Justia Contracts Opinion Summaries

A man was charged with several serious crimes and, at trial, was represented by attorneys from a law firm. His mother paid $300,000 in legal fees to the firm, based on representations made by his defense counsel about the services to be provided. The man was convicted of some charges and sentenced to prison. After an unsuccessful appeal, he and his mother sued the defense attorneys and their firm for professional negligence, breach of fiduciary duty, breach of contract, negligent misrepresentation, and fraud. They claimed that the attorneys had provided ineffective representation, failed to deliver on promises related to legal services and use of retainer funds, overcharged, failed to account for fees, and did not return unearned funds.The trial court dismissed all claims with prejudice under Texas Rule of Civil Procedure 91a, finding that the mother had no standing to sue because she was not a client, and that the Peeler doctrine barred all of the son’s claims because he had not been exonerated. The Court of Appeals for the Third District of Texas affirmed, holding that the mother lacked standing and that the Peeler doctrine categorically barred all of the son’s claims, including those about excessive fees and failure to account.The Supreme Court of Texas clarified that Peeler v. Hughes & Luce bars a convicted criminal defendant from suing defense counsel for legal malpractice unless exonerated, but does not categorically bar contract or fraud claims unrelated to the conviction. The court held that the mother had standing to bring claims for her own direct economic losses, such as overpayment or failure to return unearned fees, but could not bring claims based on an attorney-client relationship. The court affirmed the dismissal of some claims, reversed as to others, and remanded to the court of appeals to consider additional issues, including whether some claims are really fractured malpractice claims and statute of limitations defenses. View "CARDEN v. MINTON, BASSETT, FLORES & CARSEY, P.C." on Justia Law

A grocery store operated by the petitioner leased space in a shopping center owned by the respondent. As the lease’s expiration approached, the store attempted to renew but was unsuccessful in reaching terms. During negotiations, a representative of the store became suspicious that a competitor, El Rancho, might be taking over the location after hearing about a possible “big surprise” involving El Rancho. Despite these suspicions, the store did not ask the landlord if other negotiations were underway. The landlord had in fact already agreed to lease the space to the competitor, but continued to negotiate with the store. When the store eventually discovered the new lease, it was unable to secure an alternate location and ultimately ceased operations.A jury found for the store on its fraud claims, and the trial court awarded substantial damages. The trial court also found for the landlord on a counterclaim for breach of contract. On appeal, the Court of Appeals for the Fifth District of Texas reversed the trial court’s judgment in favor of the store, holding that the store’s reliance on the landlord’s representations was not justified as a matter of law because the existence of “red flags” negated justifiable reliance. The appellate court also held there was sufficient evidence to support the landlord’s counterclaim and remanded for a new judgment in the landlord’s favor.The Supreme Court of Texas granted review and affirmed the judgment of the court of appeals. The Supreme Court held that the store’s reliance on the landlord’s representations was unjustifiable as a matter of law because, despite being a sophisticated party and having reason to be suspicious, the store failed to exercise reasonable diligence by not inquiring further when it suspected the property might not be available. The case was remanded for entry of judgment favoring the landlord on its counterclaim. View "MAYA WALNUT LLC v. LY" on Justia Law

During the onset of the COVID-19 pandemic, a limited liability company (LLC), FS Medical Supplies, entered into a contract to supply personal protective equipment and related products to TannerGAP, Inc. and Tanner Pharma UK Limited for distribution. FS Medical later discovered that the Tanner entities had contracted directly with one of its suppliers, prompting FS Medical to sue for breach of contract.Initially, FS Medical brought suit in California state court, but the defendants removed the case to federal court, where it was dismissed for lack of personal jurisdiction. FS Medical then filed two actions in the United States District Court for the Western District of North Carolina, asserting diversity jurisdiction under 28 U.S.C. § 1332(a)(3). FS Medical alleged that its members were citizens of Texas and California, and later acknowledged that one member was a citizen of China. The defendants included both U.S. citizens domiciled in North Carolina and a United Kingdom corporation. After limited discovery and amendment of the complaint, the district court, following a magistrate judge’s recommendation, dismissed the actions for lack of subject matter jurisdiction, concluding that the presence of both domestic and foreign members in the plaintiff LLC destroyed diversity jurisdiction.On appeal, the United States Court of Appeals for the Fourth Circuit reviewed the dismissal de novo. The court held that, under § 1332(a)(3), complete diversity requires at least one U.S. citizen on each side of the action. Because FS Medical, as an LLC, had both domestic and foreign members at the time the complaints were filed, and because there were foreign defendants as well, the suit was not between “citizens of different States.” The Fourth Circuit affirmed the district court’s dismissal and declined to grant relief under North Carolina’s savings statute, finding it lacked jurisdiction to do so. View "FS Medical Supplies, LLC v. Tanner Pharma UK Limited" on Justia Law

T&T Management, Inc. operated a Country Inn & Suites hotel in Port Orange, Florida, under a 15-year license agreement that restricted the franchisor and others from operating hotels using the Country Inn & Suites marks within a defined area. In 2016, Radisson acquired the Country brand, and in 2022, Choice Hotels International purchased the brand from Radisson, assuming all obligations under the license agreement. Prior to acquiring the Country brand, Choice had licensed Sunshine Fund Port Orange, LLC to operate a WoodSpring Suites hotel within the protected area. T&T argued that this violated its license agreement, which it claimed protected it from all competing branded hotels operated or licensed by Choice in the area, and that the agreement’s definition of “Marks” included the WoodSpring mark.T&T initially brought suit in Florida, but after procedural rulings, the case was transferred to the United States District Court for the District of Minnesota. After amending its complaint multiple times—including to reflect its sale of the Country-branded hotel—T&T alleged breach of contract, breach of the implied covenant of good faith and fair dealing, and tortious interference. The district court dismissed the third amended complaint for failure to state a claim and denied further leave to amend, finding no good cause for additional amendments.Before the United States Court of Appeals for the Eighth Circuit, T&T contended that the district court erred in interpreting the contract, dismissing its claims, and denying further amendment. The Eighth Circuit held that, under Florida law, the agreement unambiguously permitted Choice to license non-Country-branded hotels, such as WoodSpring Suites, within the protected area. It affirmed the dismissal of T&T’s breach of contract and good faith claims, and also found the tortious interference claims insufficient because T&T failed to allege a breach or a non-speculative business expectancy. The appellate court also upheld the denial of further leave to amend due to lack of diligence. The judgment of the district court was affirmed. View "T&T Management, Inc. v. Choice Hotels Int'l" on Justia Law

A South Dakota general partnership, along with two individual partners, claimed they had made a series of loans exceeding $1 million to a corporation run by family members during a period when that corporation was engaged in costly litigation. The loans, according to the partnership, were informally made and not fully documented by promissory notes. After the corporation prevailed in its lawsuit and collected on a judgment, the partnership brought action to recover the loaned amounts. The defendants acknowledged receiving some funds but argued those had been repaid and contended that other claimed loan balances were fictitious.The Second Judicial Circuit Court in Lincoln County, South Dakota, oversaw the trial. The jury found in favor of the partnership, awarding $849,550 in damages. The court refused to instruct the jury on the statute of frauds, as requested by the defendants, and also declined their proposed instruction regarding the requirement to prove contract damages with reasonable certainty. After trial, the court denied the partnership’s request for prejudgment interest, citing the absence of a jury finding on the date of loss.The Supreme Court of the State of South Dakota reviewed the case. It held that whether a writing satisfies the statute of frauds is a question of law, not fact, and that the emails and testimony presented were sufficient to satisfy the evidentiary requirements of the statute. Moreover, the court determined that judicial estoppel precluded the defendants from denying the indebtedness after previously acknowledging the same loans as part of their damages claim in earlier litigation. The court found no abuse of discretion in the damages instruction given and concluded that any error was non-prejudicial. Finally, it held that the plaintiffs had waived their right to prejudgment interest by not securing a jury finding on the date of loss. The judgment was affirmed. View "Fischer v. Fischer-Olson" on Justia Law

An energy company, seeking to address disposal challenges associated with wastewater from its hydraulic fracturing operations, engaged a water technology firm to design and construct a specialized treatment facility. The two sides entered into a series of agreements, culminating in a comprehensive contract for the facility’s construction. Before this final contract was executed, the water technology firm discovered that its design would not meet the energy consumption requirements critical to the energy company, but did not disclose this information. The firm also failed to reveal risks associated with a proposed design change that could affect the quality of the facility’s waste byproduct. Relying on the firm’s representations, the energy company signed the contract and later approved the design change. When the facility failed to meet contractual specifications—producing unusable waste and exceeding power limits—the energy company terminated the contract and sued for breach and fraud.The case was tried in the Denver District Court, which found that the water technology firm had fraudulently induced the energy company into signing the contract by concealing and failing to disclose material facts. The trial court held that the economic loss rule did not bar the fraud claim because the misconduct occurred prior to contract formation. The court awarded the energy company substantial damages and attorney fees. On appeal, the Colorado Court of Appeals affirmed, though it reasoned that the contracts were interrelated but found an independent tort duty still existed.The Supreme Court of Colorado reviewed whether the economic loss rule barred the fraud claim. The Court held that the interrelated contracts doctrine does not apply when each contract is a stand-alone transaction and that the fraudulent conduct occurred before the governing contract was executed, inducing its formation. Therefore, the economic loss rule does not bar the fraud claim. The judgment was affirmed, and the case was remanded for a determination of reasonable attorney fees. View "Veolia Water Techs. v. Antero Treatment LLC" on Justia Law

A business entity, through its principal, attempted to lease a commercial property in Kansas City, Missouri, from the property owner’s company. Both parties signed a lease document; however, the space for the “Commencement Date” was left blank. After negotiations soured—particularly following concerns from neighboring business owners about the potential use and branding of the property—the landlord refused to provide the tenant with keys or possession. The tenant did not provide a requested business plan and, shortly thereafter, the landlord leased the property to a different tenant. The would-be tenant had already paid a security deposit and incurred expenses in anticipation of opening its business.The tenant company filed suit in the United States District Court for the Western District of Missouri, raising claims including breach of contract and racial discrimination. Several months later, after the property was re-leased, the tenant moved for a preliminary injunction and temporary restraining order to compel the landlord to grant possession. At the hearing, the tenant conceded its request for injunctive relief was based solely on the breach of contract claim. The district court denied both the motion for a preliminary injunction and a motion for reconsideration, finding the lease failed to satisfy Missouri’s statute of frauds because the commencement date—an essential term—was not included in the writing, and further finding the tenant failed to show irreparable harm.On appeal, the United States Court of Appeals for the Eighth Circuit affirmed the district court’s denial of both motions. The Eighth Circuit held that, under Missouri law, a lease for longer than one year must include all essential terms, including the commencement date, in a signed writing, and that parol evidence cannot supply missing essential terms. Because the lease lacked the commencement date, the tenant failed to show a likelihood of success on the merits, and failed to demonstrate irreparable harm. The court also found no abuse of discretion in denying reconsideration. View "Euphoric, LLC v. 4128 Broadway, LLC" on Justia Law

After her property experienced water intrusion, a homeowner sued her neighbor, whose property was the source of the problem. The neighbor, in defending the lawsuit, hired a construction consulting firm to inspect both properties and to create an expert report recommending repairs. The recommendations from this report formed the basis of a settlement between the homeowner and her neighbor, and repairs were performed accordingly. After the settlement and repairs, the water intrusion problem recurred, leading the homeowner to file a new lawsuit against the consulting firm, alleging that its recommendations were negligent and defective.In the Superior Court of Orange County, the consulting firm filed an anti-SLAPP motion, asserting that its actions were protected as statements made in the course of litigation. The trial court granted the motion concerning certain claims, but denied it for claims of negligence and breach of contract as a third-party beneficiary, reasoning these arose from conduct rather than protected statements. On appeal, the California Court of Appeal previously affirmed the trial court’s partial denial, finding that the remaining claims were not based on protected activity, and remanded for further proceedings on those claims.Upon remand, the consulting firm moved for judgment on the pleadings, contending that the litigation privilege under California Civil Code section 47(b) barred the remaining claims. The California Court of Appeal, Fourth Appellate District, Division Three, affirmed the trial court’s judgment in favor of the consulting firm. The court held that the litigation privilege applied because the firm’s formulation of repair recommendations was necessarily related to a communicative act (the expert report) prepared in the course of litigation, and thus barred the homeowner’s negligence and third-party beneficiary claims. The judgment in favor of the consulting firm was affirmed. View "Fazel v. Pete Fowler Construction Services" on Justia Law

Technicians employed by the defendant performed installation, maintenance, inspection, testing, repair, and replacement of fire alarms, fire sprinklers, and security system equipment under contracts with public entities in New York. These contracts varied in their language regarding the payment of prevailing wages: some disclaimed any obligation to pay prevailing wages, some were silent, and a few expressly based payment on prevailing wage rates. All contracts included a clause providing that any action against the defendant had to be brought within one year of accrual.The plaintiffs brought a proposed class action in the United States District Court for the Northern District of New York, alleging, among other claims, that they were owed prevailing wages as third-party beneficiaries of the contracts. The District Court granted the defendant’s motion for partial summary judgment, finding that the breach of contract claims were time-barred by the contractual limitation period, that the contracts did not expressly entitle plaintiffs to prevailing wages, and, in the alternative, that plaintiffs were not covered by the prevailing wage law. On appeal, the United States Court of Appeals for the Second Circuit held that plaintiffs were covered by Labor Law § 220 but certified two questions to the New York Court of Appeals regarding the implicit inclusion of prevailing wage promises in public works contracts and the enforceability of shortened contractual limitation periods.The New York Court of Appeals held that the promise to pay prevailing wages is implicit in every public works contract covered by Labor Law § 220, regardless of whether that promise appears in the contract’s text. As a result, employees may bring third-party beneficiary breach of contract claims to enforce the prevailing wage requirement. The Court further held that contractual agreements to shorten the statute of limitations for such claims are unenforceable. The Court answered the first certified question in the affirmative and the second in the negative. View "Walton v Comfort Sys. USA (Syracuse), Inc." on Justia Law

A commercial meat supplier delivered frozen meat products to a distributor over a series of transactions, each accompanied by an invoice. The distributor did not pay all of the invoices, claiming that some of the meat was spoiled, while the supplier insisted that the distributor simply failed to pay what was owed and invented the spoiled-meat justification later. The supplier sued for breach of contract and, alternatively, for quantum meruit (an equitable claim for the value of goods or services provided), seeking payment for the unpaid invoices. The distributor counterclaimed for breach of contract, alleging damages from the spoiled meat.At trial in a Texas district court, the jury was asked whether the distributor failed to comply with the agreements to pay for the meat and answered no. However, the jury found in favor of the supplier on its quantum meruit claim and awarded damages. The jury found that a reasonable attorney’s fee for the supplier’s attorneys was $0. The trial court entered judgment for the supplier on the quantum meruit claim and awarded the supplier its requested attorney’s fees, disregarding the jury’s finding. The Fourth Court of Appeals affirmed the trial court’s judgment on both quantum meruit and attorney’s fees.The Supreme Court of Texas concluded that the supplier’s provision of meat was covered by express agreements between the parties and, as a matter of law, quantum meruit recovery is barred when a valid contract governs the subject matter. Because the supplier was not entitled to recover in quantum meruit, it also could not recover attorney’s fees. The Supreme Court of Texas reversed the relevant portions of the court of appeals’ judgment and rendered a take-nothing judgment in favor of the distributor. View "CHAMPION FOOD SERVICE, INC. v. PROALAMO FOODS, L.L.C." on Justia Law