Justia Contracts Opinion Summaries

An individual who previously worked for a company left his employment in 2015, but in 2016 was invited by the company’s founder and sole owner to consider returning. Before rejoining, the individual drafted a one-page agreement that was signed by both himself and the owner. This document set out employment terms, including salary, vacation, and, crucially, a provision that he would receive a 10% ownership interest in the company after five years of employment, subject to certain conditions. These conditions included the individual’s own decision to accept the ownership, a review of the company’s finances after four years, and an arrangement for the purchase of the remaining ownership interest over a period of five to ten years. The agreement also contained language giving the individual considerable discretion over changes to its terms. The individual resumed employment in 2017 and was terminated in 2022, after more than five years with the company.After his termination, the individual filed suit in Guilford County Superior Court against the company for breach of contract and for a declaratory judgment. During discovery, the owner claimed he had signed the agreement only in his individual capacity, leading the individual to file a separate suit against the owner in Randolph County. Both suits were designated as mandatory complex business cases and were consolidated in the North Carolina Business Court. The defendants moved for summary judgment, arguing the agreement was unenforceable. The Business Court granted summary judgment, finding the agreement was illusory because it gave the individual unlimited discretion over its terms. The individual appealed directly to the Supreme Court of North Carolina.The Supreme Court of North Carolina held that the relevant provision of the agreement was void for indefiniteness, not merely illusory. The Court determined that the ownership provision and its sub-provisions were inseparable and lacked essential terms, such as price and payment schedule, rendering enforcement impossible. The Court also rejected the individual's equitable arguments. The decision of the Business Court was modified and affirmed. View "Langley v. Autocraft, Inc" on Justia Law

A holding company and its North Carolina insurance agency subsidiary, which function as intermediaries between clients and insurance carriers, experienced significant employee dissatisfaction after a shift in commission structure and a pay freeze in early 2020. This led to multiple employees, including both producers and account managers, leaving over several months to join a direct competitor, a new agency formed by a former employee. The departing employees had signed agreements with non-solicitation and confidentiality clauses. During their departures, some employees forwarded company documents to personal accounts, and, after litigation began, engaged in extensive deletion of electronic evidence.Previously, in Guilford County Superior Court, the plaintiffs had sued a former producer, with most claims dismissed except for breach of employment agreement, and that suit was later settled. In the current litigation, after discovery, both sides sought partial summary judgment in the North Carolina Business Court (Superior Court for Complex Business Cases). The Business Court granted summary judgment in part for both parties, including a grant of adverse inference against defendants for spoliation of evidence, but did not specify how that inference would apply to each claim.The Supreme Court of North Carolina reviewed the interlocutory appeal. It affirmed the adverse inference ruling but remanded for the Business Court to clarify its specific application. The Court reversed the Business Court’s summary judgment that two client lists could not be trade secrets, holding there were genuine issues of fact. It clarified the standard for misappropriation of trade secrets under state law, requiring evidence of a specific opportunity to acquire trade secrets without authorization. The Court remanded claims related to trade secrets, enforcement of non-solicitation provisions (pending factual findings on the scope of the employer and affiliates), and certain computer fraud claims for further proceedings. Summary judgment for defendants on unjust enrichment was affirmed, and the Business Court was directed to issue a written opinion for claims it disposed of in a summary order. The disposition was thus affirmed in part, reversed in part, and remanded for further proceedings. View "Rel. Ins., Inc. v. Pilot Risk Mgmt. Consulting, LLC" on Justia Law

A man who founded a nonprofit community radio station in Wyoming contributed substantial sums of money to the station over several years. He claimed these were loans intended to support the station’s operations and expected repayment. Although he discussed loan terms with the station’s board and referenced a loan at a board meeting, no written agreement was ever executed, and he did not follow through on drafting a loan contract. Despite the lack of formal documentation, the station’s tax filings, prepared with his assistance, listed the contributions as loans, but other board members were not aware of or had not approved these filings until after he withdrew a significant amount as “repayment” and subsequently left the station.The District Court of Teton County reviewed the claims after the parties filed cross-motions for summary judgment. The plaintiff alleged breach of implied contract and unjust enrichment, asserting that the station’s tax filings and board members’ awareness supported his claims. The district court found no evidence of a written or oral agreement approved by the board, determined that the statute of frauds barred the implied contract claim, and granted summary judgment to the defendant. The court also found the unjust enrichment claim was barred by the statute of frauds.On appeal, the Supreme Court of Wyoming reviewed the district court’s judgment de novo. The Supreme Court affirmed the district court’s ruling that the breach of implied contract claim was barred by the statute of frauds, as no definite or certain terms existed to remove the agreement from the statute’s requirements. However, the Supreme Court clarified that Wyoming law does not bar unjust enrichment claims by the statute of frauds. Nevertheless, it held that the plaintiff failed to show the station was reasonably notified that repayment was expected, as required for unjust enrichment. The Supreme Court affirmed the district court’s grant of summary judgment for the defendant. View "Tallichet v. Jackson Hole Community Radio, Inc." on Justia Law

Ford retained Versata to develop specialized software to manage its vehicle configuration processes, resulting in two main products: Automotive Configuration Manager (ACM) and Materials Cost Analytics (MCA). The parties entered into a licensing agreement in 2004, which eventually expired in 2014 without renewal. Ford then released its own software, PDO, which Versata alleged incorporated its proprietary trade secrets from ACM and MCA. Disputes arose when Ford sought a declaratory judgment of non-infringement and non-misappropriation, while Versata counterclaimed, alleging trade secret misappropriation under the Defend Trade Secrets Act (DTSA) and the Michigan Uniform Trade Secrets Act (MUTSA), as well as breach of contract.The United States District Court for the Eastern District of Michigan excluded Versata’s damages expert’s testimony regarding trade secret damages, limiting Versata to a reasonable royalty model based solely on the parties’ prior licensing history. At trial, the jury found Ford liable for misappropriating three ACM trade secrets and breaching the licensing agreement, awarding Versata $22,386,000 for trade secret misappropriation and $82,260,000 for breach of contract. However, the district court subsequently reduced these awards: it set trade secret damages to zero, citing insufficient evidence regarding the time required for Ford to independently develop the misappropriated trade secrets, and reduced breach of contract damages to $3, finding Versata’s evidence insufficient to support the jury’s calculation.On appeal, the United States Court of Appeals for the Federal Circuit vacated the district court’s judgment on trade secret damages and remanded for a new trial, holding that Versata was entitled to seek unjust enrichment damages under both the DTSA and MUTSA, and that the district court erred in precluding consideration of alternative damages models. The Federal Circuit also reversed the reduction of the breach of contract damages, reinstating the jury’s $82,260,000 award, and affirmed the denial of Ford’s motion for judgment as a matter of law on trade secret misappropriation liability. View "VERSATA SOFTWARE, LLC v. FORD MOTOR COMPANY " on Justia Law

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