Justia Contracts Opinion Summaries

Highland Capital Management, L.P. and HCRE Partners (now NexPoint Real Estate Partners) collaborated on a large real estate project in 2018, forming SE Multifamily Holdings, LLC to acquire substantial residential assets. HCRE, controlled by James Dondero, and Highland structured their membership interests in the LLC through an amended agreement after another investor joined. When Highland later entered Chapter 11 bankruptcy, HCRE, led by Dondero, filed a proof of claim asserting entitlement to distributions and seeking contract reformation regarding membership allocation. Both Dondero and another officer, Matt McGraner, admitted during litigation that their claim lacked merit, and evidence showed the claim was filed without investigation, likely to protect SE Multifamily’s assets from Highland’s creditors.The United States Bankruptcy Court for the Northern District of Texas oversaw the proceedings, including extensive discovery and a motion to disqualify HCRE’s counsel, which the court granted. As discovery continued, HCRE sought to withdraw its claim two days before critical depositions, but the bankruptcy court denied the motion, finding withdrawal would prejudice Highland. After a bench trial, the bankruptcy court ruled against HCRE, rejecting its contract reformation theory and disallowing its proof of claim. Subsequently, the court imposed sanctions on HCRE, finding bad faith in both the filing and litigation of the claim. The United States District Court for the Northern District of Texas affirmed the imposition of sanctions.On appeal, the United States Court of Appeals for the Fifth Circuit affirmed the lower courts’ decisions. The Fifth Circuit held that clear and convincing evidence supported the bankruptcy court’s finding that HCRE acted in bad faith by filing a baseless claim and litigating it in bad faith, including frivolously opposing the disqualification of counsel and seeking to withdraw the claim to avoid discovery while preserving it for future litigation. The court also held the sanctions were causally related to HCRE’s conduct and not an abuse of discretion. View "NexPoint v. Highland" on Justia Law

Two infrastructure companies formed a joint venture to bid on a Colorado highway express lane project, relying on engineering designs from a subsidiary of one partner. After winning the contract, the joint venture entered a subcontract with the engineering firm that incorporated many of their earlier terms but added a liability cap. During the project, disputes arose over the design work, resulting in multiple redesigns and delays. The engineering firm submitted change orders for additional work, but the joint venture either failed to process them according to contract procedures or “shelved” them as litigation began.The engineering firm sued the joint venture in the United States District Court for the District of Colorado, claiming breach of contract and unjust enrichment. The joint venture counterclaimed for breach of both the subcontract and the original teaming agreement, and later added a negligent misrepresentation claim. The district court dismissed the negligent misrepresentation counterclaim under the economic-loss rule and later granted summary judgment to the engineering firm on the teaming agreement counterclaim, holding that the subcontract superseded the earlier agreement and imposed a liability cap. The joint venture sought to add fraud counterclaims more than a year after the final pretrial order, but the district court denied this as untimely and prejudicial. The court also rejected the joint venture’s attempt to concede liability and assume the plaintiff’s role at trial, and denied its Rule 50 motions.On appeal, the United States Court of Appeals for the Tenth Circuit reviewed the district court’s rulings. The appellate court held that the district court did not err in denying the joint venture’s various motions, including its attempt to add new counterclaims, to instruct the jury on an implied duty of good faith and fair dealing, or to enter judgment against itself. The Tenth Circuit affirmed the district court’s judgment in favor of the engineering firm on all claims and counterclaims. View "AECOM Technical Services v. Flatiron | AECOM" on Justia Law

A married couple enrolled their children at a private school that, until the 2020–2021 academic year, offered a traditional curriculum. Following the events of summer 2020, the school shifted its curriculum to emphasize issues of race and gender identity. The parents became concerned after learning their sixth-grade child was exposed to controversial teachings and age-inappropriate materials. They joined a group of parents to express their concerns to the school’s leadership. After the parents met with school officials, the school abruptly expelled their children and accused the parents of making racist remarks, which the parents deny.The parents filed suit in Superior Court, Mecklenburg County, alleging breach of contract, fraud, unfair and deceptive trade practices, defamation, and other claims. The trial court, Judge Lisa C. Bell presiding, dismissed all claims except for breach of the implied covenant of good faith and fair dealing. The parents voluntarily dismissed that remaining claim to appeal. The North Carolina Court of Appeals affirmed the trial court’s dismissal of all other claims.The Supreme Court of North Carolina reviewed the case to determine whether the parents’ complaint satisfied the state’s “notice pleading” standard for surviving a motion to dismiss under Rule 12(b)(6). The court held that the parents adequately alleged claims for breach of contract, fraud, unfair and deceptive trade practices based on their fraud allegations, and defamation. The court found that their breach of contract claim was viable because they alleged the school expelled their children under a false pretext, in violation of the contract. The fraud and defamation claims also survived due to sufficient factual allegations. The Court reversed the Court of Appeals in part and remanded for further proceedings on these claims, but affirmed or declined to review the dismissal of other claims. View "Turpin v. Charlotte Latin Schools, Inc" on Justia Law

A Chinese drone manufacturer and its subsidiary challenged their designation by the U.S. Secretary of Defense as a “Chinese military company” under Section 1260H of the National Defense Authorization Act. The designation, which is published annually, restricts the company from contracting with certain government agencies and can damage its business reputation. DJI was added to the list in 2022 and again in 2024 and 2025 without prior notice. DJI petitioned for removal, which was denied, and subsequently received a report explaining the designation, though portions of the rationale were redacted.DJI filed suit in the United States District Court for the District of Columbia, alleging violations of the Fifth Amendment’s Due Process Clause and the Administrative Procedure Act. The company argued that it was denied due process, that there was insufficient evidence for the designation, that the agency failed to explain disparate treatment compared to other companies, and that the Secretary’s finding that DJI “contributes” to the Chinese defense industrial base was unsupported. The district court granted summary judgment against DJI, relying solely on the unclassified administrative record and declining to review the classified materials.On appeal, the United States Court of Appeals for the District of Columbia Circuit reviewed the case de novo. The appellate court affirmed the district court’s rejection of DJI’s due process, evidentiary, and disparate treatment claims, holding that DJI failed to show deprivation of a protected liberty or property interest, and that sufficient evidence supported the finding that DJI received government assistance. However, the appellate court reversed the district court’s conclusion regarding DJI’s “contribution” to the Chinese defense industrial base, finding that the lower court improperly relied on post hoc agency arguments and failed to review the classified record. The case was remanded for further proceedings on that issue. View "SZ DJI Technology Co., Ltd. v. DOD" on Justia Law

A couple alleged that their home in Union Springs suffered significant roof damage from a storm in January 2024. They had a homeowners’ insurance policy with an insurer and submitted a repair estimate of $9,112.02 to the company, which responded with a significantly lower settlement offer. The couple sued the insurer in the Bullock Circuit Court, claiming breach of contract and bad faith, and alleged a systematic practice by the insurer of underpaying roof claims. During discovery, the couple requested documents relating to the handling of roof claims. The insurer objected, citing concerns over the breadth of the requests and the confidential nature of certain documents.After both sides submitted competing motions for protective orders, the circuit court entered an order that allowed some confidential materials produced by the insurer to be used not only in the couple’s case but also in other cases handled by their counsel involving similar claims against the insurer. The order also permitted sharing information with governmental agencies under certain conditions. The insurer petitioned the Supreme Court of Alabama for a writ of mandamus, seeking to vacate the protective order and require a more restrictive, non-sharing version.The Supreme Court of Alabama held that there is no per se prohibition against sharing provisions in protective orders, provided there are adequate safeguards. The court concluded that the circuit court did not exceed its discretion in allowing sharing with government entities. However, it required the protective order to be modified to (1) specify the exact cases in which sharing is permitted, (2) require all recipients to agree in writing to be bound by the order and submit to the circuit court’s jurisdiction, and (3) clarify obligations for returning or destroying confidential materials at the conclusion of each case. The petition for mandamus was granted in part and denied in part, and the writ was issued accordingly. View "Ex parte State Farm Fire and Casualty Company" on Justia Law

The case concerns a dispute stemming from a loan agreement between Christopher Huber and Janet Currie. In 2019, Currie sought to purchase a hemp business and borrowed $185,000 from Huber, agreeing to repay $370,000 within approximately six months—an effective annual interest rate of 200%. The agreement also required Currie to provide a mortgage to secure the loan, which she did not do. After acquiring the business, Currie transferred the property to another entity she controlled without compensating Huber and failed to repay the loan. Huber sued Currie and related entities for breach of contract and fraudulent transfer, seeking the contract amount, interest, and an equitable lien on the property.The Vermont Superior Court, Addison Unit, Civil Division, granted partial summary judgment to Huber on the breach-of-contract claim because Currie did not contest the essential facts or substantiate her listed affirmative defenses, including usury, in her response to Huber’s motion. The court denied summary judgment on the fraudulent-transfer claim. Currie later moved to vacate the summary-judgment order, arguing that the contract was usurious under Vermont law. The court denied this motion, finding Currie had waived the usury defense by failing to raise it at the summary-judgment stage. The court awarded Huber $185,000 with interest at the legal rate and imposed an equitable lien, but did not rule on Currie’s third-party claims.On appeal, the Vermont Supreme Court affirmed the lower court’s judgment for Huber, holding that Currie procedurally waived the usury defense by not properly raising it in response to the summary-judgment motion, and that the trial court acted within its discretion in refusing to revisit the issue. The Court remanded the case for consideration of Currie’s outstanding third-party claims. View "Huber v. Currie" on Justia Law

A group of former shareholders of a reinsurance provider’s parent company acquired the provider’s rights to seek recourse against third parties for losses stemming from a failed reinsurance program. The losses occurred after the provider’s agent advised participation in a structurally unsound London Market program, resulting in significant financial harm. The shareholders, now plaintiffs, alleged that an insurance brokerage firm failed to properly notify the agent’s professional liability insurers of claims arising from these events, as required under agreements between the broker, the agent, and the insurers.After unsuccessful attempts to recover from the provider’s agent and its bankrupt parent company, the plaintiffs notified the agent’s insurers, who denied coverage due to untimely notice. The plaintiffs then filed suit against the brokerage firm in the Circuit Court of Cook County, Illinois, asserting claims for professional negligence and breach of contract. The suit was removed to the United States District Court for the Northern District of Illinois. The district court dismissed the negligence claim and granted summary judgment to the brokerage firm on the contract claim, finding the provider was not a third-party beneficiary to the relevant agreements and the broker owed no duty to the provider.The United States Court of Appeals for the Seventh Circuit reviewed the case and affirmed the district court’s judgment. The court held that the provider was not a third-party beneficiary of the agreements between the broker and the agent, as the contracts did not expressly manifest an intent to benefit the provider. The court also held that the broker owed no professional duty to the provider to notify the agent’s insurers of claims. Finally, it concluded that the claims were time-barred under Illinois law. View "Ferguson v Aon Risk Services Companies, Inc." on Justia Law

Bristol-Myers acquired Celgene in 2019 and, as part of the transaction, issued contingent value rights (CVRs) to Celgene shareholders. These CVRs entitled holders to a one-time payment if certain FDA approvals were obtained by specified deadlines. The CVR Agreement established a trust to benefit CVR holders, with Equiniti Trust Company as the original trustee. After concerns that Equiniti was affiliated with Bristol-Myers, a majority of CVR beneficial owners sought to appoint UMB Bank as successor trustee. UMB, acting as trustee, later sued Bristol-Myers alleging breach of its diligent efforts obligations under the Agreement.The United States District Court for the Southern District of New York dismissed UMB’s claims for lack of subject matter jurisdiction, holding that UMB lacked Article III standing because it was not properly appointed as trustee under the strict terms of the CVR Agreement. The district court found UMB’s appointment invalid, and concluded this defect implicated standing and thus could not be cured. Bristol-Myers conditionally cross-appealed the district court’s denial of a prior motion to dismiss on alternative grounds.The United States Court of Appeals for the Second Circuit reversed, holding that any defects in UMB’s appointment implicated its capacity to sue, not Article III standing. The court determined that injuries to the trust and its beneficiaries provided standing, and that UMB’s claims as trustee did not require UMB to have suffered personal injury. The Second Circuit further concluded that, even if UMB’s appointment did not strictly comply with the Agreement, the conduct of both Bristol-Myers and Equiniti, along with the approval of a majority of beneficial owners, constituted waiver or ratification, precluding Bristol-Myers from challenging UMB’s capacity to act. The appellate court vacated the district court’s judgment, dismissed the cross-appeal, and remanded the case for further proceedings. View "UMB Bank v. Bristol-Myers" on Justia Law

Underwood Towers Limited Partnership leased land from the city of Hartford to build apartment buildings and financed the project with a mortgage loan. After defaulting, Underwood executed additional notes and a second mortgage in favor of HUD. Following further defaults and transfers, LPP Mortgage Inc. acquired the second mortgage and notes but did not receive the original of one note—only a lost note affidavit. LPP Mortgage then brought a foreclosure action, seeking not only to foreclose the mortgage but also damages against Underwood and its management agent, CDC Management Corporation.The Superior Court, Complex Litigation Docket, denied Underwood and CDC’s motion to dismiss, ruling that LPP Mortgage had standing to foreclose as the owner of the debt, even without possession of the lost note, relying on New England Savings Bank v. Bedford Realty Corp. Judgment of strict foreclosure and damages was entered. On appeal, the Connecticut Appellate Court affirmed, concluding that LPP Mortgage had standing to pursue foreclosure as the debt owner, despite not being able to enforce the note under the UCC. The case was remanded for setting new law days. After remand, Underwood and CDC again moved to dismiss, arguing that the Connecticut Supreme Court’s later decision in Bank of New York Mellon v. Tope changed the law, requiring possession of the note to foreclose.The Connecticut Supreme Court reviewed the case after transfer from the Appellate Court. The Court held that res judicata barred Underwood and CDC from relitigating LPP Mortgage’s standing, as the issue had already been fully litigated and decided by the Appellate Court. The Supreme Court further held that Bank of New York Mellon v. Tope did not overrule Bedford Realty Corp., and thus the law had not changed. The trial court’s denial of the motions to dismiss was affirmed, and the case was remanded for further proceedings. View "LPP Mortgage Ltd. v. Underwood Towers Ltd. Partnership" on Justia Law

A woman and her husband, after marrying, received a parcel of real estate from her parents, which they held as tenants by the entirety in Massachusetts. They planned and undertook substantial renovations, initially funded by gifts from the husband’s parents. When those funds ran out, the husband’s parents provided over $1.5 million more, which was later documented as a loan in a promissory note signed only by the husband, not the wife. The couple’s marriage deteriorated, leading to divorce proceedings. During the divorce, the husband’s parents obtained a default judgment against the husband (but not the wife) for the loan and secured a writ of execution against his interest in the property, which was recorded. After the divorce, the family court awarded the property solely to the wife, free from any claim by the husband, and clarified that it could not adjudicate the parents’ rights under the promissory note.Subsequently, the husband’s parents transferred their judgment to a family trust, which noticed a sheriff’s sale of the husband’s purported interest in the property. The wife sued in state court to stop the sale, the case was removed to federal court, and both sides sought summary judgment. The United States District Court for the District of Massachusetts granted summary judgment to the wife, holding that the divorce and property distribution extinguished the creditor’s interest and that, even if the loan were valid, the wife was not jointly liable because the funds were not spent on “necessaries” under Massachusetts law.On appeal, the United States Court of Appeals for the First Circuit vacated the district court’s prediction of state law concerning the effect of divorce on a creditor’s interest and remanded for factual findings on the validity of the loan as to the wife. The court also found that neither preclusion nor the state’s domestic relations exception barred the wife’s challenge, and that factual disputes remained as to whether the loan was spent on necessaries. The court affirmed, reversed, and vacated in part, remanding for further proceedings. View "Cosel v. Wendt" on Justia Law