Justia Contracts Opinion Summaries

Golden Corral, a buffet restaurant chain, held a commercial property insurance policy issued by Illinois Union Insurance Company, covering losses from physical damage to its property. When state and local governments, including North Carolina, mandated closure of indoor dining facilities in response to the COVID-19 pandemic, Golden Corral suspended its restaurant operations, resulting in significant lost revenue and reduced income from franchisees. Golden Corral submitted a claim to Illinois Union for coverage of these losses, which Illinois Union denied.After the denial, Golden Corral filed suit in North Carolina state court, seeking a declaration that its pandemic-related losses were covered under the policy. The case was removed to the United States District Court for the Eastern District of North Carolina, where Golden Corral amended its complaint to add claims for breach of contract and breach of the implied covenant of good faith and fair dealing. Illinois Union moved for judgment on the pleadings, arguing that COVID-19 did not cause physical loss or damage as required for coverage. The district court granted the motion and dismissed the case with prejudice, a decision affirmed by the United States Court of Appeals for the Fourth Circuit.Over three years later, Golden Corral sought relief from final judgment under Federal Rule of Civil Procedure 60(b)(6), citing a subsequent North Carolina Supreme Court decision in North State Deli v. Cincinnati Insurance Co. that found similar losses covered. The United States Court of Appeals for the Fourth Circuit reviewed the district court’s denial of the Rule 60(b)(6) motion for abuse of discretion. The court held that a change in state decisional law alone does not constitute "extraordinary circumstances" warranting relief under Rule 60(b)(6), especially when the later case involved different parties, policies, and injuries. The Fourth Circuit affirmed the district court’s decision to deny relief. View "Golden Corral Corp. v. Illinois Union Insurance Co." on Justia Law

A large New York healthcare provider participated for decades in the Blue Cross Blue Shield insurance network through contracts with the New York Blue Cross licensee, Empire. Under this arrangement, the provider offered negotiated pricing and direct billing for Blue Cross patients. The Blue Cross network comprises thirty-four independent companies, each licensed to operate in a specific region. The provider’s current dispute concerns claims for care provided to patients insured by Blue Cross entities based in Washington, D.C., Maryland, and Virginia. These out-of-state insurers, although not directly contracted with the provider and not operating in New York, used the BlueCard Program to facilitate claims processing in New York and relied on Empire’s network to obtain discounted rates. The provider alleged that these insurers underpaid over $5.5 million in claims.After unsuccessful resolution attempts under the Provider Agreement, the provider brought suit in New York state court. The defendants removed the case to the United States District Court for the Eastern District of New York, which dismissed the case for lack of personal jurisdiction and failure to state a claim. The district court also denied leave to amend the complaint.The United States Court of Appeals for the Second Circuit reviewed the case. It found diversity jurisdiction proper, holding that the D.C.-based insurer’s federal charter made it a D.C. citizen for jurisdictional purposes. The court held that the out-of-state insurers’ purposeful business dealings with Empire and exploitation of New York’s healthcare market established personal jurisdiction under both New York’s long-arm statute and the Due Process Clause. On the merits, the Second Circuit held that the provider adequately stated claims for contract liability based on ratification and for quasi-contract, but affirmed dismissal of the provider’s third-party beneficiary claims. The court affirmed in part, reversed in part, and remanded for further proceedings. View "Northwell Health, Inc. v. Group Hospitalization and Medical Services, Inc." on Justia Law

A group of employees working for a private contractor, which operated and maintained a municipal wastewater treatment facility under a long-term contract with the local water and sewer commission, claimed they were entitled to be paid prevailing wages for their work. The contract, authorized under a special legislative act, included both initial capital improvements (which were subcontracted out and paid at prevailing wage rates) and ongoing operations, maintenance, repair, and replacement work, which was paid according to collective bargaining agreements. The employees performed work in the latter category and argued that the prevailing wage requirements should apply to their activities.After the employees brought suit in Massachusetts Superior Court, the case was removed to the United States District Court. Both sides filed for summary judgment. The District Court judge ruled for the contractor, finding that the employees' work was not covered by the phrase "construction and design of improvements" in the special act, and therefore was not subject to the prevailing wage law. The employees appealed, and the United States Court of Appeals for the First Circuit certified two questions of Massachusetts law to the Supreme Judicial Court.The Supreme Judicial Court of Massachusetts held that the phrase "construction and design of improvements" in the special act is not synonymous with the broader definition of "construction" in the prevailing wage law and does not include ordinary repairs, routine inspections, day-to-day operations and maintenance, or ordinary replacements. The Court further concluded that its previous decision in Metcalf v. BSC Group, Inc., 492 Mass. 676 (2023), which addressed different statutory provisions relating to professional services contracts, does not control or render the special act incompatible with the prevailing wage law. View "Nicholls v. Veolia Water Contract Operations USA, Inc." on Justia Law

A physician was employed by a medical group and its affiliated healthcare organization when they implemented a COVID-19 vaccination policy requiring employees to either be vaccinated or obtain a medical or religious exemption. The physician objected to the policy on scientific and religious grounds and engaged in internal advocacy, including meetings with leadership and organizing a petition among medical staff. She also communicated with a disbarred attorney who was promoting litigation against the vaccine mandate, forwarding confidential internal emails and documents to him to build his case. Although she was granted a religious exemption, she was subsequently terminated for cause, with the employer citing misappropriation of company property, policy violations, disruptive conduct, and breach of loyalty.After exhausting administrative remedies, the physician filed suit in the United States District Court for the Eastern District of Kentucky, asserting federal claims for retaliation under Title VII and the ADA, and state claims for retaliation, discharge against public policy, breach of contract, tortious interference, and declaratory relief from her non-compete clause. Both parties moved for summary judgment. The district court granted summary judgment in favor of the defendants on all claims, finding no violation of state or federal law.The United States Court of Appeals for the Sixth Circuit reviewed the district court’s grant of summary judgment de novo. The court held that the physician did not engage in protected activity under Title VII or the ADA, as her conduct did not qualify under either the participation or opposition clauses. Her state retaliation claims failed for the same reasons. The court also ruled that Kentucky’s wrongful discharge tort applies only to at-will employees, and her contract employment precluded such a claim. Finally, it found no breach of contract, as her conduct violated company policies and justified termination for cause. The Sixth Circuit affirmed the district court’s judgment. View "DiChiara v. Summit Medical Group, Inc." on Justia Law

Jackie Lackie owned property adjacent to Greers Ferry Lake, a federally managed lake in Arkansas. In January 2022, park rangers discovered sixty-nine trees had been cut down on government land between Lackie’s property and the lake. The Army Corps of Engineers identified Lackie as responsible, filed a notice of trespass, and sent Lackie a letter offering to settle the violation if he paid for the tree damage. The letter also indicated the Corps was recommending revocation of his shoreline use permit for a boat dock. Enclosed was a settlement agreement stating the parties intended to settle “all known disputes” regarding the public lands. Lackie signed the agreement and paid the requested sum, but the Corps subsequently revoked his shoreline use permit.Lackie challenged the revocation in the United States District Court for the Eastern District of Arkansas, seeking judicial review under the Administrative Procedure Act. He argued the Corps’s action breached the settlement agreement, which he contended had resolved all disputes, including the permit issue. The district court affirmed the Corps’s decision, reasoning that the letter accompanying the settlement made clear that the permit revocation was not resolved by the agreement, so the Corps did not violate the agreement by revoking the permit.On appeal, the United States Court of Appeals for the Eighth Circuit reviewed the district court’s decision de novo. The court held that under the applicable federal common law, guided by Arkansas law, the unambiguous language of the settlement agreement encompassed “all known disputes,” including the dispute over Lackie’s permit. The Eighth Circuit concluded that the Corps’s revocation of Lackie’s permit contravened the settlement agreement and constituted unlawful agency action. The court reversed the district court’s judgment, remanding with instructions to set aside the Corps’s permit revocation. View "Lackie v. Noe" on Justia Law

A generic drug manufacturer and a brand-name drug company previously settled a patent infringement lawsuit concerning a medication used to treat osteoporosis. As part of their 2018 settlement, the generic manufacturer agreed not to sell its version of the drug until a specified “Entry Date,” and in return, the brand-name company covenanted not to take any action to prevent or delay the approval, launch, or marketing of the generic drug. The agreement did not specify a fixed expiration date for these obligations. Later, after the relevant patents expired in August 2019, the brand-name company submitted a supplemental application to the FDA, obtaining additional regulatory exclusivity that temporarily kept generics—including the plaintiff’s product—off the market.After being unable to enter the market due to this additional exclusivity, the generic manufacturer sued for breach of contract, arguing that the covenants in the settlement agreement required the brand-name company both to waive any exclusivity and not to interfere with its market entry. The United States District Court for the Southern District of Indiana dismissed the case, holding that the agreement and its obligations expired with the patents and therefore could not have been breached after that date.The United States Court of Appeals for the Seventh Circuit reviewed the dismissal de novo. It held that the generic manufacturer plausibly alleged breaches of contract terms that may have survived the expiration of the patents, as the settlement agreement did not clearly define its own duration. The court found that, under Indiana law, a contract without a fixed term remains effective for a “reasonable time,” which is a factual question not suitable for resolution on the pleadings. The Seventh Circuit reversed the district court’s judgment and remanded the case for further proceedings. View "Teva Pharmaceuticals USA, Inc. v Eli Lilly and Company" on Justia Law

A contract between two parties provided for a succession plan at a dairy farm, outlining salary, livestock transfers, and an option to lease the farm. After four years, the party working at the dairy claimed not to have received all payments and livestock owed, resulting in a lawsuit for breach of contract, unjust enrichment, and conversion. A jury awarded damages to the plaintiff but did not specify which claims were the basis for the award. The plaintiff then sought to recover attorney fees and paralegal fees under a contractual provision.The Superior Court of Humboldt County found the plaintiff to be the prevailing party and awarded attorney fees but significantly reduced the compensable hours and, on its own initiative, excluded all paralegal fees, finding the contract did not authorize their recovery. When the plaintiff moved for reconsideration of the paralegal fee exclusion, the court denied the motion and ordered the plaintiff’s attorney to pay the defendants’ fees for opposing it, treating the motion as procedurally improper. The defendants also sought appellate sanctions, arguing the appeal was frivolous and that the plaintiff’s opening brief contained misrepresentations, including fabricated case law quotations.The California Court of Appeal, First Appellate District, Division Four, affirmed the trial court’s reduction of attorney hours, finding no abuse of discretion. However, it reversed the categorical exclusion of paralegal fees, holding that the contractual language allowing recovery of “attorneys’ fees” encompasses reasonable paralegal fees. The appellate court also vacated the sanctions imposed for the reconsideration motion, finding that the motion was procedurally permitted and not frivolous. While the court declined to sanction the appeal as frivolous, it ordered the plaintiff’s attorney to pay sanctions to the court for submitting a brief with fabricated legal quotations. The case was remanded for the trial court to determine reasonable paralegal fees. View "Del Biaggio v. Bansen" on Justia Law

Dr. Mark Lee, age 59 at hiring, was appointed Chair of the Department of Neurosurgery at West Virginia University’s School of Medicine and also employed as a pediatric neurosurgeon by University Health Associates. By spring 2020, senior administrators raised concerns about Lee’s performance, including absenteeism and lack of engagement. In March 2021, Lee was offered a new position requiring him to step down as Chair, which he ultimately declined. Discussions about his removal continued, during which Lee was allegedly told the university sought a younger Chair. After Lee’s attorney raised age discrimination concerns in July and August 2021, Lee was informed he would be removed as Chair effective September 1, 2021, rather than the previously discussed later date. Lee subsequently resigned in January 2022 and pursued claims for age discrimination, retaliation, and breach of contract.The United States District Court for the Northern District of West Virginia dismissed claims against WVU defendants on sovereign immunity grounds and granted summary judgment to University Health Associates on all remaining claims. The district court found Lee’s age discrimination claim lacked direct and circumstantial evidence, noting Lee’s replacement and the decisionmaker were of similar age. Lee’s retaliation claims failed because the removal process began before his complaints, and the decision to accelerate his removal was attributed to his conduct at a July meeting rather than his protected activity. The breach-of-contract claims were rejected based on the employment agreement’s terms and integration clause.The United States Court of Appeals for the Fourth Circuit reviewed the district court’s summary judgment de novo. The Fourth Circuit affirmed summary judgment for University Health Associates on Lee’s age discrimination, retaliation (removal and constructive discharge), and breach-of-contract claims. However, it vacated the judgment on Lee’s claim that the acceleration of his removal constituted unlawful retaliation, finding genuine disputes of material fact precluded summary judgment. The case was remanded for further proceedings on that claim. View "Lee v. West Virginia University Medical Corp." on Justia Law

A China-based company sought to invest indirectly in SpaceX by becoming a limited partner in a Delaware fund, despite SpaceX’s preferences against China-based investors and public disclosure. The fund’s principal allowed the company’s investment and negotiated disclosure terms, which the company followed. The disclosure, accompanied by a press release, attracted significant media attention. When SpaceX learned of the investment through the media, it objected and refused to allow the fund to purchase its shares with the company as a partner. To appease SpaceX, the fund’s principal initially asked the company to withdraw voluntarily, but ultimately removed it unilaterally. The company’s investment was returned, and the fund later purchased SpaceX shares at a higher price.The company sued the fund, its general partner, and the principal in the Court of Chancery of the State of Delaware, alleging breaches of fiduciary duty and the partnership agreement. At summary judgment, the court held that the company’s disclosure was permitted. After trial, it found that the company had not proved breach of loyalty or care, applying the business judgment rule. However, it found a breach of the “duty of candor” in communications surrounding the forced withdrawal, awarding nominal damages and nearly $16 million in attorneys’ fees. Both sides appealed some rulings.The Supreme Court of the State of Delaware affirmed the Court of Chancery’s application of the business judgment rule and its finding of no breach of loyalty or care, as well as its interpretation of the forum-selection clause. It also affirmed the nominal damages award for the breach of the duty to communicate honestly. However, it reversed the award of attorneys’ fees, holding that fee-shifting was not warranted under the circumstances where the plaintiff prevailed only on a minor issue and failed to prove causation or damages. View "Leo Investments Hong Kong Limited v. Tomales Bay Capital Anduril III, L.P." on Justia Law

A Louisiana limited liability company (LLC) with a sole member voluntarily dissolved in April 2024 and subsequently had its Texas registration terminated in May 2024. Prior to dissolution, the LLC had developed a bid strategy for certain oilfield assets and shared confidential information with a bank to seek financing. The assets were ultimately acquired by a different bidder, also financed by the same bank, and the LLC alleged that its confidential information was improperly conveyed to the winning bidder. After dissolution, the LLC initiated a lawsuit in July 2024 against the bank and the winning bidder, asserting trade secret misappropriation and breach of contract.In the United States District Court for the Southern District of Texas, the defendants moved for judgment on the pleadings, arguing the LLC lacked capacity to sue due to its prior dissolution. The LLC did not contest its lack of capacity but requested a stay while it sought reinstatement in Louisiana state court. The district court granted judgment on the pleadings for lack of capacity, denied the LLC’s request for a stay, and denied the defendants’ request to seek attorneys’ fees. The court also sealed various filings relating to the mental health of the LLC’s sole member.The United States Court of Appeals for the Fifth Circuit reviewed the case. It affirmed the district court’s judgment on the pleadings, holding that under Texas law, an entity dissolved prior to suit lacks capacity to file suit, and that Louisiana law does not permit retroactive reinstatement of an LLC dissolved by affidavit to pursue claims known before dissolution but filed after. The Fifth Circuit denied the LLC’s request to certify a question to the Louisiana Supreme Court and affirmed the denial of attorneys’ fees. However, it vacated the district court’s sealing order, remanding for proper balancing of the public’s right of access to court records, as required by precedent. View "Juneau Group v. Vendera Management" on Justia Law