Justia Contracts Opinion Summaries

The Office of the Special Deputy Receiver (OSD), an Illinois non-profit that manages receiverships for insolvent insurance companies, purchased a Financial Institution Bond from Hartford Fire Insurance Company. The bond included coverage for computer systems fraud and for electronic mail initiated transfer fraud, subject to certain exclusions. Hackers infiltrated OSD’s Chief Financial Officer’s email account via a spear phishing attack, impersonated the CFO, and sent fraudulent instructions to other OSD employees, resulting in unauthorized wire transfers and a loss of nearly $4 million.OSD filed claims with both Hartford and another insurer. Hartford denied coverage, asserting that an exclusion in the bond applied to the loss. OSD sued both insurers in the United States District Court for the Northern District of Illinois, seeking declaratory relief and alleging breach of contract. The district court granted Hartford’s motion to dismiss under Rule 12(b)(6), finding that the policy’s exclusion for losses resulting from fraudulent instructions sent to OSD by email applied, and denied the other insurer’s motion. OSD later voluntarily dismissed its claims against the second company, and judgment was entered.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed the dismissal de novo. The court held that the exclusion in Rider 17 of the Hartford bond unambiguously barred coverage for losses resulting from fraudulent email instructions sent to OSD—even if the sender was impersonating an internal employee—because the exclusion focused on the recipient, not the sender. The court found no ambiguity or conflict between the exclusion and other coverage provisions, and concluded that OSD’s losses fell outside the scope of coverage. The Seventh Circuit affirmed the district court’s dismissal of OSD’s claims against Hartford. View "Office of the Special Deputy Receiver v Hartford Fire Insurance Company" on Justia Law

The Incorporated Village of Freeport and Freeport Plaza West, LLC entered into a contract for the purchase and development of several parcels of land. The agreement stipulated that the closing would occur within 30 days after Freeport Plaza West received all required approvals. The Village alleged that Freeport Plaza West obtained the necessary approvals but failed to close on the property within the contractual timeframe. In response, Freeport Plaza West filed a counterclaim, alleging that the Village had effectively breached the contract by forcing a premature closing and refusing to accept necessary development documentation. Importantly, Freeport Plaza West did not file a notice of claim with the Village regarding its counterclaim.After the Village brought suit for breach of contract, Freeport Plaza West answered and asserted its counterclaim. The Village, in turn, raised as a defense that Freeport Plaza West had failed to satisfy all conditions precedent, including the statutory notice of claim requirement under CPLR 9802. Nearly a year and a half into the litigation and shortly before the scheduled trial, the Village moved to dismiss the counterclaim for the lack of a timely notice of claim. Supreme Court denied the motion, applying equitable estoppel against the Village due to its litigation conduct and finding no prejudice from the absence of formal notice. The Appellate Division reversed, concluding that the Village’s actions did not amount to misleading conduct warranting equitable estoppel and dismissed the counterclaim.The New York Court of Appeals affirmed the Appellate Division’s order. The Court held that CPLR 9802’s notice of claim requirement applies strictly to contract actions against villages, including counterclaims, and that equitable estoppel against a municipality is only warranted in rare and unusual circumstances involving misconduct or misleading behavior, which were not present here. The failure to file a notice of claim barred Freeport Plaza West’s counterclaim. View "Incorporated Vil. of Freeport v Freeport Plaza W., LLC" on Justia Law

Two sisters became involved in a business dispute after one sister contributed $200,000 to the other for the purchase of four residential properties, expecting an equal share of profits from their rental or sale. The properties were titled solely in the recipient sister’s name, who later sold one and kept all proceeds. After attempts to secure her ownership interest failed, the contributing sister filed suit, asserting claims including breach of contract and unjust enrichment, seeking return of her investment and her share of profits.The Eighth Judicial District Court in Clark County initially entered a default against the defendant for failing to timely answer, but this was later set aside. As the trial approached, the defendant moved to exclude evidence of damages, arguing that the plaintiff had not provided an adequate computation of damages as required by NRCP 16.1. The court gave the plaintiff another chance to supplement her computation but she failed to comply in time. The court granted the motion to exclude all evidence of damages, then dismissed the complaint with prejudice, reasoning that without damages there was nothing left to litigate.The Supreme Court of the State of Nevada reviewed the case. The court held that the district court correctly required a computation of damages because the claims sought tangible, quantifiable losses. However, it found that by granting the motion to exclude all damages evidence—which resulted in dismissal with prejudice—the district court imposed a case-terminating sanction. Under Nevada law, before issuing such a sanction, the court must analyze the factors set out in Young v. Johnny Ribeiro Building, Inc. Because the district court failed to conduct this analysis, the Supreme Court vacated the dismissal and remanded for further proceedings consistent with the required standards. View "ZHANG VS. ZHANG" on Justia Law

A Mississippi construction company, operating under the name MCA Construction, Inc., entered into a contract with an Alabama property owner to perform site development work on a residential subdivision in Baldwin County. The contract was executed on February 11, 2021, and at that time, the company held an Alabama general contractor’s license with a “Building Construction” (BC) classification and an unlimited bid limit. Shortly before executing the contract, the city engineer raised questions regarding whether the BC classification was adequate for the planned utility work (such as water and sewer installation) and indicated that an additional “Municipal and Utility” (MU) classification might be required before such work began. MCA sought clarification from the state licensing board and subsequently obtained the MU classification in May 2021, before starting the utility work.The property owner, RAM-Robertsdale Subdivision Partners, LLC, along with related parties, later alleged that MCA had performed defective work and failed to pay subcontractors, and they brought suit in Baldwin Circuit Court. MCA filed counterclaims for breach of contract and fraud, asserting that it had not been fully paid for its work. The RAM parties moved for summary judgment, arguing that the contract was void because MCA was not properly licensed with the MU classification at the time the contract was executed.The Baldwin Circuit Court granted summary judgment for the RAM parties, holding that the contract was void because MCA was not “duly licensed” for all aspects of the work at the time of contracting. MCA appealed. The Supreme Court of Alabama reviewed the statutory and regulatory framework, noting that MCA had a valid BC license, acted in good faith, and obtained the MU classification before performing utility work. The Supreme Court of Alabama held that substantial compliance with the licensing statute was sufficient in these circumstances and that voiding the contract was not warranted. The court reversed the summary judgment and remanded for further proceedings. View "Construction Services, LLC v. RAM-Robertsdale Subdivision Partners, LLC" on Justia Law

A business operating a restaurant and bar near Memorial Stadium in Lincoln, Nebraska, leased its space from a landlord and claimed an exclusive right, under its lease, to sell alcohol in a specific outdoor area called the Common Area. Another business, which also operated a restaurant nearby, entered into agreements with the same landlord to sell alcohol from a space adjacent to the Common Area during Nebraska football home games. The new competitor sold alcohol through windows to customers standing in the Common Area, which the first business claimed violated its exclusive rights and harmed its sales.After learning of the competitor’s plans, the original bar sent a cease-and-desist letter, which was ignored. The bar then sued the competitor, alleging tortious interference with contract and with a business expectancy, seeking both damages and injunctive relief. Both sides submitted affidavits and evidence during discovery. The District Court for Lancaster County granted summary judgment in favor of the competitor, finding no evidence that the competitor’s actions went beyond valid competition or that it induced the landlord to breach the lease’s exclusivity provision. The court also struck certain portions of the plaintiff’s affidavit on evidentiary grounds.The Nebraska Supreme Court affirmed the district court’s judgment. It held that to prevail on claims for tortious interference with contract or business expectancy, a plaintiff must show intentional and unjustified interference beyond valid competition. The Court found no evidence that the competitor induced the landlord to breach the lease or engaged in improper means; mere knowledge that entering a new agreement would conflict with an existing contract was insufficient. The Court also agreed that the competitor’s conduct constituted valid competition, not actionable interference, and that any evidentiary rulings by the district court did not affect the outcome. View "Bar at the Yard v. Friends Family" on Justia Law

A small Indiana telecommunications engineering company entered into a master services agreement with a larger firm, Crown Castle, for potential construction work on cell tower sites. The agreement did not guarantee specific work or payment, and required approval of any subcontractors. Before the agreement was signed, the company began discussions with a group including the defendants about subcontracting the construction work because it lacked sufficient resources. Communications between the parties included a draft proposal but no finalized agreement. Nevertheless, work commenced, with the defendants providing crews, equipment, and funding, and the plaintiff company also supplying resources and covering expenses. Throughout the project, both parties disputed their responsibilities, and payments were made and later charged back. Eventually, the defendants contacted Crown Castle directly seeking payment, and the project ended with Crown Castle terminating its contract with the plaintiff due to poor work quality.The United States District Court for the Northern District of Indiana granted summary judgment for all defendants. The court found there was no enforceable contract, as both sides admitted no final agreement was reached and essential terms were missing. The court also rejected the plaintiff’s claims for fraudulent inducement, fraud, and negligent misrepresentation, finding no actionable reliance or advisory relationship. The claim for unjust enrichment failed because no benefit was conferred that would make retention unjust. The claim of tortious interference with business relations was dismissed because the defendants’ actions were justified by their legitimate interest in payment. The district court accordingly granted summary judgment to the insurers as well.The United States Court of Appeals for the Seventh Circuit affirmed the district court’s judgment. The appellate court held there was no enforceable contract, no actionable fraud or misrepresentation, no unjust enrichment, and no tortious interference, and upheld summary judgment for all defendants. View "Peters Broadcast Engineering, Inc. v PEM Consulting Group, LLC" on Justia Law

A developer owned all property in a residential community and petitioned a town to create a public improvement district to finance and construct infrastructure improvements, such as roads and water lines. The district’s board, composed of representatives of the developer, was authorized to levy assessments and issue bonds to fund construction. The developer and the district entered a development agreement requiring the developer to fund the improvements, and the district contracted with a construction company to perform the work. After most of the work was done, a payment dispute arose. The construction company obtained an arbitration award against the district but was not fully paid. The construction company then sued the developer and related entities for unjust enrichment, asserting that the developer received the benefit of infrastructure improvements without paying for them.The Superior Court in Maricopa County granted the developer’s motion to dismiss, concluding that, under Arizona law as interpreted in Wang Electric, Inc. v. Smoke Tree Resort, a plaintiff in an unjust enrichment claim must allege improper conduct by the property owner, and the construction company had not done so. The court also denied the construction company’s request to file an amended complaint. The Arizona Court of Appeals reversed, holding that the improper conduct requirement applied only in landlord-tenant-contractor cases, and allowed the construction company to amend its complaint.The Supreme Court of the State of Arizona reviewed the case to clarify when the improper conduct requirement applies to unjust enrichment claims. The court held that the requirement only applies when the owner is a landlord and the improvements are made at the tenant’s direction. It does not extend to situations where the owner directly arranges for improvements and pays no one for them. The court concluded that the construction company’s allegations were sufficient to state a claim for unjust enrichment against the developer. The court vacated the decision of the court of appeals, reversed the superior court’s dismissal, and remanded for further proceedings. View "MARKHAM v. CAHAVA" on Justia Law

Samantha Pinto was involved in a car accident in December 2020, after which she claimed to have suffered various physical and cognitive injuries, including a concussion and related mental health issues. At the time, she was employed by United Services Automobile Association (USAA), her insurer, and asserted a claim for uninsured motorist (UM) benefits. Pinto alleged significant lost wages and benefits following her termination from USAA, which she attributed to her accident-related health issues. She received $500,000 from the other driver’s insurer but claimed that her damages exceeded that amount, seeking additional recovery from USAA under her UM policy.After USAA denied her UM claim, valuing it at less than what she had already recovered, Pinto filed a breach of contract lawsuit against the company. During discovery in the El Paso County District Court, USAA requested Pinto’s unredacted medical records, documents relating to a subsequent 2022 accident, and required her to submit to an independent medical examination (IME). Pinto objected, arguing that under Schultz v. GEICO Casualty Co., USAA should be limited to the evidence available at the time of its coverage decision. The district court distinguished Schultz, finding the requested information relevant and discoverable for the contract claim, and ordered Pinto to comply.The Supreme Court of Colorado reviewed the district court’s order under its original jurisdiction. It held that the rule from Schultz, which limits review to evidence available when the insurer made its decision, applies only to bad faith claims, not to breach of contract claims. The court further held that the district court did not abuse its discretion in compelling production of Pinto’s medical records and insurance documents, and in ordering her to undergo an IME. The order to show cause was discharged. View "Pinto v. United Servs. Auto. Ass'n" on Justia Law

Mark and Courtney Wightman, who own a dental clinic in Louisiana, entered into an agreement with DenteMax, a preferred provider organization (PPO), allowing DenteMax to offer their services at discounted rates to its network subscribers in exchange for access to more patients. Unbeknownst to the Wightmans, DenteMax also entered into a separate agreement with Ameritas Life Insurance Corporation, which permitted Ameritas to pay DenteMax’s network providers, including the Wightmans, at the same discounted rates. The Wightmans only became aware of this arrangement when Ameritas reimbursed them at the discounted rates rather than their standard rates for services rendered to Ameritas-insured patients.The Wightmans filed suit in the United States District Court for the Eastern District of Louisiana against Ameritas and DenteMax, alleging breach of contract, violations of Louisiana’s Preferred Provider Organization Act (PPO Act), and unjust enrichment. The district court initially dismissed several claims, partly on the ground that the suit was prescribed (time-barred). On appeal, the United States Court of Appeals for the Fifth Circuit certified a question to the Louisiana Supreme Court, which held that PPO Act claims are contractual for prescriptive purposes, making the claims timely. The Fifth Circuit reversed the district court’s prior dismissal. DenteMax settled, and on remand, the district court granted summary judgment to Ameritas, concluding that dental services are not “healthcare services” under the PPO Act, and that the Wightmans had abandoned their non-PPO Act claims.On further appeal, the United States Court of Appeals for the Fifth Circuit held that dental services are “healthcare” under the PPO Act, reversing the district court’s grant of summary judgment on those claims. The court also found error in the district court’s treatment of the abandonment of non-PPO Act claims and remanded for further proceedings. The denial of leave to amend was affirmed. View "Wightman v. Ameritas Life Ins" on Justia Law

A Texas city created a local government corporation to finance public improvements in a designated district. The corporation borrowed $17.4 million from a Wisconsin bond issuer, which funded the construction of improvements, with the city agreeing to purchase those improvements over time using assessments levied within the district. The financing structure involved a promissory note and other contracts, but the corporation did not submit these documents to the Texas Attorney General for required examination and approval. After a change in city leadership and financial difficulties, the city and corporation sued the bondholder and related parties, arguing that the failure to obtain Attorney General approval rendered the transaction void and that the financing arrangement violated provisions of the Public Improvement District (PID) Act.The trial court (District Court of Williamson County) granted summary judgment for the bondholder and other defendants, holding that while submission to the Attorney General was required, failure to do so did not void the transaction. The court also determined that the PID Act had not been violated, and it rejected challenges to certain evidence and to the award of attorney’s fees. The Court of Appeals for the Third District of Texas affirmed, agreeing that the note and contracts were not void and that statutory requirements regarding bond issuance did not apply to the transaction.The Supreme Court of Texas reviewed the case and affirmed the judgment of the court of appeals. The court held that failing to submit the promissory note and supporting contracts to the Attorney General removes the statutory defense of incontestability but does not render the transaction void or unenforceable. It further held that the transaction did not violate the PID Act because the relevant restrictions applied only to bonds issued by the city or its corporation, which was not the case here. The court also found no reversible error regarding evidentiary rulings or the award of attorney’s fees. View "RIVER CREEK DEVELOPMENT CORPORATION v. PRESTON HOLLOW CAPITAL, LLC" on Justia Law