Justia Contracts Opinion Summaries

Two couples, who were friends and interested in purchasing vacation property to accommodate their families, entered into identical purchase agreements in 2015 with the owner of a luxury resort in Montana. The agreements granted each couple a fractional interest in a three-bedroom villa, with the understanding that they would be transferred to a four-bedroom villa once one was constructed. Until that time, they were to be exempt from maintenance fees and allowed use of a four-bedroom cabin. Both couples paid the purchase price and received warranty deeds for the three-bedroom villas but never received the promised upgrade, as no four-bedroom villas were ever constructed. In 2023, the resort owner demanded maintenance fees and cancelled their reservations when the couples refused to pay, citing the unfulfilled contractual obligation. After the resort was sold to a new owner, the couples received no further communication or access.The couples sued for breach of contract and under the Montana Consumer Protection Act (MCPA), seeking damages and attorney fees. The Montana Nineteenth Judicial District Court granted summary judgment in their favor on the breach of contract claim, finding the agreements valid and breached by the owner for failing to provide the upgrade and improperly charging fees. The court denied summary judgment on the MCPA claim, which went to a jury along with the issue of contract damages. The jury awarded $250,000 in contract damages to each couple but found for the defendant on the MCPA claim. The court subsequently awarded all attorney fees and costs to the couples, finding these were inseparable from the contract claim.On appeal, the Supreme Court of the State of Montana affirmed. It held that substantial credible evidence supported the jury’s damages award, including damages for loss of use after the property changed hands, and that the verdict was consistent with the instructions and supported by the evidence. The court also upheld the award of full attorney fees, finding the claims and related work inseparable, and remanded for a determination of fees and costs incurred on appeal. View "McNain Holdings v. Wilderness Preserve" on Justia Law

The Village of Schaumburg owns a hotel and convention center that it alleges has defective exterior walls. In February 2022, it initiated a lawsuit in the United States District Court for the Northern District of Illinois, Eastern Division, against several parties for fraud, breach of warranty, and products liability. In November 2022, the Village added Permasteelisa North America, a subcontractor, as a defendant. About eight months later, the Village sought to compel arbitration of its dispute with Permasteelisa, even though it had not previously requested arbitration in its complaint or before filing suit, and the arbitration clause was contained in a contract between Permasteelisa and the general contractor, not the Village directly.The District Court concluded that by filing a lawsuit and then delaying its request for arbitration, the Village presumptively waived any right to arbitrate it might have had. The Village argued that the lawsuit was filed to avoid the statute of limitations expiring, but the District Court responded that the Village should have requested arbitration at the outset or, at the latest, soon after Permasteelisa’s motion to dismiss was filed. The court found that the combination of filing suit and substantial delay amounted to waiver of any right to arbitrate and denied the Village’s motion to compel arbitration.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed the District Court’s decision for abuse of discretion. The appellate court held that the District Court did not err in concluding that the Village waived any right to arbitrate by acting inconsistently with that right through both initiating litigation and delaying the arbitration request. The Seventh Circuit also rejected the argument that a contractual anti-waiver clause could override federal procedural rules governing litigation conduct. The judgment of the District Court was affirmed. View "Village of Schaumburg v Permasteelisa North America" on Justia Law

A conservation district in Montgomery County, Texas, required large water users to reduce groundwater usage by 30%. To facilitate compliance, the San Jacinto River Authority (the “River Authority”), a political subdivision of Texas, created a joint groundwater reduction plan and entered into contracts with about 80 utilities, including Quadvest, L.P. (“Quadvest”). These contracts required participants to pay certain fees and, at the River Authority’s discretion, to connect to surface water provided by the River Authority. The fees aimed to equalize costs between groundwater and surface water users and to finance new infrastructure. Quadvest, a family-owned utility, initially operated only in the retail market and later expanded into wholesale water supply.After the relevant groundwater regulations were rescinded due to political changes and litigation, Quadvest challenged the lawfulness of its contract with the River Authority in the United States District Court for the Southern District of Texas. It alleged that the contract constituted an unlawful restraint of trade under the Sherman Act, specifically as per se illegal horizontal price-fixing and market allocation. After a bench trial, the district court found in favor of the River Authority, concluding that Quadvest failed to prove its claims.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the district court’s findings of fact for clear error and legal conclusions de novo. The Fifth Circuit held that the challenged contract did not constitute a per se illegal horizontal restraint because the parties were not competitors at the time of contracting, and the agreement was vertical in nature. The court further determined that the contract did not fix prices or allocate markets in a manner prohibited by the Sherman Act. Under the rule of reason, Quadvest also failed to define the relevant market and thus could not demonstrate anticompetitive effects. The Fifth Circuit affirmed the judgment of the district court. View "Quadvest v. San Jacinto River Auth" on Justia Law

Water districts in California that received water from the federal Central Valley Project sought to convert their water service contracts into repayment contracts under the Water Infrastructure Improvements for the Nation (WIIN) Act. This conversion allowed the districts to prepay construction costs in exchange for contracts that would last indefinitely, rather than for a set term. The Bureau of Reclamation, which manages the Central Valley Project, converted 67 contracts upon request from water districts, modifying only the payment terms and leaving other contractual rights unchanged. The Bureau did not conduct contract-specific environmental review under the National Environmental Policy Act (NEPA) or consult with wildlife agencies under the Endangered Species Act (ESA) before making these conversions.The Center for Biological Diversity and other plaintiffs challenged the Bureau’s actions in the United States District Court for the Eastern District of California. They argued that the Bureau was required to undertake NEPA review and ESA consultation before converting each contract, because the conversions would impact the environment and protected species in the Bay-Delta ecosystem. The district court compelled joinder of the affected water districts and granted summary judgment to the Bureau and the water districts. The court found that the WIIN Act imposed a mandatory duty on the Bureau to convert contracts upon request, and that the Bureau lacked discretion to alter terms for environmental protection, so NEPA and the ESA did not apply.On appeal, the United States Court of Appeals for the Ninth Circuit affirmed the district court’s judgment. The court held that section 4011(a) of the WIIN Act requires the Bureau to convert water service contracts upon request, permitting only changes related to payment structure and not to other contractual rights. Because the conversions are nondiscretionary, the Bureau is not required to conduct NEPA review or ESA consultation. The Ninth Circuit also found that this interpretation does not violate the WIIN Act’s savings clauses. View "CENTER FOR BIOLOGICAL DIVERSITY V. UNITED STATES BUREAU OF RECLAMATION" on Justia Law

Highland Capital Management, L.P. and HCRE Partners (now NexPoint Real Estate Partners) collaborated on a large real estate project in 2018, forming SE Multifamily Holdings, LLC to acquire substantial residential assets. HCRE, controlled by James Dondero, and Highland structured their membership interests in the LLC through an amended agreement after another investor joined. When Highland later entered Chapter 11 bankruptcy, HCRE, led by Dondero, filed a proof of claim asserting entitlement to distributions and seeking contract reformation regarding membership allocation. Both Dondero and another officer, Matt McGraner, admitted during litigation that their claim lacked merit, and evidence showed the claim was filed without investigation, likely to protect SE Multifamily’s assets from Highland’s creditors.The United States Bankruptcy Court for the Northern District of Texas oversaw the proceedings, including extensive discovery and a motion to disqualify HCRE’s counsel, which the court granted. As discovery continued, HCRE sought to withdraw its claim two days before critical depositions, but the bankruptcy court denied the motion, finding withdrawal would prejudice Highland. After a bench trial, the bankruptcy court ruled against HCRE, rejecting its contract reformation theory and disallowing its proof of claim. Subsequently, the court imposed sanctions on HCRE, finding bad faith in both the filing and litigation of the claim. The United States District Court for the Northern District of Texas affirmed the imposition of sanctions.On appeal, the United States Court of Appeals for the Fifth Circuit affirmed the lower courts’ decisions. The Fifth Circuit held that clear and convincing evidence supported the bankruptcy court’s finding that HCRE acted in bad faith by filing a baseless claim and litigating it in bad faith, including frivolously opposing the disqualification of counsel and seeking to withdraw the claim to avoid discovery while preserving it for future litigation. The court also held the sanctions were causally related to HCRE’s conduct and not an abuse of discretion. View "NexPoint v. Highland" on Justia Law

Two infrastructure companies formed a joint venture to bid on a Colorado highway express lane project, relying on engineering designs from a subsidiary of one partner. After winning the contract, the joint venture entered a subcontract with the engineering firm that incorporated many of their earlier terms but added a liability cap. During the project, disputes arose over the design work, resulting in multiple redesigns and delays. The engineering firm submitted change orders for additional work, but the joint venture either failed to process them according to contract procedures or “shelved” them as litigation began.The engineering firm sued the joint venture in the United States District Court for the District of Colorado, claiming breach of contract and unjust enrichment. The joint venture counterclaimed for breach of both the subcontract and the original teaming agreement, and later added a negligent misrepresentation claim. The district court dismissed the negligent misrepresentation counterclaim under the economic-loss rule and later granted summary judgment to the engineering firm on the teaming agreement counterclaim, holding that the subcontract superseded the earlier agreement and imposed a liability cap. The joint venture sought to add fraud counterclaims more than a year after the final pretrial order, but the district court denied this as untimely and prejudicial. The court also rejected the joint venture’s attempt to concede liability and assume the plaintiff’s role at trial, and denied its Rule 50 motions.On appeal, the United States Court of Appeals for the Tenth Circuit reviewed the district court’s rulings. The appellate court held that the district court did not err in denying the joint venture’s various motions, including its attempt to add new counterclaims, to instruct the jury on an implied duty of good faith and fair dealing, or to enter judgment against itself. The Tenth Circuit affirmed the district court’s judgment in favor of the engineering firm on all claims and counterclaims. View "AECOM Technical Services v. Flatiron | AECOM" on Justia Law

A married couple enrolled their children at a private school that, until the 2020–2021 academic year, offered a traditional curriculum. Following the events of summer 2020, the school shifted its curriculum to emphasize issues of race and gender identity. The parents became concerned after learning their sixth-grade child was exposed to controversial teachings and age-inappropriate materials. They joined a group of parents to express their concerns to the school’s leadership. After the parents met with school officials, the school abruptly expelled their children and accused the parents of making racist remarks, which the parents deny.The parents filed suit in Superior Court, Mecklenburg County, alleging breach of contract, fraud, unfair and deceptive trade practices, defamation, and other claims. The trial court, Judge Lisa C. Bell presiding, dismissed all claims except for breach of the implied covenant of good faith and fair dealing. The parents voluntarily dismissed that remaining claim to appeal. The North Carolina Court of Appeals affirmed the trial court’s dismissal of all other claims.The Supreme Court of North Carolina reviewed the case to determine whether the parents’ complaint satisfied the state’s “notice pleading” standard for surviving a motion to dismiss under Rule 12(b)(6). The court held that the parents adequately alleged claims for breach of contract, fraud, unfair and deceptive trade practices based on their fraud allegations, and defamation. The court found that their breach of contract claim was viable because they alleged the school expelled their children under a false pretext, in violation of the contract. The fraud and defamation claims also survived due to sufficient factual allegations. The Court reversed the Court of Appeals in part and remanded for further proceedings on these claims, but affirmed or declined to review the dismissal of other claims. View "Turpin v. Charlotte Latin Schools, Inc" on Justia Law

A Chinese drone manufacturer and its subsidiary challenged their designation by the U.S. Secretary of Defense as a “Chinese military company” under Section 1260H of the National Defense Authorization Act. The designation, which is published annually, restricts the company from contracting with certain government agencies and can damage its business reputation. DJI was added to the list in 2022 and again in 2024 and 2025 without prior notice. DJI petitioned for removal, which was denied, and subsequently received a report explaining the designation, though portions of the rationale were redacted.DJI filed suit in the United States District Court for the District of Columbia, alleging violations of the Fifth Amendment’s Due Process Clause and the Administrative Procedure Act. The company argued that it was denied due process, that there was insufficient evidence for the designation, that the agency failed to explain disparate treatment compared to other companies, and that the Secretary’s finding that DJI “contributes” to the Chinese defense industrial base was unsupported. The district court granted summary judgment against DJI, relying solely on the unclassified administrative record and declining to review the classified materials.On appeal, the United States Court of Appeals for the District of Columbia Circuit reviewed the case de novo. The appellate court affirmed the district court’s rejection of DJI’s due process, evidentiary, and disparate treatment claims, holding that DJI failed to show deprivation of a protected liberty or property interest, and that sufficient evidence supported the finding that DJI received government assistance. However, the appellate court reversed the district court’s conclusion regarding DJI’s “contribution” to the Chinese defense industrial base, finding that the lower court improperly relied on post hoc agency arguments and failed to review the classified record. The case was remanded for further proceedings on that issue. View "SZ DJI Technology Co., Ltd. v. DOD" on Justia Law

A couple alleged that their home in Union Springs suffered significant roof damage from a storm in January 2024. They had a homeowners’ insurance policy with an insurer and submitted a repair estimate of $9,112.02 to the company, which responded with a significantly lower settlement offer. The couple sued the insurer in the Bullock Circuit Court, claiming breach of contract and bad faith, and alleged a systematic practice by the insurer of underpaying roof claims. During discovery, the couple requested documents relating to the handling of roof claims. The insurer objected, citing concerns over the breadth of the requests and the confidential nature of certain documents.After both sides submitted competing motions for protective orders, the circuit court entered an order that allowed some confidential materials produced by the insurer to be used not only in the couple’s case but also in other cases handled by their counsel involving similar claims against the insurer. The order also permitted sharing information with governmental agencies under certain conditions. The insurer petitioned the Supreme Court of Alabama for a writ of mandamus, seeking to vacate the protective order and require a more restrictive, non-sharing version.The Supreme Court of Alabama held that there is no per se prohibition against sharing provisions in protective orders, provided there are adequate safeguards. The court concluded that the circuit court did not exceed its discretion in allowing sharing with government entities. However, it required the protective order to be modified to (1) specify the exact cases in which sharing is permitted, (2) require all recipients to agree in writing to be bound by the order and submit to the circuit court’s jurisdiction, and (3) clarify obligations for returning or destroying confidential materials at the conclusion of each case. The petition for mandamus was granted in part and denied in part, and the writ was issued accordingly. View "Ex parte State Farm Fire and Casualty Company" on Justia Law

The case concerns a dispute stemming from a loan agreement between Christopher Huber and Janet Currie. In 2019, Currie sought to purchase a hemp business and borrowed $185,000 from Huber, agreeing to repay $370,000 within approximately six months—an effective annual interest rate of 200%. The agreement also required Currie to provide a mortgage to secure the loan, which she did not do. After acquiring the business, Currie transferred the property to another entity she controlled without compensating Huber and failed to repay the loan. Huber sued Currie and related entities for breach of contract and fraudulent transfer, seeking the contract amount, interest, and an equitable lien on the property.The Vermont Superior Court, Addison Unit, Civil Division, granted partial summary judgment to Huber on the breach-of-contract claim because Currie did not contest the essential facts or substantiate her listed affirmative defenses, including usury, in her response to Huber’s motion. The court denied summary judgment on the fraudulent-transfer claim. Currie later moved to vacate the summary-judgment order, arguing that the contract was usurious under Vermont law. The court denied this motion, finding Currie had waived the usury defense by failing to raise it at the summary-judgment stage. The court awarded Huber $185,000 with interest at the legal rate and imposed an equitable lien, but did not rule on Currie’s third-party claims.On appeal, the Vermont Supreme Court affirmed the lower court’s judgment for Huber, holding that Currie procedurally waived the usury defense by not properly raising it in response to the summary-judgment motion, and that the trial court acted within its discretion in refusing to revisit the issue. The Court remanded the case for consideration of Currie’s outstanding third-party claims. View "Huber v. Currie" on Justia Law