Justia Contracts Opinion Summaries

Benchmark Investments, LLC, an ETF sponsor, entered into an agreement with Pacer Advisors, Inc. for investment advisory and related services under a “white label” structure. The contract allowed Benchmark to terminate the agreement without cause at the end of the contract term upon written notice, and also provided a mechanism for Benchmark to give notice of its intent to terminate and simultaneously propose a reorganization of the funds, subject to approval by a third-party trust board. Benchmark sent emails to Pacer indicating its intent to terminate after the contract term and stated its intention to propose a reorganization. The reorganization proposal was ultimately not approved by the trust board, and Pacer then told Benchmark it “accepted” the termination, treating Benchmark’s notice of intent as an actual termination, which Benchmark disputed.The Superior Court of the State of Delaware concluded that Benchmark’s emails effectively constituted actual termination of the agreement. The court reasoned that the distinction between a notice of intent to terminate and a written notice of termination was not meaningful under the contract, and that the process for proposing a reorganization required a prior or simultaneous actual termination notice.On appeal, the Supreme Court of the State of Delaware found the contract unambiguously allowed Benchmark to provide a notice of intent to terminate and propose a reorganization without causing a present termination of the agreement. The Supreme Court explained that only a formal written notice under the relevant contract section could effectuate termination, and that Benchmark’s actions did not amount to such notice. The Supreme Court reversed the Superior Court’s judgment and remanded with instructions to grant summary judgment in favor of Benchmark. View "Benchmark Investments LLC v. Pacer Advisors, Inc." on Justia Law

A homeowner obtained a home equity line of credit (HELOC) secured by a deed of trust, subsequently defaulted, and faced nonjudicial foreclosure initiated by a party claiming to be the beneficiary. The loan servicer, acting on behalf of the claimed beneficiary, executed a declaration asserting that the beneficiary was the “holder” of the HELOC agreement, as required by Washington’s Deed of Trust Act (DTA) for nonjudicial foreclosure. The homeowner challenged the foreclosure in federal court, arguing that a HELOC is not a negotiable instrument and, therefore, the entity seeking foreclosure could not be its “holder” as contemplated by the DTA.In the United States District Court for the Western District of Washington, the homeowner’s quiet title and some statutory claims were dismissed, but other claims were allowed to proceed. Recognizing that state law questions were central and unresolved, the district court certified two questions to the Supreme Court of the State of Washington: (1) whether a typical HELOC is a negotiable instrument under Article 3 of the Uniform Commercial Code, and (2) whether a party claiming to be a beneficiary can satisfy the DTA’s “holder” requirement by declaring it holds a HELOC agreement.The Supreme Court of the State of Washington held that a HELOC agreement, as described, is not a negotiable instrument because it does not contain an unconditional promise to pay a fixed amount of money. The court further held that under the DTA, “holder” means the holder of a negotiable instrument as defined by Article 3 of the UCC. Therefore, a party cannot fulfill the DTA’s proof-of-beneficiary requirement for nonjudicial foreclosure simply by declaring it is the holder of a nonnegotiable HELOC agreement. This does not preclude judicial remedies, but nonjudicial foreclosure is unavailable in such circumstances. View "Vargas v. RRA CP Opportunity Tr. 1" on Justia Law

A county entered into a contract in the late 1970s with various firms for the construction of a new jail, which was completed in 1981. Decades later, during a renovation in 2021, a construction defect was discovered: the original roof was not properly attached to the masonry walls. The county paid for repairs and, in 2023, sued the original architect, the general contractor, and the masonry subcontractor for negligence, fraudulent misrepresentation or nondisclosure, and breach of contract. Each defendant raised the statute of repose in 42 Pa.C.S. § 5536 as a defense, arguing the claims were filed more than 12 years after completion of the jail.The Court of Common Pleas of Clearfield County sustained the defendants’ preliminary objections, finding the statute of repose applied because the jail was completed in 1981, and the defendants had performed the qualifying construction services. The court further held that the doctrine of nullum tempus occurrit regi, which sometimes allows government entities to avoid statutes of limitations, did not apply to the statute of repose. The county appealed.The Commonwealth Court affirmed, assuming for argument's sake that nullum tempus could apply to statutes of repose, but concluding the county failed to meet the requirements for invoking the doctrine because constructing the jail was not enforcing an obligation imposed by law.Upon further appeal, the Supreme Court of Pennsylvania held that nullum tempus cannot preclude the application of the Section 5536 statute of repose. The court concluded the statute of repose is a legislative judgment eliminating liability for construction professionals after 12 years, and its purpose cannot be undermined by the common law doctrine of nullum tempus. The Supreme Court affirmed the Commonwealth Court’s order upholding dismissal of the complaint. View "Clearfield County v. Transystems Corp." on Justia Law

The dispute arose from a contract in which a company specializing in vehicle emissions testing equipment agreed to supply and install its products in a facility being constructed by a general contractor for a state agency. After receiving substantial payments, the equipment supplier sought additional compensation through arbitration. The general contractor defended by arguing that the supplier was not properly licensed as required by California’s Contractors State Licensing Law (CSLL), and thus could not recover payment. The supplier then initiated a lawsuit seeking a judicial declaration that it was exempt from the CSLL’s licensing requirements because its equipment did not become a “fixed part of the structure,” referencing an exemption in the law.The Superior Court of Riverside County reviewed cross-motions for summary judgment. The general contractor argued the exemption did not apply because the equipment became permanently affixed to the building, and the supplier had performed work before obtaining a license. The supplier contended its products were portable and not intended to be permanent fixtures, and that it acted as an equipment installer exempt under the law. The superior court granted summary judgment for the general contractor, finding that the evidence showed the equipment did become a fixed part of the structure and thus the supplier needed a contractor’s license.On appeal, the California Court of Appeal, Fourth Appellate District, Division One, found the lower court erred by deciding as a matter of law that the exemption did not apply. The appellate court held that whether the equipment became a fixed part of the structure is a factual question, not one suitable for summary judgment on the record before it. Because there was conflicting evidence—including expert declarations—on this issue, the trial court should have permitted the factual dispute to be resolved by a trier of fact. The appellate court reversed the judgment and remanded the case for further proceedings. View "AVL Test Systems v. Hensel Phelps Construction" on Justia Law

The case involves a dispute between an Arizona municipal corporation and a water conservation district, both of which are public entities. In 2002, the two parties entered into a long-term agreement for the sale and delivery of water, with specific provisions regarding termination. In 2018, the water district notified the city that it considered the agreement terminated and ceased performance, while the city maintained that the contract remained valid and that the district’s actions constituted breach and anticipatory breach. Over the subsequent years, the city repeatedly requested water delivery under the agreement, and the district consistently refused, reiterating its position that the agreement was no longer in effect. In 2022, after further unsuccessful attempts to enforce the contract, the city formally notified the district of a breach and then initiated legal action seeking specific performance and declaratory relief.The Superior Court in Maricopa County denied the district’s motion for summary judgment and granted summary judgment in favor of the city. The court found the city’s claims were subject to the one-year limitation period under A.R.S. § 12-821 but concluded the claims were timely because each refusal to deliver water constituted a new breach. The court also declared the agreement valid and enforceable. The district appealed, and the Arizona Court of Appeals reversed, holding that the statute of limitations in § 12-821 applied to the city’s claims and thus barred them.The Supreme Court of the State of Arizona reviewed the effect of § 12-821 on the common law nullum tempus doctrine, which exempts the state from statutes of limitation when acting as plaintiff. The Court held that § 12-821 does not expressly abrogate the nullum tempus doctrine for lawsuits between public entities and that the one-year limitation does not apply in such cases. Accordingly, the Court vacated the court of appeals’ opinion, reversed the superior court’s judgment as to timeliness, and remanded with instructions to grant summary judgment for the city, declaring the agreement valid and enforceable. View "CHANDLER v. ROOSEVELT" on Justia Law

A manufacturer of specialized products for road construction and a supplier had a longstanding business relationship, with the supplier relying heavily on the manufacturer’s goods for government paving projects. In 2021, the manufacturer faced supply chain disruptions and increased material costs due to the COVID-19 pandemic, leading to missed deliveries and eventually an ultimatum: the supplier must accept significant price increases on existing contracts or the business relationship would end. The supplier rejected the increases, deemed the manufacturer in breach, and procured substitute products from other vendors at prevailing market rates, which were significantly higher than the manufacturer’s proposed increased prices.The Iowa District Court for Cedar County held a bench trial, finding that contracts existed and were breached by the manufacturer when it refused to honor the original prices. The court awarded damages to both parties for breaches but offset the sums, ultimately finding the supplier’s cover purchases reasonable under the circumstances. Both parties appealed. The Iowa Court of Appeals affirmed the district court’s findings regarding contract formation, breach, and damages, including the reasonableness of the supplier’s cover purchases, but remanded for correction of prejudgment interest calculations.The Iowa Supreme Court reviewed only the question of whether the supplier’s procurement of substitute goods constituted reasonable “cover” under Iowa Code section 554.2712, given the manufacturer’s post-breach offer to fill the orders at a higher price. The court held that a buyer is not obligated to accept a breaching seller’s new terms to mitigate damages and that “cover” does not require dealing with the breaching seller. Substantial evidence supported the lower court’s finding that the supplier’s cover purchases were reasonable, even though they cost more than the manufacturer’s increased prices. The district court’s judgment was affirmed in relevant part, except regarding double prejudgment interest, which was remanded for correction. View "CMT Highway, LLC v. Logan Contractors Supply, Inc." on Justia Law

A married couple entered into a premarital agreement prior to their 2015 wedding. The agreement stated that each party’s property, including business interests owned prior to or acquired during the marriage, would remain separate and nonmarital. It also included a provision anticipating that the husband would purchase a condominium, which would become the marital home and, in the event of divorce, its value would be split equally. During the marriage, the couple resided in the condominium, but it remained owned by the husband’s mother, and the husband never purchased it. The couple separated in 2020, and the husband filed for divorce in 2021. Throughout the marriage, the husband acquired and managed various business interests, while both parties maintained separate finances.The Maine District Court in Portland held several hearings to resolve issues related to spousal support, discovery sanctions, and the interpretation and validity of the premarital agreement. The parties stipulated that the agreement was valid but disputed its scope, particularly regarding business interests and the condominium provision. The District Court found that the wife had waived any claim to the husband’s business interests and any increase in their value, and that the agreement did not require the husband to purchase the condominium. The court also determined it lacked jurisdiction to consider the wife’s breach-of-contract claim regarding the condominium and awarded her a portion of her requested attorney fees.Upon appeal, the Maine Supreme Judicial Court vacated the District Court’s judgment in part. It held that the wife had clearly waived any claim to the husband’s business interests and their increases in value. However, the Supreme Judicial Court determined that the lower court erred in concluding it lacked jurisdiction over the breach-of-contract claim concerning the condominium and in interpreting the agreement as not requiring its purchase. The case was remanded for further proceedings consistent with these holdings. View "Hutchinson v. Gomez" on Justia Law

A California company repurposed decommissioned military bunkers in South Dakota as survival shelters, offering them for sale or long-term lease. In 2020, an individual entered into a 99-year lease with the company for one of these bunkers, paying $35,000 upfront. The lease agreement incorporated a set of community rules, which the company reserved the right to modify with 30 days’ written notice. In 2021, the company amended the rules to expressly prohibit the brandishing of firearms except in designated areas. In 2023, the lessee was alleged to have brandished a firearm during an altercation, prompting the company to issue notices to vacate and, ultimately, to file a forcible entry and detainer action when the lessee secured the bunker but refused to return possession.The Circuit Court of the Seventh Judicial Circuit in Fall River County granted summary judgment in favor of the lessee. The court reasoned that the lease was illusory because the company could unilaterally modify the rules at any time, leaving the lessee with no recourse. The court concluded that this rendered the entire lease void and unenforceable, thereby preventing the company from evicting the lessee under the lease.The Supreme Court of the State of South Dakota reversed the circuit court’s summary judgment order. The Supreme Court held that the lease agreement was supported by valid consideration and was not illusory merely because the company retained the right to modify community rules, as such modifications were constrained by requirements of reasonableness and good faith. The Court ruled that the ability to modify rules, when exercised subject to notice and implied duties of good faith and fair dealing, does not make the underlying contract unenforceable. The case was remanded for further proceedings. View "Vivos Xpoint v. Sindorf" on Justia Law

A former Army specialist was seriously injured in a suicide bombing at a U.S. military base in Afghanistan. The attack was carried out by Ahmad Nayeb, a Taliban operative hired by Fluor Corporation, a military contractor, as part of a program encouraging the hiring of Afghan nationals. The Army’s investigation concluded that Fluor was primarily responsible due to negligent supervision and failure to enforce proper security procedures, including allowing Nayeb to check out tools used in the bombing and to move about the base unsupervised. The plaintiff sued Fluor in federal court in South Carolina, seeking damages under state law for negligent supervision, negligent entrustment, and negligent retention of Nayeb.The United States District Court for the District of South Carolina granted summary judgment to Fluor, holding that state-law tort claims were preempted under Fourth Circuit precedent whenever they arose out of combatant activities in a wartime setting. The United States Court of Appeals for the Fourth Circuit affirmed, adopting a broad “battlefield preemption” doctrine. It reasoned that the Federal Tort Claims Act’s (FTCA) combatant-activities exception, which preserves government immunity for claims arising out of military combatant activities, reflected an intent to bar all tort suits against contractors connected with those activities, regardless of whether the contractor followed or violated military instructions.The Supreme Court of the United States vacated the Fourth Circuit’s judgment and remanded the case. The Court held that the Fourth Circuit erred in finding the state-law tort claims preempted where the federal government neither ordered nor authorized the challenged conduct. The Supreme Court clarified that neither the Constitution, federal statutes, nor its precedents support such broad preemption. Preemption applies only if the contractor was following government directives or if there is a significant conflict between federal interests and state law, which was not the case here. View "Hencely v. Fluor Corp." on Justia Law

After being injured in a car accident while riding in a vehicle insured by Progressive, the respondent received medical treatment from several providers. The total amount billed for her treatment was $27,786.17. However, as a Medicaid recipient, her providers agreed to accept $1,323.60—paid by Medicaid—as full satisfaction for her medical expenses. The respondent demanded payment of the full $10,000 policy limit under the "Medpay" provision of her Progressive auto insurance policy, but Progressive paid only the $1,323.60 Medicaid had paid, arguing that this was the only amount the respondent actually "incurred."The Circuit Court for Chester County denied Progressive’s motion to dismiss the breach of contract claim and, after a bench trial, found for the respondent. The court determined the term "incurred" was ambiguous and should be interpreted in favor of the insured, entitling the respondent to the full amount charged for her medical care. The South Carolina Court of Appeals affirmed, holding that the full amount billed constituted expenses "incurred," even though the providers accepted less due to Medicaid.The Supreme Court of South Carolina granted certiorari and reversed. It held that the term "expenses incurred" in the policy is unambiguous and means the amount for which the insured is legally obligated to pay. The Court determined the respondent incurred only the amount Medicaid paid, as she had no obligation to pay the providers more. Accordingly, Progressive was required to pay only $1,323.60, and not the higher amounts billed or the policy limit. The Court remanded for entry of judgment in favor of Progressive. View "Jones v. Progressive Northern Insurance Company" on Justia Law