Justia Contracts Opinion Summaries

A real estate development dispute arose when three businessmen, each controlling separate entities, formed an LLC to redevelop property in Charlotte. The plaintiff, through one entity, held a minority interest and served as a manager with another member. The operating agreement contained strict requirements for transferring membership interests, including the need for prior written consent from both managers. Tensions developed among the partners, and two of them attempted to transfer their interests to new holding companies and later voted to remove the plaintiff as manager. There was, however, no evidence that the formal requirements for transferring membership interests—such as written consent—were ever met.The case was designated a mandatory complex business case and heard in the Superior Court, Mecklenburg County, sitting as the North Carolina Business Court. The plaintiff sought a declaratory judgment that the attempted transfers were valid, rendering the removal of the plaintiff as manager invalid, and further alleged breach of fiduciary duty and constructive fraud. The Business Court found that the plaintiff failed to show the transfer provisions of the operating agreement were followed, so the original members retained their interests and the removal of the plaintiff as manager was valid. The court also ruled that no fiduciary duty arises among a coalition of minority LLC members absent a single majority member with control, and thus dismissed the plaintiff’s claims for breach of fiduciary duty and constructive fraud.The Supreme Court of North Carolina reviewed the case on appeal. It affirmed the Business Court’s order and opinion, holding that the plaintiff failed to show compliance with the operating agreement’s transfer provisions and that there was no basis to impose a fiduciary duty on a coalition of minority LLC members. The summary judgment in favor of the defendants was affirmed. View "Gvest Real Est., LLC v. JS Real Est. Invs., LLC" on Justia Law

Several former employees of a logistics company left their positions and later joined a competitor. The former employer alleged that, as a condition of their employment, these individuals had signed agreements containing restrictive covenants, including broad non-solicitation and business interference clauses. The company claimed the employees breached these restrictive covenants and further alleged that the competitor had tortiously interfered with its contractual relationships.Initially, the United States District Court for the District of Minnesota granted summary judgment for the defendants, holding that the agreements were unenforceable under California law, and thus the breach of contract and tortious interference claims failed. On the first appeal, the Eighth Circuit determined that Minnesota law rather than California law governed the agreements for all but one employee, remanding the case to the district court to reconsider the enforceability of the contracts under Minnesota law and to resolve related summary judgment motions. On remand, the district court again granted summary judgment to the defendants, holding the restrictive covenants were overly broad and unenforceable under Minnesota law, and denied the plaintiff’s motion for voluntary dismissal of certain claims.On appeal, the United States Court of Appeals for the Eighth Circuit held that the restrictive covenants in the agreements are unenforceable under Minnesota law, as they sweep more broadly than necessary to protect the former employer’s business interests, both in scope and geographic reach. The Eighth Circuit also affirmed the district court’s denial of voluntary dismissal, finding it would waste judicial resources and could prejudice the affected employee. The Eighth Circuit affirmed the district court's grant of summary judgment for the defendants, denial of the plaintiff’s summary judgment motion, and denial of the plaintiff’s motion for voluntary dismissal. View "C.H. Robinson Worldwide, Inc. v. Traffic Tech, Inc." on Justia Law

During the COVID-19 pandemic, a university in Nebraska instituted a policy requiring all students to be vaccinated against COVID-19 by a specified deadline, with the only exemptions allowed for medical reasons or until a vaccine received full FDA approval. Religious exemptions were not permitted. Students who failed to comply were unenrolled and barred from campus, and some had holds placed on their accounts, preventing access to transcripts. One student complied with the mandate but suffered adverse effects and was medically exempted from further doses. Another student withdrew voluntarily before the deadline.After the university enforced the mandate, several students sought injunctive relief in the District Court for Douglas County to prevent their unenrollment, alleging breach of contract and unjust enrichment. The court denied relief, finding that any contract included the Emergency Use Authorization waiver agreements and that the students breached the contract by not being vaccinated after FDA approval. An initial appeal was dismissed by the Nebraska Supreme Court for lack of a final, appealable order. The students then consolidated their actions and filed an operative complaint alleging breach of implied contract, denial of due process, conversion, negligence, and violations of the Nebraska Consumer Protection Act (NCPA). The district court dismissed the complaint with prejudice and denied leave to amend.The Nebraska Supreme Court reviewed the district court’s dismissal de novo and found that the students plausibly alleged claims for breach of an implied contract and conversion, based on the university’s unilateral modification of conditions mid-semester and the withholding of transcripts. The court affirmed the dismissal of the negligence and NCPA claims, finding them preempted by the federal Public Readiness and Emergency Preparedness Act, and held that the due process claim was abandoned on appeal. The case was affirmed in part, reversed in part, and remanded for further proceedings on the breach of contract and conversion claims. View "Ramaekers v. Creighton University" on Justia Law

A dispute arose between two siblings, Wayne Orkin and Lisa Albert, over the operation and ownership of a business called Boost Web SEO, Inc. Orkin managed the day-to-day business and generated all of its revenue, while Albert incorporated the company and was listed as its registered agent and officer. No written agreements clarified their roles, profit sharing, or compensation. In 2014, residual income from a payment processing arrangement was assigned to Boost Web, which both parties treated as company revenue for years. In 2021, after a breakdown in their relationship, Albert cut Orkin’s access to company funds and accused him of fraudulent activities in communications with a third-party vendor. Orkin then redirected company revenues to an account he controlled, prompting legal action.The litigation began in Massachusetts Superior Court, where Orkin (and his father) sued Albert and her son for various state-law claims, and Albert removed the case to the U.S. District Court for the District of Massachusetts. Boost Web intervened with a crossclaim against Orkin. After partial summary judgment, the remaining claims—Orkin’s defamation and related claims against Albert, and Boost Web’s conversion claim against Orkin—proceeded to a bench trial. The district court ruled for Albert on the defamation claim, finding her email was not defamatory or was protected as true, and for Boost Web on conversion, awarding it damages for funds Orkin took as personal expenses and for redirected residuals. The court also found Orkin in contempt for interfering with its orders and permanently enjoined him from pursuing related litigation in Florida.The United States Court of Appeals for the First Circuit reviewed the case. It held that the district court erred in dismissing Orkin’s defamation claim, finding that Albert’s email could be defamatory per se and remanded for further proceedings on truthfulness. It affirmed the conversion judgment regarding the redirected residuals but vacated the judgment concerning personal expenses, holding that Orkin was entitled to some compensation and remanded to determine the appropriate amount. The court vacated the contempt order and the permanent injunction, finding the previous orders did not unambiguously decide Boost Web’s ownership. The case was remanded for further proceedings consistent with these holdings. View "Orkin v. Albert" on Justia Law

Russ and Debi Ropken hired a construction company to build a custom home based on an oral agreement. The contractor began work and sent invoices for services and materials, which the Ropkens paid until May 2022, after which they stopped making payments. In July 2022, the Ropkens removed the contractor from the site. The contractor then sent a demand letter for three unpaid invoices totaling $276,169, but the Ropkens refused to pay. The contractor sued to recover the unpaid amount.In the District Court of Park County, the Ropkens admitted owing at least $176,870.21. At the conclusion of a jury trial, the jury found there was a valid contract, the Ropkens had breached it, and awarded the contractor $258,587.70 in damages. The district court entered judgment for that amount and permitted the contractor to request prejudgment interest. The contractor timely filed for prejudgment interest, and the Ropkens objected. The district court found for the contractor, awarding $33,473.25 in prejudgment interest at a statutory rate, and calculated interest from the date of the demand letter. The Ropkens paid the judgment but appealed the prejudgment interest award.The Supreme Court of Wyoming reviewed whether the district court erred in awarding prejudgment interest and whether due process was violated by granting interest without an evidentiary hearing. The court held that a district court may award prejudgment interest even when it is not the trier of fact, as prejudgment interest is a matter of law and not fact. The court found the claim was liquidated and the Ropkens had notice. The court also held that the Ropkens received adequate notice and opportunity to be heard, satisfying due process. The Supreme Court of Wyoming affirmed the award of prejudgment interest. View "Ropken v. Yj Construction, Inc." on Justia Law

Loews Corporation created a publicly traded master limited partnership, Boardwalk Pipeline Partners, LP, to operate natural gas pipelines. The partnership agreement included a call-right provision allowing the general partner, controlled by Loews, to acquire all public limited partnership units if certain conditions were met. In 2018, following proposed policy changes by the Federal Energy Regulatory Commission (FERC) that could affect pipeline profitability, Loews sought legal opinions to justify exercising the call right. Although Boardwalk's internal analysis suggested minimal impact from the FERC changes, Loews’ outside counsel issued an opinion that the policy shift was reasonably likely to have a material adverse effect on Boardwalk’s rates, satisfying a key condition for the call right. After obtaining a second law firm’s endorsement of the opinion’s acceptability, Loews exercised the call right, acquiring public units at a price that unitholders alleged was artificially depressed.The Court of Chancery initially found that the legal opinion used to trigger the call right was not rendered in good faith, meaning a contractual condition for exercising the call right had not been fulfilled. As a result, the court held that Boardwalk’s general partner breached the partnership agreement and awarded damages to the unitholders. The court stayed the remaining claims, which included breach of the implied covenant of good faith and fair dealing, tortious interference, and unjust enrichment.On appeal, the Supreme Court of the State of Delaware first held that the general partner was exculpated from monetary liability for breach of contract under the partnership agreement, reversing the damages judgment and remanding for consideration of the non-exculpated claims. Upon remand, the Court of Chancery dismissed those remaining claims, concluding that the Supreme Court’s prior decision foreclosed them. On further appeal, the Supreme Court of Delaware held that the lower court misunderstood the scope of its prior ruling; it affirmed dismissal of most claims but reversed as to tortious interference, remanding that claim for further proceedings. View "Bandera Master Fund LP v. Boardwalk Pipeline Partners, LP" on Justia Law

This case concerns a contractual dispute between two companies engaged in the purchase and sale of natural gas. In 2010, the parties entered into a base contract using a standard industry form that governed their future transactions, with specific delivery obligations detailed in transaction confirmations executed in October 2020. Under these confirmations, one party was required to deliver fixed and variable amounts of gas to the other at agreed prices. During Winter Storm Uri in February 2021, significant disruptions in natural gas supply occurred, and the seller delivered far less gas than contracted over a six-day period. The seller invoked the contract’s force majeure provision, citing weather-related supply loss and declarations by its affiliates. The buyer, however, disputed the sufficiency and applicability of this claim, asserting the seller could have obtained gas from other sources.After the seller initiated a declaratory judgment action in Texas state court, the case was removed to the United States District Court for the Southern District of Texas. The district court granted partial summary judgment to the seller, holding that force majeure excused its nonperformance, and found the contract did not require the purchase of replacement gas. The question of how to allocate delivered gas between the two contracts (with differing prices) went to a jury, which found for the buyer, concluding that available gas should be allocated first to the fixed-price contract.Upon appeal, the United States Court of Appeals for the Fifth Circuit reviewed the case. The court reversed the district court’s summary judgment on force majeure, finding factual disputes about the seller’s gas supply and its reasonable efforts to avoid nonperformance. The court affirmed the jury’s verdict regarding allocation, holding that trade usage could supplement the contract and sufficient evidence supported the jury’s finding. The case was remanded for further proceedings on force majeure. View "MIECO v. Targa Gas Marketing" on Justia Law

The case centers on a bakery and deli operator, Bagelmania Holdings, LLC, which leased property from Somerset Property, LLC. Together, they renovated the building for Bagelmania’s restaurant, hiring RDH Interests, Inc. as architect, JEM Associates West, Inc. as contractor, and Turpin & Rattan Engineering, Inc. for HVAC mechanical engineering. Following the renovation, Bagelmania and Somerset alleged construction defects and sued these entities for breach of contract, breach of the implied covenant of good faith and fair dealing, and negligence, with both plaintiffs represented by the same attorney.Prior attempts to initiate litigation were dismissed for failing to comply with Nevada’s NRS 11.258 requirements, which mandate an attorney affidavit of merit and supporting expert reports in nonresidential construction defect cases. The plaintiffs then filed a joint complaint supported by one affidavit and a set of expert reports. The defendants argued that each plaintiff was required to file separate affidavits and expert reports, and the Eighth Judicial District Court, Clark County, agreed, dismissing the case with prejudice for failure to comply with NRS 11.258, also awarding attorney fees, costs, and interest to the defendants.On appeal, the Supreme Court of the State of Nevada considered whether a single affidavit and set of expert reports sufficed under NRS 11.258 when coplaintiffs, represented by the same attorney, jointly brought identical claims arising from the same alleged defects. The Supreme Court held that, under such circumstances, separate affidavits and expert reports are not required. The Court found that the plaintiffs complied with the statute’s plain language and purpose and that the affidavit and reports met the statutory requirements. The Supreme Court reversed the district court’s dismissal, vacated the post-judgment award of fees, costs, and interest, and remanded for further proceedings. View "Bagelmania Holdings, LLC v. RDH Interests, Inc." on Justia Law

A dispute arose from the design and installation of cabinetry in a luxury home in Charleston, South Carolina. Design Gaps, Inc., owned by David and Eva Glover, had a longstanding business relationship with Shelter, LLC, a general contractor operated by Ryan and Jenny Butler. After being dissatisfied with Design Gaps’ performance, the homeowners, Dr. Jason and Kacie Highsmith, and Shelter terminated their contract with Design Gaps and hired Distinctive Design & Construction LLC, owned by Bryan and Wendy Reiss, to complete the work. The Highsmiths and Shelter initiated arbitration against Design Gaps, which led to the arbitrator ruling in favor of the homeowners and Shelter on their claims, and against Design Gaps on its counterclaims, including those for copyright infringement, tortious interference, and unfair trade practices.After the arbitration, Design Gaps sought to vacate the arbitration award in the United States District Court for the District of South Carolina, but the court instead confirmed the award. Concurrently, Design Gaps filed a separate federal lawsuit against several parties, including some who were not part of the arbitration. The defendants moved to dismiss, arguing that res judicata and collateral estoppel barred the new claims, or alternatively, that the claims failed on other grounds such as the statute of limitations and laches. The district court agreed, dismissing most claims based on preclusion or other legal bars, and granted summary judgment on the remaining claims.The United States Court of Appeals for the Fourth Circuit reviewed the district court’s decisions. The court held that res judicata and collateral estoppel applied to bar most of Design Gaps’ claims, even against parties not directly involved in the arbitration but in privity with those who were. For the remaining claims, the court found they were properly dismissed on grounds such as the statute of limitations, waiver, or laches. The Fourth Circuit affirmed the district court’s judgment in full. View "Design Gaps, Inc. v. Distinctive Design & Construction LLC" on Justia Law

A manufacturer of aircraft engines contracted with both the federal government and commercial clients. The contracts at issue were cost-plus agreements, requiring the government to reimburse the manufacturer for a share of overhead costs, calculated under federal Cost Accounting Standards (CAS), specifically CAS 418. The manufacturer used unique “collaboration agreements” with suppliers, involving payments tied to program revenues rather than direct part costs. A central dispute arose over whether certain costs, known as “Drag”—representing amounts paid by collaborators to compensate the manufacturer for shared expenses—should be included in the pool of overhead costs to be allocated, and over how to measure the material costs of parts for allocation purposes.After protracted disagreements and administrative decisions dating back to the 1990s, a contracting officer in 2013 determined that the manufacturer’s accounting violated CAS 418 and that Drag amounts should be excluded from the overhead pool. The manufacturer appealed to the Armed Services Board of Contract Appeals. The Board held in part for each side: it found the Drag agreement between the parties valid, so Drag need not be excluded, but rejected the manufacturer’s method for calculating material costs, settling on a “net revenue share” approach. The Board remanded to the parties to negotiate quantum (the amount owed), retaining jurisdiction if they failed to agree.The United States Court of Appeals for the Federal Circuit reviewed the case. It held that it lacked jurisdiction to review the Board’s decision on the material cost allocation base (CAS 418 Claim) because no final determination of quantum had been made. However, the court found the Board’s decision on the Drag Claim was final and reviewable. The Federal Circuit held that the Drag agreement was unenforceable against the government because it did not comply with required federal regulations for advance agreements, and therefore reversed the Board’s ruling on that point. The case was remanded for further proceedings. View "SECRETARY OF DEFENSE v. PRATT & WHITNEY" on Justia Law