Justia Contracts Opinion Summaries

A couple owned a large property in Missoula County, Montana, known as Marshall Mountain, and agreed to sell it to buyers for $2,150,000. The original purchase agreement called for conventional financing, but the parties later amended their agreement to provide for seller financing through a contract for deed, specifying essential terms such as the down payment, interest rate, amortization period, and payment responsibilities. The agreement contained a title contingency, among others, and the buyers approved the preliminary title commitment, which did not include any public access easements.After negotiating drafts of the contract for deed, the sellers’ attorney added numerous new provisions, including a public access easement that would allow various groups to use the property, which was not present in the original agreement or amendment. The buyers objected to this new term, arguing that it changed the character of the property. The sellers refused to accept the buyers’ proposed revisions and terminated the agreement. The buyers filed suit in the Montana Fourth Judicial District Court, alleging breach of contract, among other claims. The District Court found that the executed buy-sell agreement and its amendment constituted an enforceable contract, that the sellers breached its express terms by refusing to close, and that the buyers were damaged, but left other issues for trial.On appeal, the Supreme Court of the State of Montana reviewed de novo whether the parties’ failure to agree to the final terms of the contract for deed rendered the agreement unenforceable. The Court held that the buy-sell agreement and amendment contained all material terms necessary for the enforceable sale of real property, and that the parties did not clearly condition contract formation on later agreement to the contract for deed’s terms. The Court affirmed the District Court’s order granting partial summary judgment to the buyers. View "Melby v. Doering" on Justia Law

This case centers on a car accident between an insured driver, Ortiz, and an uninsured motorist, Camacho, in Colorado. At the time of the collision, Camacho lacked insurance, drove with only a learner’s permit, and was unsupervised. Ortiz, insured by Progressive Direct Insurance Company, sought uninsured motorist (UM) benefits from Progressive after the accident. Progressive denied the claim, asserting Ortiz was more than 50% at fault. Ortiz then sued both Camacho for negligence and Progressive for breach of contract, insurance bad faith, and unreasonable delay and denial of benefits.Camacho did not respond to the lawsuit, leading the District Court for Garfield County to enter a clerk’s default against her. Progressive had been served but did not object at that time. Progressive’s answer to Ortiz’s complaint included general affirmative defenses but did not specifically assert comparative fault. After Ortiz moved for partial summary judgment, Progressive, for the first time, sought to participate in the liability and damages components of the default judgment hearing. The district court permitted Progressive to contest damages but barred it from contesting liability, finding Progressive had not timely or specifically pleaded its legitimate defenses as required under State Farm Mutual Automobile Insurance Co. v. Brekke, 105 P.3d 177 (Colo. 2004). Progressive paid the damages awarded in the default judgment and then proceeded to trial on Ortiz’s bad faith claims, where Ortiz prevailed.On appeal, the Colorado Court of Appeals affirmed the district court’s decision, holding Progressive failed to meet the Brekke standards for timely and particularized pleading of its legitimate defenses. The Supreme Court of Colorado reviewed whether Brekke’s requirements should be reconsidered. The Court clarified that pleading with particularity under Rule 9(b) is only necessary if fraud or mistake is asserted, and otherwise, insurers must plead legitimate defenses specifically and as soon as practicable. The Court affirmed the appellate judgment, reaffirming Brekke and declining to overrule it. View "Progressive Direct Ins. Co. v. Ortiz" on Justia Law

The case concerns a dispute arising from an agreement between the State of Georgia and several organizations representing death row inmates. This agreement, made in response to the COVID-19 pandemic, established certain conditions that had to be met before the State would resume seeking execution orders for specific inmates. One condition required that a COVID-19 vaccine be “readily available to all members of the public.” The Federal Defender Program, Inc., along with intervenors including Virgil Delano Presnell, Jr., alleged the State breached this agreement by seeking execution orders before this condition was fulfilled, specifically arguing that vaccines were not FDA-approved for children under six months old.The Superior Court of Fulton County previously granted an interlocutory injunction halting the executions, finding the agreement enforceable and the vaccine condition unmet. After further litigation focused on whether the vaccine condition was satisfied, the parties filed cross-motions for partial summary judgment. The Superior Court concluded that because the FDA had not approved COVID-19 vaccines for children under six months old, the condition remained unsatisfied. It granted summary judgment to the plaintiffs and issued a permanent injunction preventing the State from resuming executions until all agreement conditions were met.On direct appeal, the Supreme Court of Georgia first determined it had jurisdiction, holding that intervention by a prisoner in a suit originally filed by a non-prisoner did not transform the case into a “prisoner action” under the Prison Litigation Reform Act. Addressing the merits, the Supreme Court reversed the Superior Court’s order. It held that the vaccine condition did not require FDA approval for every age group and that the evidence showed COVID-19 vaccines were “readily available” to all members of the public as required by the agreement. The court remanded the case for further proceedings. View "STATE OF GEORGIA v. FEDERAL DEFENDER PROGRAM, INC." on Justia Law

Morgan Lohman purchased a 25.8-acre property from Stephen and Melinda Dreher in 2022, knowing that the property was subject to a permanent easement held by Cave Bay Community Services, Inc., and an option agreement allowing Cave Bay to purchase the easement area for one dollar once the Drehers’ loans were paid off. After the purchase, the Drehers paid off their loans, Cave Bay attempted to exercise its option, and Lohman refused to comply. Cave Bay, which had already been using the easement for a wastewater facility, filed suit against Lohman for breach of contract, breach of the implied covenant of good faith and fair dealing, and specific performance.The District Court of the First Judicial District, Kootenai County, granted summary judgment to Cave Bay solely on the claim for specific performance and awarded attorney fees and costs. The court’s decision was based on its view that there were no disputed material facts and that Cave Bay was entitled to specific performance under the option agreement. The district court did not issue a detailed written opinion and did not resolve whether there was a breach of contract, focusing instead on the remedy of specific performance.The Supreme Court of the State of Idaho reviewed the case and held that the district court erred by granting summary judgment on specific performance as if it were an independent cause of action. The Supreme Court clarified that specific performance is a remedy, not a stand-alone claim, and that entitlement to such a remedy requires first establishing a breach of contract. Because the district court had not ruled on the underlying breach, the Supreme Court reversed the summary judgment, vacated the award of attorney fees and costs, and remanded the case for further proceedings. Costs on appeal were awarded to Lohman. View "Cave Bay Community Services v. Lohman" on Justia Law

Two neighbors in Bonner County, Idaho, own adjacent properties—one is lakefront and the other sits directly behind it without lake access. After years of disputes over easements relating to beach, lake, and parking access, the parties entered litigation. During trial, the district court mediated a settlement, which was read into the record and later formalized as a Stipulated Agreement and Order. This agreement outlined the parties’ rights to use the properties and set procedures for mediation and arbitration if further disputes arose.After signing the agreement and a minor modification by the district court, further conflicts emerged, especially regarding the construction and location of one party’s patio, use of a parking easement, a maintenance corridor, and a sprinkler system. Pursuant to the agreement, the unresolved issues were submitted to arbitration. The arbitrator ruled in favor of the lakefront property owner on all issues, finding that the other party had not complied with the agreement. The dissatisfied party then moved in the District Court of the First Judicial District to vacate the arbitration award, alleging bias and that the arbitrator had exceeded his authority. The district court denied the motion, finding the arbitrator had acted within the scope of his authority.On appeal, the Supreme Court of the State of Idaho reviewed the district court’s denial. The Court held that the arbitrator’s decisions were within the authority granted by the parties’ agreement and the Idaho Uniform Arbitration Act. The Court found no evidence of bias and concluded the arbitrator had not rewritten or exceeded the terms of the agreement, but rather interpreted and applied it as authorized. Therefore, the Supreme Court affirmed the district court’s denial of the motion to vacate the arbitration award and granted attorney fees on appeal to the prevailing party under Idaho Code section 12-121. View "Khalsa v. Ridnour" on Justia Law

Benard Hubbard II electronically signed an admissions packet and a stand-alone arbitration agreement for his father’s admission to Woodlands Rehabilitation and Healthcare Center in Clinton, Mississippi. At the time, Hubbard Sr. was competent and able to communicate with staff. Two years later, Hubbard Sr. filed a medical-negligence claim against the facility’s parent company, a physician, and a medical practice. The defendants moved to compel arbitration based on the agreement signed by Hubbard II. At the hearing, both parties acknowledged that Hubbard II did not have power of attorney or formal authority and that the arbitration agreement was separate from the admission itself. Hubbard II submitted an affidavit stating he signed without consulting or receiving authority from his father, and no evidence was presented to refute this.The Hinds County Circuit Court granted the motion to compel arbitration, expressing concern about Hubbard II contesting the agreement but failing to specify any factual basis for its decision or address the defendants’ request for additional discovery. The defendants subsequently conceded in the Supreme Court of Mississippi that the factual record was insufficient to affirm the trial court’s order and requested a remand for further findings.The Supreme Court of Mississippi reviewed the trial court’s decision de novo and found that the record lacked evidence establishing Hubbard II’s authority to bind his father to arbitration. The court also determined that the defendants had abandoned their motion for additional discovery by failing to secure a trial court ruling. Accordingly, the Supreme Court reversed the trial court’s order compelling arbitration and remanded the case for further proceedings consistent with its opinion. View "Hubbard v. Nexion Health at Clinton, Inc." on Justia Law

A major equity investor contributed $65 million to a joint venture formed to acquire and develop a luxury residential tower in New York City. The project was financed with significant loans, including a $325 million mezzanine loan from Apollo entities. After construction cost overruns put the mezzanine loan in default, Apollo and the joint venture entered a forbearance agreement splitting the loan and securing a portion with the joint venture’s equity. Apollo later assigned the junior mezzanine loan to Spruce Capital Partners, which then initiated a strict foreclosure under the Uniform Commercial Code. This process extinguished the joint venture’s equity—including the plaintiff’s investment—while allegedly allowing the project sponsor to retain a role and equity interest. The investor claimed that Apollo, Spruce, and the sponsor colluded to cut it out of the project’s value through assignment and foreclosure.The Supreme Court, New York County, dismissed the investor’s breach of implied covenant claim against Spruce but allowed the claim against Apollo to proceed, while dismissing tortious interference claims. The Appellate Division, First Department, reversed in part by dismissing the implied covenant claim against Apollo, holding that Apollo’s sole discretion to assign the loan foreclosed such a claim, and otherwise affirmed the dismissal of the tortious interference claims.The New York Court of Appeals held that a party’s sole discretion to assign a loan does not exempt it from the implied covenant of good faith and fair dealing. The Court concluded that the plaintiff sufficiently pleaded that Apollo may have exercised its assignment right as part of a bad faith scheme to deprive the investor of the benefit of its bargain, reviving the implied covenant claim against Apollo. The Court affirmed the dismissal of the tortious interference claims for insufficient pleading. The case was remitted to Supreme Court for further proceedings on the implied covenant claim. View "111 W. 57th Inv. LLC v 111 W57 Mezz Inv. LLC" on Justia Law

A solo attorney and another law firm entered into contingency fee agreements with three clients for representation in workers’ compensation matters, providing for a 50/50 split of any attorney’s fees. After the solo attorney died, disputes arose over how much his estate was owed for fees from two resolved cases and a third pending case. The settlement for the first client was received shortly before the attorney’s death, while the second client’s case settled months later. The estate sued to recover its share of fees and for a declaratory judgment regarding the third case, which remained unresolved.The Circuit Court of the Seventh Judicial Circuit, Pennington County, found that the attorney’s contracts with the second and third clients expired at his death, and that the estate had been fully paid for the first two cases. The court also awarded prejudgment interest to the estate for delayed payment on the first client’s case and ordered the estate to pay prejudgment interest to the law firm for the disputed portion of the second client’s fees that had been deposited with the court. The estate and the law firm both appealed aspects of the decision.The Supreme Court of the State of South Dakota affirmed the ruling that the contingency fee agreements for the second and third clients terminated upon the attorney’s death. However, it reversed the finding that the estate had been fully paid for services rendered in the second client’s case, holding that the estate could recover in quantum meruit for the reasonable value of services rendered before death, and remanded for further proceedings on that issue. The Supreme Court also reversed the award of prejudgment interest to the law firm for the deposited funds and directed recalculation of prejudgment interest owed to the estate for the first client’s case based on the timing of unconditional tender and full payment. View "Groves v. Goodsell & Oviatt LLP" on Justia Law

Aberdeen Developers, LLC obtained a $41 million loan secured by a mixed-use building in Chicago. The loan was governed by two agreements: a Loan Agreement and a Cash Management Agreement (CMA). During the COVID-19 pandemic, a major tenant filed for bankruptcy, which under the CMA allowed the loan servicer, LNR Partners, LLC, to trigger a Cash Sweep Event Period. As a result, building income was redirected to a special account controlled by LNR Partners. The dispute arose over how long LNR Partners could retain the excess revenue (Excess Cash Flow) in this account: Aberdeen Developers argued for monthly disbursement, while LNR Partners asserted that it could hold the funds until a specific cure event occurred, which had not and might never happen.The case was initially filed by Aberdeen Developers in Illinois state court, alleging breach of contract. The defendants removed the case to the United States District Court for the Northern District of Illinois. The district court concluded that the relevant agreements unambiguously allowed LNR Partners to retain the Excess Cash Flow until the end of the contract term and dismissed the complaint under Rule 12(b)(6).Upon appeal, the United States Court of Appeals for the Seventh Circuit reviewed the district court’s dismissal de novo. The Seventh Circuit determined that the language in the Loan Agreement and CMA was ambiguous because both parties’ interpretations were reasonable. The court held that ambiguity in the contract meant the case could not be resolved on a motion to dismiss and factual development was required to determine the parties’ intent. The Seventh Circuit therefore reversed the district court’s dismissal and remanded the case for further proceedings. View "Aberdeen Developers, LLC v Wells Fargo Bank, N.A." on Justia Law

George Bernard Worrell, Jr., a foundational member and arranger for the musical group Parliament-Funkadelic, collaborated with George Clinton and Thang, Inc. from 1969 to 1981. In 1976, Worrell was presented with a contract (the “1976 Agreement”) by Thang, Inc., which purported to grant Thang full ownership of sound recordings Worrell contributed to, in exchange for royalties. Over the years, Worrell and his estate asserted that Thang and Clinton failed to pay royalties due under this agreement. Worrell died in 2016, and his estate became the plaintiff in subsequent litigation.After Worrell’s estate sued Thang and Clinton in New York state court for breach of contract related to the 1976 Agreement, the New York Supreme Court dismissed the suit. The court found that the agreement was not enforceable because it had not been signed by Thang, and the estate did not refute this. Subsequently, the estate filed a new action in the United States District Court for the Eastern District of Michigan, seeking a declaration of joint copyright ownership in the sound recordings and an accounting of royalties. The district court granted summary judgment for the defendants on statute of limitations grounds, holding that the estate’s copyright claims were untimely.The United States Court of Appeals for the Sixth Circuit reviewed the case and determined that genuine disputes of material fact precluded summary judgment. The court held that, given the unique circumstances—including the parties’ decades-long conduct in apparent reliance on the 1976 Agreement—there was a factual question as to whether Clinton and Thang had “plainly and expressly repudiated” Worrell’s copyright co-ownership before 2020. The Sixth Circuit reversed the district court’s judgment and remanded for further proceedings, holding that part of the estate’s copyright-ownership claim is timely. The court also found genuine disputes of material fact as to Worrell’s status as a co-author of the recordings. View "Estate of Worrell v. Thang, Inc." on Justia Law