Justia Contracts Opinion Summaries

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

Guild Mortgage Company LLC and CrossCountry Mortgage LLC are direct competitors in the residential mortgage industry. Over an 18-month period, several Guild employees in the Kirkland, Washington branch, including the branch manager and other high-level staff, were allegedly recruited by CrossCountry while still employed by Guild. According to the complaints, these employees solicited their colleagues to also move to CrossCountry, diverted customers and loan applications, and accessed Guild’s computer systems to take confidential and proprietary information. The employees had signed agreements with Guild prohibiting such conduct, and Guild subsequently lost nearly its entire Kirkland branch workforce to CrossCountry.After Guild initiated arbitration against the former employees and prevailed, it filed a lawsuit in the Superior Court of San Diego County against CrossCountry. Guild’s claims included interference with economic advantage, interference with contract, violation of California’s Comprehensive Computer Data Access and Fraud Act (CCDAFA), unfair competition, and aiding and abetting tortious conduct. The Superior Court sustained CrossCountry’s demurrers, finding that the claims were preempted by the California Uniform Trade Secrets Act (CUTSA) or otherwise failed to state a cause of action, and dismissed the case without leave to amend.The Court of Appeal, Fourth Appellate District, Division One, reviewed the case. It held that Guild had adequately alleged actionable duties of loyalty and, for the branch manager, fiduciary duty, that were breached by the employees and aided by CrossCountry. The court found that the claims for interference and violation of the CCDAFA were not displaced by CUTSA because they arose from conduct beyond trade secret misappropriation. The court also held that the unfair competition claim could proceed since the other claims were viable. The Court of Appeal reversed the judgment in favor of CrossCountry and remanded for further proceedings. View "Guild Mortgage Company v. CrossCounty Mortgage" on Justia Law

A dispute arose following a failed real estate transaction involving the sale of a hotel property in Warwick, Rhode Island. The property was to be sold by Shiva, LLC, of which Jay Patel was the registered agent, to LandingPartners LLC under a Purchase and Sale and Discounted Pay-Off Agreement. Centreville Bank held a mortgage on the property, which was in default. When Shiva, Airport Hospitality (another entity linked to Patel), and Patel failed to respond to an earlier lawsuit brought by LandingPartners, the Superior Court entered a default judgment against them, ordering specific performance of their obligations under the agreement and appointing a commissioner to facilitate the closing. Afterward, LandingPartners and Centreville Bank reached a consent order with new terms for the sale and discharged the mortgage, and the case was dismissed with prejudice.Shortly after the dismissal of the first case, Patel filed a new lawsuit in the Washington County Superior Court against LandingPartners, Centreville, and a related entity, 1850 Post Road Owner LLC. He alleged violations of the agreement, fraud, misrepresentation, unjust enrichment, and breach of the implied covenant of good faith and fair dealing. The defendants moved to dismiss, arguing the claims were barred by res judicata because they arose from the same transaction addressed in the prior litigation. The Superior Court agreed, finding that the parties or their privies were the same, the issues arose from the same transaction, and there was a final judgment in the first action.The Supreme Court of Rhode Island affirmed the Superior Court’s judgment. The Court held that res judicata barred Patel’s claims, as all issues now raised were or could have been raised in the initial suit, and the new claims concerned the same transaction. The dismissal of Patel’s complaint with prejudice was therefore upheld. View "Jay Patel v. LandingPartners LLC et al." on Justia Law

Two American companies, Declan Flight, Inc. and Right Rudder Aviation, LLC (RRA), developed successful sales and distribution relationships with Pipistrel, a Slovenian aircraft manufacturer, through contracts signed in 2020 and 2021. Their contracts contained forum-selection clauses specifying Slovenia as the forum for disputes. In 2022, Textron, Inc., a large U.S. aerospace company, acquired Pipistrel through its subsidiary Textron eAviation, Inc. Shortly after the acquisition, Textron and eAviation orchestrated the termination of Declan’s and RRA’s contracts. RRA also lost a separate sales contract with Mesa Airlines after Textron and eAviation allegedly interfered with that business relationship.Declan and RRA sued Textron and eAviation in the United States District Court for the Middle District of Florida, alleging tortious interference with the Pipistrel contracts and with the Mesa Airlines contract. The district court dismissed the claims related to the Pipistrel contracts (Counts I and II) for forum non conveniens, holding that the forum-selection clauses could be enforced by Textron and eAviation—nonsignatories—under the federal doctrine of equitable estoppel, thus requiring litigation to proceed in Slovenia. The district court also found that personal jurisdiction existed for the Mesa Airlines claim (Count III), but dismissed it for failure to state a claim.On appeal, the United States Court of Appeals for the Eleventh Circuit reversed the dismissal of Counts I and II. The court held that the applicability of the forum-selection clauses is governed by Slovenian law, not federal common law, and that Slovenian law does not permit nonsignatories to invoke these clauses. Thus, the district court erred in applying the modified forum non conveniens rule from Atlantic Marine. The Eleventh Circuit also reversed the finding of personal jurisdiction over Textron and eAviation as to Count III, remanding all claims for further proceedings. View "Declan Flight, Inc. v. Textron eAviation, Inc." on Justia Law

Several researchers at the University of California received multi-year federal grants from agencies including the Environmental Protection Agency, the National Science Foundation, and the National Endowment for the Humanities. In April 2025, these agencies terminated the research grants by issuing form letters, citing shifts in agency priorities and referencing multiple Executive Orders issued by the President, some of which explicitly aimed to eliminate diversity, equity, and inclusion (DEI) and related initiatives from the federal government. The affected researchers alleged these terminations resulted in lost funding, harm to their reputations, and disruption to their projects, with no ready alternative sources of support.The researchers filed a class action lawsuit in the United States District Court for the Northern District of California, asserting constitutional and statutory claims, including violations of the First Amendment and the Administrative Procedure Act (APA). The district court provisionally certified two classes: one consisting of researchers whose grants were terminated by form letter without grant-specific explanation (the Form Termination Class), and another whose grants were terminated specifically due to the DEI Executive Orders (the DEI Termination Class). The district court granted a preliminary injunction, ordering the reinstatement of the grants for both classes. The government appealed.The United States Court of Appeals for the Ninth Circuit reviewed the case. The court held that the plaintiffs had established Article III standing. It reversed the preliminary injunction for the Form Termination Class, concluding that the district court likely lacked jurisdiction over their APA claim because the claim was essentially contractual and thus barred by the Tucker Act. However, the Ninth Circuit affirmed the preliminary injunction for the DEI Termination Class, finding that the class was likely to succeed on its First Amendment claim because the grant terminations were based on viewpoint discrimination. The court remanded for further proceedings. View "THAKUR V. TRUMP" on Justia Law

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