeals for the Fifth Circuit applied clear error review to the bankruptcy court’s factual findings and de novo review to its legal conclusions. The Fifth Circuit held that Owen did not have apparent authority to bind Jet, as Jet’s member-managers did not hold him out as an agent, and Spin’s reliance on Owen’s asserted authority was unreasonable. The court thus affirmed the judgment, holding that Spin’s claim against Jet was unenforceable. View "Spin Capital v. Jet Oilfield" on Justia Law