Justia Contracts Opinion Summaries

A regional airport authority undertook a project to remove a hill from land owned by a private property holder. Instead of purchasing the land outright, the parties entered into an agreement allowing the airport authority to remove the hill and, afterwards, to further lower the elevation of the property by overblasting, which would make future development easier for the owner. The airport authority completed the hill removal but failed to perform the overblasting. The landowner then sued for breach of contract, seeking damages for the incomplete work.The United States District Court for the Southern District of West Virginia found that the airport authority had breached the agreement and granted partial summary judgment to the landowner on liability. Both sides submitted expert reports concerning the cost to complete the required overblasting, ultimately agreeing that this cost was over $4 million. However, the district court held that the cost of completion was grossly disproportionate to the value of the property and applied the “gross disproportionality” rule, awarding only nominal damages because it found insufficient evidence of the property’s diminution in value. The landowner appealed, and the United States Court of Appeals for the Fourth Circuit certified to the Supreme Court of Appeals of West Virginia the question of whether, how, and by whom the gross disproportionality rule should be applied in such cases.The Supreme Court of Appeals of West Virginia held that, in breach of construction contract cases, the gross disproportionality rule may be applied to limit damages. The court clarified that gross disproportionality is calculated using the diminution in value approach, measuring the difference in value between the property as is and as it should have been if the contract had been fully performed. The court further held that the breaching party bears the burden of invoking and proving gross disproportionality. If the breaching party fails to meet this burden, the non-breaching party’s proven measure of damages applies. View "Corotoman, Inc. v. Central West Virginia Regional Airport Authority" on Justia Law

Jeffrey Olson leased a Jeep Grand Cherokee from a car dealership under a lease agreement that included an arbitration provision and a delegation clause, which assigned questions about the scope of arbitration to an arbitrator. FCA US, LLC, the manufacturer of the Jeep, was not a signatory to the lease agreement. Olson later became the named plaintiff in a federal class-action lawsuit against FCA, alleging defects in the vehicle’s headrest system. FCA, not being a party to the lease, sought to compel Olson to arbitrate the dispute based on the arbitration agreement between Olson and the dealership.The United States District Court for the Eastern District of California denied FCA’s motion to compel arbitration. The district court found that FCA, as a non-signatory to the lease agreement, could not enforce the arbitration provision or its delegation clause against Olson. The court concluded that the arbitration agreement applied only to Olson and the dealership (including its employees, agents, successors, or assigns), and FCA did not qualify under any of those categories. Additionally, the court rejected FCA’s argument that it could use equitable estoppel to compel arbitration, holding that none of Olson’s claims were sufficiently intertwined with the lease agreement to justify such an exception under California law.The United States Court of Appeals for the Ninth Circuit affirmed the district court’s decision. The Ninth Circuit held that FCA could not compel Olson to arbitrate because FCA was not a party to the arbitration agreement and no applicable exception—such as equitable estoppel—applied. The court clarified that, under both federal and California law, only parties to an arbitration agreement (or those qualifying under specific, limited exceptions) may enforce it. The court also rejected FCA’s reliance on Supreme Court precedent, finding it inapplicable to non-signatories in these circumstances. View "OLSON V. FCA US, LLC" on Justia Law

Two siblings inherited a ranch and campground from their father. One sibling actively managed the properties, operated the business, and distributed annual payments to the other sibling based on her ownership share. Over time, the managing sibling purchased their mother’s interest, consulted an accountant who advised filing partnership tax returns, and continued to issue payments and tax forms to the other sibling. The siblings discussed formalizing their arrangement into business entities, but never completed operating agreements or transferred property. Later, they negotiated the sale of one sibling’s interest in the cattle herd, and a check was delivered, but not cashed. The non-managing sibling subsequently asserted that she had not agreed to the sale and claimed a partnership existed between them.The Circuit Court of the Fourth Judicial Circuit, Lawrence County, South Dakota, held a bifurcated trial on the partnership and partition issues. After hearing testimony and reviewing evidence, it found that the siblings did not intend to jointly carry on a business for profit and had not formed a partnership under South Dakota law. It further determined that an enforceable agreement existed for the sale of the non-managing sibling’s interest in the cattle herd, despite her attempts to disavow the sale after the fact.The Supreme Court of the State of South Dakota reviewed the circuit court’s factual findings for clear error and the legal conclusions de novo. It affirmed, holding that no partnership was formed because the siblings lacked the requisite intent and co-ownership control for a partnership under SDCL 48-7A-202. It also upheld the finding that an enforceable contract existed for the sale of the cattle interest. The Supreme Court’s disposition was to affirm the circuit court’s judgment in all respects. View "Sleep v. Steele" on Justia Law

An individual regularly visited a commercial exercise facility as a guest of a member who held a special tier of membership, which allowed guests to accompany them. After several months of incident-free visits, the guest experienced two confrontational encounters with facility employees on consecutive days. On the first day, an employee refused the guest entry, questioned his status, and acted in a hostile manner. The following day, the same employee behaved in an intimidating way, and another employee threatened to bar the guest from the facility and called the police. The guest was not barred or arrested, and the police deemed it a non-police matter. Later, the guest was informed that no employees would be disciplined, and, months after the incident, he was accused by the business of making harassing phone calls, which he denied.The guest filed suit in the Superior Court of the District of Columbia against the facility and related entities, alleging assault, intentional and negligent infliction of emotional distress, negligent hiring and supervision, and breach of contract. The defendants moved to dismiss for failure to state a claim, arguing that the facts alleged did not support any of the legal claims. The Superior Court granted the motion and dismissed the complaint.On appeal, the District of Columbia Court of Appeals reviewed the dismissal de novo and affirmed the Superior Court’s decision. The appellate court held that the guest did not plausibly allege imminent apprehension of harmful contact necessary for assault, nor conduct sufficiently extreme or outrageous to support intentional infliction of emotional distress. The court also found that the facility’s marketing statements did not create a duty necessary for negligent infliction of emotional distress, and that the guest was not an intended third-party beneficiary of any contract between the member and the facility. The dismissal of all claims was affirmed. View "Blackwell v. Planet Fitness Franchising, LLC" on Justia Law

An engineer who had worked for more than two decades at a manufacturing company resigned after a demotion and accepted a leadership position at a competitor. As he was leaving, the company discovered that he had potentially printed several documents containing confidential information about its products. Although forensic analysis could not confirm that he actually printed these documents, the company concluded he had taken trade secrets and sued him and his new employer, alleging breach of a confidentiality agreement and misappropriation of trade secrets. The company sought a preliminary injunction to prevent disclosure of the alleged secrets and to restrict the engineer’s work with the competitor.The United States District Court for the Northern District of Ohio denied the preliminary injunction. The district court ruled that the company failed to meet its burden by not providing “clear and convincing” evidence for each of the four required factors for a preliminary injunction: likelihood of success on the merits, risk of irreparable harm, risk of harm to others, and the public interest. The court treated each factor as a separate prerequisite, each requiring clear and convincing proof.The United States Court of Appeals for the Sixth Circuit reviewed the district court’s decision for abuse of discretion, clarifying that the district court had committed a legal error. The appellate court held that the correct approach is to weigh all four preliminary injunction factors together in a sliding-scale analysis, not to require clear and convincing evidence for each factor individually. It explained that a heightened standard of proof is not mandated unless required by statute, the Constitution, or in rare cases involving unusually coercive government action, none of which applied here. The Sixth Circuit reversed the district court’s decision and remanded the case for reconsideration under the appropriate standard. View "PCC Airfoils, LLC v. Daugherty" on Justia Law

The dispute centers on foreclosure proceedings involving a residential property in West Warwick, Rhode Island. The plaintiffs purchased the property in 2006, executing a mortgage and promissory note with Long Beach Mortgage Company. After defaulting on the mortgage payment due July 1, 2022, Select Portfolio Servicing (SPS), the mortgage servicer, sent a notice of default and right to cure by certified mail in August 2022. The mortgage had previously been assigned to Deutsche Bank National Trust Company. Following further notices, including a notice of acceleration, the property was sold at foreclosure in April 2023. Plaintiffs then filed suit, alleging wrongful foreclosure based on purported defects in the required notices, specifically arguing that the notices failed to strictly comply with paragraph 22 of the mortgage contract, which governs the notice requirements prior to foreclosure.In Kent County Superior Court, the defendants moved for summary judgment, arguing that the notices strictly complied with the contractual requirements and properly informed plaintiffs of their rights, including the right to cure and reinstate. Plaintiffs objected, asserting that the notice of default contained inaccuracies regarding the cure date and that the notice of acceleration used language that was insufficiently unequivocal with respect to their right to reinstate. The hearing justice found no genuine issues of material fact and granted summary judgment in favor of defendants, concluding that the notices satisfied the requirements of the mortgage. Judgment was entered in February 2025.The Supreme Court of Rhode Island reviewed the case de novo. It held that the notice of default strictly complied with paragraph 22 of the mortgage, adequately informed plaintiffs of the required cure date, and unequivocally stated the right to reinstate after acceleration. The Court further determined that the notice of acceleration was not required to reiterate the right to reinstate in the same manner. The Court affirmed the judgment of the Superior Court. View "Diaz v. Select Portfolio Servicing" on Justia Law

A consumer purchased a licorice product manufactured by a Minnesota company, relying on packaging that stated the product was “Naturally Flavored,” “Natural Strawberry & Raspberry Flavored Licorice,” and “Free of . . . Artificial Colors & Flavors.” The consumer later learned, through laboratory testing, that the product contained DL malic acid, which is an artificial flavor created from petrochemical sources. The consumer alleged that this ingredient rendered the product’s labeling false or misleading, and filed a putative class action in California, asserting claims for violation of the California Consumers Legal Remedies Act, unjust enrichment, and breach of express warranty.The United States District Court for the Southern District of California dismissed the complaint with prejudice. The court found that the complaint failed to plead with sufficient particularity that the malic acid was artificial, thus not meeting the heightened pleading standard of Federal Rule of Civil Procedure 9(b). The district court also held that the plaintiff did not plausibly allege that a reasonable consumer would be misled by the product’s labeling, reasoning that the labels did not explicitly state the product was “all natural” or “100% natural,” and that the ingredients list disclosed both natural and artificial ingredients.On appeal, the United States Court of Appeals for the Ninth Circuit reversed the district court’s dismissal. The appellate court held that the complaint satisfied Rule 9(b) because it identified the specifics of the alleged fraud and provided details about the laboratory testing. The court also held that the plaintiff plausibly alleged that a reasonable consumer could be misled by the product’s claim to be free of artificial flavors when it allegedly contained an artificial flavor. The case was remanded for further proceedings. View "TRAMMELL V. KLN ENTERPRISES, INC." on Justia Law

The dispute centers on allegations of breach of contract and related claims involving a credit card account that the defendant allegedly opened with a national bank. The bank claimed that the defendant opened the account, used it for purchases and cash advances, and then defaulted by failing to make the required payments, leaving a substantial unpaid balance. The defendant denied the material allegations in her answer to the complaint.After the initial pleadings, the bank moved for summary judgment in the Kent County Superior Court, asserting that there were no material facts in dispute and it was entitled to judgment as a matter of law. Importantly, the bank’s motion was not initially accompanied by any supporting affidavits or exhibits. The defendant filed an affidavit in opposition, pointing out the lack of any supporting affidavit from the bank. On the day of the hearing, the bank submitted an affidavit by emailing it to the hearing justice’s clerk, rather than filing and serving it in accordance with procedural rules. Despite the defendant’s objections to this late submission and improper service, the Superior Court granted summary judgment in favor of the bank, relying on the belated affidavit. Final judgment was entered, and the defendant appealed.The Supreme Court of Rhode Island reviewed the Superior Court’s grant of summary judgment de novo. The Supreme Court found that the bank’s failure to timely file and serve the affidavit, as required by Rule 6(c) of the Superior Court Rules of Civil Procedure, prejudiced the defendant’s ability to respond. The Supreme Court held that the hearing justice erred in relying on the untimely affidavit and in not postponing the hearing. The judgment of the Superior Court was vacated, and the case was remanded for further proceedings consistent with the Supreme Court’s opinion. View "American Express National Bank v. Perretta" on Justia Law

An Oklahoma company, formed to acquire mineral rights in Appalachia, alleged that two Texas parties failed to convey certain West Virginia mineral interests as contractually agreed. The Oklahoma company, which included non-Texas owners and participants, had funded the purchase of these rights, but a number of mineral deeds were recorded in the name of the Texas seller rather than the buyer. As a result, royalties from those mineral rights were paid to the seller. The Oklahoma plaintiff sought to compel the Texas defendants to reform the deeds, perform their contractual obligations, declare the plaintiff’s entitlement to the royalties, and enjoin the defendants from transferring the disputed interests.The 141st District Court in Tarrant County, Texas, denied the defendants’ plea to the jurisdiction and ultimately granted summary judgment for the plaintiff, awarding specific performance, deed reformation, declaratory relief, an injunction, and monetary relief. The court found it had jurisdiction over the parties and the contract, even though the mineral rights were located in West Virginia. On appeal, the Court of Appeals for the Second District of Texas reversed, holding that Texas courts lacked subject-matter jurisdiction because the suit’s gravamen was the adjudication of title to foreign (West Virginia) real property.The Supreme Court of Texas reviewed the matter and disagreed with the appellate court’s application of the so-called “gist” rule. The Supreme Court held that Texas courts with personal jurisdiction over the parties may issue in personam judgments concerning contractual obligations to convey out-of-state real property, as long as the judgment binds only the parties and does not purport to establish or alter title to the property by the court’s own force. The Supreme Court reversed the appellate court’s judgment and remanded for consideration of remaining issues. View "BRAXTON MINERALS III, LLC v. BAUER" on Justia Law

The case involves disputes among the descendants of Roy and Grace Whittenburg, who were beneficiaries of separate trusts holding interests in a large ranch spanning New Mexico and Colorado. After years of litigation over the ranch’s ownership, the parties signed two settlement agreements: a Partial Settlement Agreement (PSA) and a later Compromise Settlement Agreement (CSA). These agreements were intended to resolve their disputes, with provisions for partitioning the ranch and a clause designating Texas as the forum for enforcement. When the parties could not agree on partitioning, a group led by Angela Kate initiated partition proceedings in New Mexico, as allowed by the agreements. Another group, led by John Burk, opposed the partition, resulting in protracted litigation and additional attorney’s fees.The 251st District Court of Randall County, Texas, after a bench trial, found John Burk had breached the settlement agreements by opposing the partition in the New Mexico litigation, causing Angela Kate to incur $216,112 in extra attorney’s fees. Despite these findings, the trial court entered a take-nothing judgment, holding that the attorney’s fees from the New Mexico litigation were not recoverable as damages. The Court of Appeals for the Seventh District of Texas affirmed, reasoning that the American Rule barred recovery of such fees as damages for breach of contract.The Supreme Court of Texas reversed the Court of Appeals. It held that the American Rule does not bar recovery of attorney’s fees incurred in prior litigation as damages for breach of a settlement agreement, provided the breach was not itself the basis for that prior litigation. Because the fees at issue resulted from litigation initiated before John Burk’s breach, Angela Kate was entitled to recover those excess fees as actual damages. The Court also held she could seek reasonable attorney’s fees for the Texas suit, remanding for reconsideration of the appropriate amount. View "WANG v. WHITTENBURG" on Justia Law