Justia Contracts Opinion Summaries

A law firm, represented by its own attorney, sued a former client to recover unpaid fees for legal services rendered during divorce and restraining order proceedings. A jury found in favor of the law firm, awarding it over $21,000. After prevailing, the firm sought to recover additional attorney fees under a provision in its retainer agreement that specifically stated the firm could collect such fees—even if it represented itself—without limitation by California Civil Code section 1717 or the California Supreme Court’s decision in Trope v. Katz.Following the jury verdict, the Superior Court of Los Angeles County denied the law firm's motion for attorney fees. The court found that the retainer provision attempting to waive the limitations set by Trope v. Katz and section 1717 was contrary to public policy, oppressive, and unenforceable. The law firm appealed this denial, arguing that the express waiver in its agreement should entitle it to collect attorney fees even as a self-represented attorney.The California Court of Appeal, Second Appellate District, Division Five, reviewed the case. The appellate court conducted a de novo review, focusing on whether the retainer agreement’s waiver provision could circumvent the statutory and public policy restrictions established by Trope v. Katz and Civil Code section 1717. The court held that parties cannot contract around section 1717’s requirement that attorney fees be “incurred,” nor override public policy by allowing self-represented attorneys to recover such fees. The court further ruled that section 1021 did not provide a separate basis for recovery in this context. Accordingly, the Court of Appeal affirmed the lower court’s order denying the law firm's motion for attorney fees. View "The Law Firm of Fox & Fox v. Arteaga" on Justia Law

A commercial landlord leased a property to an individual, Sina, who stopped paying rent soon after the lease began, causing significant unpaid rent and property damage. The landlord regained possession of the property and found it had been gutted. The landlord sued Sina for breach of contract and prevailed at trial, but the initial judgment was reversed on appeal due to a change in parol evidence law. On retrial before a referee, the landlord again prevailed, with the referee finding substantial damages and the trial court adopting the referee’s decision, entering judgment for the landlord. This judgment was affirmed on appeal.After the second judgment, Sina and his wife filed for bankruptcy. During related bankruptcy proceedings, the landlord discovered new evidence revealing that Sina, his brothers, their wives, and a family-owned corporation, Amey, were all part of a longstanding “one-for-all” family partnership. The landlord moved in the Superior Court of Los Angeles County to amend the judgment to add these family members and Amey as judgment debtors, arguing that they were the true parties in interest and had been virtually represented in the litigation by Sina.The California Court of Appeal, Second Appellate District, Division Eight, reviewed the trial court's decision to amend the judgment. The appellate court affirmed the trial court’s order, holding that substantial evidence supported the findings that the family members and Amey were part of a partnership that controlled the litigation and benefited from it. The court held that under Code of Civil Procedure section 187, a court may amend a judgment to add parties who had sufficient control of the litigation and unity of interest with the original judgment debtor, even if traditional alter ego requirements are not strictly met. The court found no abuse of discretion and affirmed the addition of the individual partners and Amey as judgment debtors. View "8451 Melrose Property, LLC v. Akhtarzad" on Justia Law

In the aftermath of the 2008 housing crisis, Congress created the Federal Housing Finance Agency (FHFA) and authorized it to place Fannie Mae and Freddie Mac into conservatorship. The FHFA and the U.S. Treasury entered into agreements whereby the Treasury would provide capital to these companies, initially in exchange for fixed-rate dividends. In 2012, these agreements were amended so that Fannie and Freddie were required to pay the Treasury dividends equal to their net worth above a specified reserve, a change known as the “Net Worth Sweep.” The announcement of this amendment caused the value of Fannie and Freddie shares to drop significantly, and shareholders, including those holding both common and junior preferred shares, filed suit alleging various statutory and contract violations.The United States District Court for the District of Columbia initially dismissed most claims, but after appellate review and remand, permitted the shareholders’ implied covenant of good faith and fair dealing claim to proceed to trial. The jury found the FHFA had violated this implied covenant by adopting the Net Worth Sweep, awarding over $612 million in damages, which the district court increased to $812 million with prejudgment interest. The district court denied the FHFA’s post-trial motions and rejected shareholders’ attempts to seek restitution or reliance damages beyond expectation damages.The United States Court of Appeals for the District of Columbia Circuit affirmed the district court’s judgment. The Court of Appeals held that the implied covenant claim was not foreclosed by Supreme Court precedent or by the Housing and Economic Recovery Act, that the claim was available against the FHFA as conservator, and that the Net Worth Sweep violated the reasonable expectations of shareholders. The court also determined that post-Net Worth Sweep purchasers of shares could pursue the claim, and that the denial of restitution and reliance damages was proper. Accordingly, the award of expectation damages was affirmed. View "Fairholme Funds, Inc v. FHFA" on Justia Law

The plaintiff participated in a clinical trial for an experimental COVID-19 vaccine manufactured by AstraZeneca in November 2020. Before receiving the vaccine, she signed an informed-consent form stating that AstraZeneca would compensate her for injuries caused by the vaccine, including providing medical care and reimbursement, and that the company had an insurance policy to cover such costs. The form also disclosed that federal law may limit her right to sue for vaccine-related injuries, referencing the Public Readiness and Emergency Preparedness Act (PREP Act), which provides broad immunity to vaccine manufacturers during a public health emergency.After suffering debilitating medical injuries from the vaccine, the plaintiff requested compensation and care from AstraZeneca, which was denied. She then filed suit in the United States District Court for the District of Utah, alleging breach of contract and breach of the contractual duty of good faith and fair dealing. AstraZeneca moved to dismiss the complaint, arguing that the PREP Act immunized it from liability. The district court denied the motion, holding that the PREP Act’s immunity provision applies only to tort claims, not to contract-based claims. The court further reserved judgment on whether AstraZeneca had waived its statutory immunity in the informed-consent form.The United States Court of Appeals for the Tenth Circuit reviewed the case and reversed the district court’s ruling. The appellate court held that the PREP Act’s immunity provision applies to “all claims for loss,” including those arising from breach of contract, provided they bear a causal relationship to the administration or use of a covered countermeasure like a vaccine. The court remanded the case for the district court to consider whether AstraZeneca waived immunity in the informed-consent form. View "Dressen v. AstraZeneca AB" on Justia Law

A technology company developed a healthcare revenue management software platform and, in 2014, licensed a white-labeled version to a bank. The bank branded this software as its own and used it to provide services to its customers. The licensing agreement gave the bank access to confidential software and data, while prohibiting reverse engineering, copying, or creating derivative works. In 2018, the bank began developing its own software that performed similar functions. The technology company later noticed a decline in users of its platform and suspected the bank had breached the contract by reverse engineering and copying its software. The company then sought a preliminary injunction to stop the bank from using its new platform and from misusing the information gained through the contract.The United States District Court for the Western District of Missouri reviewed the request for a preliminary injunction. The district court found that the technology company failed to show that it would suffer irreparable harm absent injunctive relief, ruling that any potential financial losses could be compensated with money damages and that claims of reputational harm were too speculative. The court also determined that the contract’s clause permitting injunctive relief was not, by itself, sufficient to require an injunction.On appeal, the United States Court of Appeals for the Eighth Circuit affirmed the district court’s decision. The appellate court held that the district court did not clearly err in finding the alleged harms compensable with money damages or too speculative, nor did it abuse its discretion by giving limited weight to the contract’s injunctive relief provision. The court emphasized that failure to demonstrate likely irreparable harm is, by itself, a sufficient ground to deny a preliminary injunction. Accordingly, the denial of the preliminary injunction was affirmed. View "RMS v. Commerce Bank" on Justia Law

A dairy operator in Northeast Missouri leased thousands of acres of adjacent forage land from a landowner to grow feed for its cattle and manage waste under regulatory requirements. The lease included provisions for renewal at a market rental rate and an agreement for the eventual sale of the leased and surrounding acreage to the dairy, with fair market value to be established by appraisal if necessary. The dairy alleged that the landowner breached the lease by unilaterally raising rent, demanding an unfavorable addendum, and refusing to complete the agreed land sales, while the landowner asserted that the dairy breached by not signing the addendum and threatened eviction.The United States District Court for the Eastern District of Missouri granted the dairy’s request for injunctive relief, enjoining the landowner from evicting or otherwise interfering with the dairy’s possession of the leased land. The landowner appealed, arguing lack of adequate notice and opportunity to be heard, as well as contesting the enforceability of the lease and the propriety of the injunction.The United States Court of Appeals for the Eighth Circuit first determined it had jurisdiction, treating the lower court order as a preliminary injunction rather than a temporary restraining order, based on its duration and effect. The appellate court held that the landowner waived or forfeited its due process objections by not raising them below. On the merits, the court found the dairy had a fair chance of prevailing on its contract claims, including the enforceability of the land-sale provision and compliance with notice requirements. The court further concluded that the dairy faced irreparable harm due to threatened loss of unique land, that the balance of harms favored the dairy, and that the public interest did not weigh against the injunction. The Eighth Circuit affirmed the district court’s issuance of the preliminary injunction. View "La Belle Dairy, LLC v. Sharpe Holdings, Inc." on Justia Law

The Maine Human Rights Commission filed a lawsuit in the Superior Court alleging that a landlord discriminated against his tenant based on sex, asserting claims under both the Maine Human Rights Act and the Fair Housing Act. After litigation began, the tenant requested a judicial settlement conference. The landlord did not attend the conference, but his attorney and daughter attended, allegedly with his authority to settle. After the conference, a record form stated that the parties had agreed to a full and final settlement, but disagreements arose during subsequent exchanges of draft settlement agreements, particularly over provisions related to an acknowledgment of antidiscrimination laws and certain “public-relief terms” such as fair-housing training and property management oversight.The Kennebec County Superior Court reviewed a motion to enforce the settlement agreement. Without holding an evidentiary hearing, the court found that the parties intended to be bound by an agreement reached at the settlement conference, as reflected in the settlement conference record form. The court identified five basic terms as the substance of the agreement, including a payment to the tenant and specific non-monetary provisions. The court ordered the parties to execute an agreement consistent with these terms, except for the acknowledgment provision, which it found was not part of the agreement.On appeal, the Maine Supreme Judicial Court found that the record was insufficient to support the Superior Court’s finding that the parties mutually assented to all material terms of a binding settlement agreement. The Supreme Judicial Court held that, in the absence of an evidentiary hearing or a sufficiently detailed record, the lower court erred in enforcing the settlement. The Supreme Judicial Court vacated the judgment and remanded the case to the Superior Court for an evidentiary hearing to determine whether the parties actually reached a binding agreement and, if so, its precise terms. View "Maine Human Rights Commission v. Larkin" on Justia Law

A homeowner hired a general contractor to perform a remodeling project, which included electrical work provided by a subcontractor. During construction, a fire occurred at the home, allegedly due to improper electrical work by both the general contractor and the subcontractor. The homeowner’s insurer paid for the fire damage and, acting as subrogee, brought a negligence and breach of contract action against both contractors. After the fire, the homeowner discontinued the services of both contractors and later hired a new general contractor to complete the project.The Minnesota District Court granted summary judgment in favor of the contractors, dismissing the insurer’s claims as time-barred under the two-year statute of limitations for defective construction claims involving improvements to real property, as set out in Minn. Stat. § 541.051, subd. 1. The district court found that the statute of limitations began to run when the homeowner terminated the contract with the original general contractor, concluding that the action was not timely filed.On appeal, the Minnesota Court of Appeals reversed the district court's decision. The appellate court interpreted the statute to mean that the statute of limitations does not begin until the entire construction project is terminated, substantially completed, or abandoned, not merely upon termination of the contract with the general contractor.The Supreme Court of Minnesota reviewed the case to resolve the statutory interpretation issue. The court held that, for purposes of the statute of limitations under Minn. Stat. § 541.051, subd. 1, the termination of the contract with the general contractor constitutes “termination … of the construction or the improvement to real property.” As a result, the Supreme Court reversed the Court of Appeals and reinstated the district court’s dismissal of the insurer’s claims as time-barred. View "American Family Insurance Company vs. NB Electric, Inc." on Justia Law

A church with property insurance sustained windstorm damage and submitted a claim to its insurer. When the parties could not agree on the amount of loss, the church invoked the insurance policy’s binding appraisal process. Each party selected an appraiser, and the appraisers agreed on an award, which the insurer paid and the church accepted. Afterward, the church alleged it discovered additional, previously hidden damages, and the insurer refused to pay more than the appraisal award. The church then sued, claiming breach of contract and seeking to set aside the binding appraisal based on the later-discovered damage.The Franklin County Court of Common Pleas granted judgment on the pleadings to the insurer, finding that the appraisal award was binding and there was no evidence of fraud, misfeasance, or mistake to justify reopening the award. The Tenth District Court of Appeals reversed, holding that the church’s complaint pleaded mistake with sufficient particularity to satisfy Ohio’s Civil Rule 9(B), which requires that mistake be pled with particularity.The Supreme Court of Ohio reviewed the case and held that a binding appraisal award may only be set aside for fraud or manifest mistake, defined as an egregious error undermining the intent of the agreement, not a mere error in judgment. The court further concluded that, to plead mistake with particularity under Civil Rule 9(B), the facts alleged must satisfy the elements of mistake. Since the church only alleged that additional, hidden damages were discovered after the appraisal, and did not plead facts constituting a manifest mistake by the appraisers, the complaint did not state a claim for mistake. The Supreme Court of Ohio reversed the Tenth District’s judgment and reinstated the trial court’s dismissal of the complaint. View "One Church v. Bhd. Mut. Ins. Co." on Justia Law

A male sophomore at a private university was accused by two female students of physically assaulting them in separate incidents involving alleged choking. Both incidents occurred during the 2023 academic year and involved evolving accounts from the complainants, contradictory witness testimony, and a lack of immediate reporting. The accused, John, denied the accusations and provided evidence and witnesses in his defense, including text messages and accounts from a sole eyewitness supporting his version of events. Despite this, the university’s internal investigation and disciplinary hearing were alleged to have been conducted in an imbalanced way, favoring the complainants, limiting the accused’s ability to present witnesses, and subjecting him and his witness to more rigorous questioning. The hearing concluded with John being found responsible and suspended for two years, which he appealed internally without success.The United States District Court for the District of New Jersey reviewed John’s subsequent lawsuit against the university, which asserted claims under Title IX for sex discrimination as well as state law claims for breach of contract and breach of the implied covenant of good faith and fair dealing. The District Court dismissed the complaint, holding that John’s allegations were insufficient to plausibly state a claim under federal or state law.On appeal, the United States Court of Appeals for the Third Circuit reversed the District Court’s dismissal. The Third Circuit held that, taking the allegations as true, John had plausibly alleged that the university’s disciplinary process was influenced by both external and internal pressure to favor female complainants over male respondents, and that procedural irregularities and evidence of biased treatment supported an inference of sex discrimination under Title IX. The court also found that John plausibly alleged breaches of contract and the implied covenant of good faith and fair dealing based on the university’s failure to follow its own procedures and to provide a fundamentally fair process. The case was remanded for further proceedings. View "Doe v. Princeton University Trustees" on Justia Law