Justia Contracts Opinion Summaries

A San Diego family suffered a significant mistake after the sudden death of their relative, Jose Gonzalez, Jr., in Texas. Due to a mix-up at the Tarrant County Medical Examiner’s Office, the body of Mr. Gonzalez was confused with another individual who died a day later. As a result, the family received the wrong body for burial, while Mr. Gonzalez’s remains were mistakenly cremated in Texas. The widow, Celina Gonzalez, contracted with a California mortuary to arrange for Mr. Gonzalez’s body to be transported and prepared for funeral services in California. However, due to the error, the family discovered the mistake only at the viewing and could not bury their loved one as intended.Following these events, two lawsuits were filed in the Superior Court of San Diego County: one by the extended family and one by Celina and her daughter Edna. The cases were consolidated. The operative complaint alleged breach of contract and negligence. At trial, the mortuary asserted the affirmative defense of impracticability of performance, which the trial judge submitted to the jury. The jury found for the mortuary on both negligence and breach of contract, concluding that performance was excused due to impracticability. The trial court also granted nonsuit to the mortuary, ruling that only Celina, as the contracting party, had standing to sue for breach of contract, and that the extended family were not intended third-party beneficiaries.The California Court of Appeal, Fourth Appellate District, Division One, held that the defense of impracticability of performance is equitable and must be decided by the judge, not a jury. The appellate court reversed the judgment on the breach of contract claim as to Celina, remanding for a bench trial on the impracticability defense and, if necessary, a trial on damages. The court affirmed the dismissal of the extended family’s contract claims, finding they lacked standing. View "Gonzalez v. Community Mortuary" on Justia Law

The plaintiffs held individual retirement accounts (IRAs) for which Capital One acted as custodian. Capital One chose to resign as custodian and notified the plaintiffs that, unless they directed otherwise, their IRA funds would be transferred to Inspira Financial Trust (formerly Millennium Trust Company). Plaintiffs did not act to select a different custodian or investment option. After the funds were transferred, Inspira placed them in a “sweeps” account that paid a low annual interest rate—less than Inspira’s management fees. Plaintiffs complained that both Capital One and Inspira breached their contractual duties by causing their funds to earn little or no net return, though they acknowledged Inspira is a reputable institution.In the United States District Court for the Northern District of Illinois, Eastern Division, the judge compelled arbitration of the claims against Inspira due to an arbitration agreement. The court then dismissed the claims against Capital One on the merits under Federal Rule of Civil Procedure 12(b)(6), relying in part on an exculpatory clause in the contract. Plaintiffs appealed the portion of the judgment relating to Capital One, under Rule 54(b).The United States Court of Appeals for the Seventh Circuit reviewed the case. The appellate court held that Capital One did not breach its contractual obligations, even when interpreting the contract as plaintiffs urged. The court found that Capital One’s actions—providing ample notice and allowing plaintiffs to choose their own custodian or investment vehicle—complied with its duties, including any obligations of good faith and fair dealing under applicable state law. The court further noted that plaintiffs were not prevented from learning about or choosing better investment options. The Seventh Circuit affirmed the district court’s dismissal of the claims against Capital One. View "Hewitt v Capital One Bank, N.A." on Justia Law

A dispute arose between a South Korean electronics manufacturer and a group of Delaware-based patent holding entities after the manufacturer paid $12.8 million to license certain patents in order to protect itself and its customers from infringement claims. Despite this agreement, the patent holders later sued two of the manufacturer’s major automotive customers in Texas, alleging infringement based on those customers’ use of the manufacturer’s telematics units. The customers settled with the patent holders and then sought indemnification from the manufacturer for their legal expenses and settlement payments, as contemplated by supply agreements between the manufacturer and its customers.The manufacturer initiated a breach of contract action in the Delaware Superior Court, alleging that the patent holders’ Texas lawsuits violated the license agreement, which was intended to provide “patent peace” for both the manufacturer and its customers. The parties disputed whether the telematics units at issue were covered by the license or excluded as “Foundry Products.” The Superior Court ruled on summary judgment that the telematics units were covered and not excluded. The jury found for the manufacturer, awarding over $17 million in damages. The court then capped damages at $12.8 million per the contract but, after trial, further reduced the award to $4.9 million based on a new argument by the patent holders about which entity had received the license fee. The court also denied prejudgment interest and costs.On appeal, the Supreme Court of the State of Delaware affirmed the findings that the telematics units were covered by the license and that sufficient evidence supported the manufacturer’s damages and indemnification obligations. It reversed the post-trial reduction of damages to $4.9 million, finding that argument was raised too late and prejudiced the manufacturer, reinstating the $12.8 million cap. The court also reversed the denial of prejudgment interest and costs, remanding for their calculation and award. View "LG Electronics Inc. v. Invention Investment Fund I, L.P." on Justia Law

A public entity contracted with a general contractor to construct a major rail line project. The general contractor, in turn, subcontracted a significant portion of the work to a subcontractor. As the project progressed, it experienced numerous delays and disruptions, which the subcontractor claimed increased its costs. After completing its performance, the subcontractor, relying on expert analysis of its additional costs, filed a verified statement of claim under the Colorado Public Works Act, asserting it was owed additional millions for labor, materials, and other costs, including those stemming from delay and disruption.Following the filing, the general contractor substituted a surety bond for the retained project funds and the subcontractor initiated litigation in Denver District Court. After a bench trial, the trial court found in favor of the subcontractor, concluding that its verified statement of claim was not excessive and that there was a reasonable possibility the claimed amount was due. The court awarded the subcontractor damages for delay, disruption, and unpaid funds. The general contractor appealed, contending the claim was excessive and should result in forfeiture of all rights to the claimed amount. The Colorado Court of Appeals reversed in relevant part, holding that the verified statement of claim was excessive as a matter of law and that the subcontractor forfeited all rights to the amount claimed. This disposition left certain issues raised by the subcontractor on cross-appeal unaddressed.The Supreme Court of Colorado granted review and held that, under the Public Works Act, disputed or unliquidated amounts—including delay and disruption damages—may be included in a verified statement of claim if they represent the specified categories of costs and the claim is not excessive under the statute. The court also held that filing an excessive claim results only in forfeiture of statutory remedies under the Act, not all legal remedies. The Supreme Court reversed the Court of Appeals’ judgment and remanded for further proceedings. View "Ralph L. Wadsworth Constr. Co. v. Reg'l Rail Partners" on Justia Law

The plaintiff entered into a lease agreement with a car dealership to lease a Jeep Grand Cherokee. The lease included an arbitration agreement containing a delegation clause, which specified that disputes about the scope of the arbitration agreement would be decided in arbitration. Later, the plaintiff filed a federal class action lawsuit against the vehicle’s manufacturer, alleging defects in the headrest. The manufacturer, however, was not a party to the lease agreement and did not claim to be an employee, agent, successor, or assign of the dealership.After the lawsuit was filed in the United States District Court for the Eastern District of California, the manufacturer moved to compel arbitration, arguing that the delegation clause required an arbitrator—not the court—to decide whether the manufacturer could enforce the arbitration agreement. In the alternative, the manufacturer asserted that either the plain language of the agreement or the doctrine of equitable estoppel entitled it to compel arbitration. The district court denied the motion, finding that the manufacturer could not enforce the arbitration agreement because it was not a party to the contract and none of the exceptions allowing enforcement by a non-signatory applied.The United States Court of Appeals for the Ninth Circuit reviewed the case and affirmed the district court’s denial of the motion to compel arbitration. The appellate court held that, absent a relevant exception, a non-party to an arbitration agreement cannot enforce the agreement’s terms against a signatory. It found that the language of the arbitration agreement did not cover disputes with the manufacturer, and under California law, the manufacturer could not use equitable estoppel to compel arbitration because the plaintiff’s claims were not founded in or intertwined with the lease agreement. The court’s disposition was to affirm the district court’s order. View "OLSON V. FCA US, LLC" on Justia Law

A married couple separated, and their marital settlement agreement (MSA) awarded the family home to the wife, specifying that the net proceeds of any future sale would be split equally. An amendment later required the wife to sign a quitclaim deed, removing her from the title, while retaining her right to half the proceeds upon sale. Disputes arose over whether the wife still had an interest in the home, leading to litigation. A trial court determined that she retained a one-half interest and ultimately ordered the husband to buy out her share. The only remaining issue was the wife’s request for attorney’s fees and costs under the MSA's prevailing party clause.The Superior Court of San Luis Obispo County found the wife was entitled to an award of attorney’s fees but limited the amount to $12,500, rather than the nearly $49,000 she claimed. The trial court considered the financial circumstances of both parties, noting that neither had significant income and that the case had been over-litigated. The court reasoned that the fees sought were not “reasonably necessary” under the circumstances and allowed the husband to pay in installments. The court also denied the wife’s request to recalculate the fee award solely under Civil Code section 1717, instead of the Family Code.The California Court of Appeal, Second Appellate District, Division Six, affirmed the trial court’s order. The appellate court held that, in marital dissolution cases, even when an MSA includes a prevailing party attorney’s fees clause, the trial court has discretion to consider the losing party’s ability to pay and other equitable factors under Family Code sections 2030 and 2032 when determining the amount of fees. The court found no abuse of discretion or legal error in the trial court’s decision. Each party was ordered to bear their own costs on appeal. View "In re Marriage of Bowman" on Justia Law

After the death of Paul A. Knapp, his son Lance, as personal representative of Paul’s estate, sought to probate Paul’s 2010 will, which primarily left property to his first wife and, if she predeceased him, to his children and grandchildren. Paul’s widow, Barbara, filed claims against the estate, specifically for a share of the marital residence’s proceeds and a statutory maintenance fund. These claims were based on a premarital agreement executed before Barbara and Paul’s marriage, as well as a purported subsequent oral agreement that Barbara would receive 40% of the marital residence due to her financial contributions to its remodel and refinancing.The County Court for Dodge County reviewed the case after Lance, as personal representative, disallowed Barbara’s claims. At trial, evidence showed that while Barbara contributed funds to remodel the residence and participated in refinancing, title to the home remained solely in Paul’s name. The premarital agreement referred to certain rights in a non-existent “Article 9.4” and generally maintained that separate property would remain separate unless jointly titled. The county court found the agreement unambiguous, concluded there was no evidence of a mutual mistake justifying reformation, and determined that Barbara was not entitled to proceeds from the marital residence or a maintenance fund. The court also found insufficient evidence of an enforceable oral contract for transfer of the property.On appeal, the Nebraska Supreme Court affirmed the county court’s decision. The Supreme Court held that the premarital agreement was unambiguous and did not entitle Barbara to the claimed property interests, nor was reformation appropriate. Additionally, the Court found that Barbara had not proven the existence or terms of an enforceable oral contract by clear and convincing evidence. The disallowance of Barbara’s claims was affirmed. View "In re Estate of Knapp" on Justia Law

Porch.com is the parent company of Homeowners of America Insurance Company (HOA), which entered into an agreement with Gallagher Reinsurance (Gallagher) to serve as its reinsurance broker. Gallagher brokered a reinsurance deal for HOA involving Whiterock as the insurer and Vesttoo as a financier, with the understanding that China Construction Bank (CCB) would provide a letter of credit as collateral. Instead, HOA was only given a letter from Yu Po Finance stating a letter of credit would be forthcoming, which was never issued. Gallagher continued to assure HOA that the collateral was valid, leading HOA to authorize a substantial withdrawal by Vesttoo. When it was later revealed that Vesttoo’s collateral was invalid and CCB had never issued the promised letter of credit, HOA suffered financial harm, including increased costs for replacement reinsurance and regulatory intervention.The United States District Court for the Northern District of Texas heard Porch’s breach-of-contract claims against Gallagher, alleging violations of several sections of their agreement. The district court dismissed all of Porch’s claims with prejudice, finding that Gallagher did not breach the contract and that amending the complaint would be futile.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the dismissal de novo. The Fifth Circuit affirmed the dismissal of Porch’s claims under Sections 5 and 11 of the contract, concluding Gallagher had no duty to procure collateral documents from CCB or to comply with Texas insurance laws under the economic sanctions provision. However, the Fifth Circuit reversed the dismissal of Porch’s claim under Section 13, finding that Porch plausibly alleged Gallagher failed to perform administrative services customarily expected of a reinsurance broker after contract placement. The case was remanded for further proceedings on the Section 13 claim. View "Porch.com v. Gallagher Re" on Justia Law

A Canadian citizen married an American citizen in 2017. The couple lived in Canada until 2020, then moved to Hawaii, where the American spouse began working as a physician. The Canadian spouse entered the United States on a tourist visa and soon applied for lawful permanent residency. To support this application, the American spouse signed a federal Affidavit of Support, committing to maintain the non-citizen’s income above 125% of the federal poverty line. The Canadian spouse obtained permanent residency in 2021. Around that time, the marriage ended, and the American spouse moved to Michigan and filed for divorce. In 2022, the parties entered into a settlement agreement and consented divorce judgment in Michigan, in which they resolved all issues—including spousal support—and released any claims against each other.The Canadian spouse later filed suit in the United States District Court for the Eastern District of Michigan, alleging that his former spouse had failed to provide the financial support required by the Affidavit of Support. The former spouse moved to dismiss, arguing that the district court lacked jurisdiction under the Rooker-Feldman doctrine and that the divorce judgment precluded the claim. The district court rejected the jurisdictional argument but agreed that claim preclusion under Michigan law barred the lawsuit, and dismissed the action.On appeal, the United States Court of Appeals for the Sixth Circuit affirmed. The court held that federal courts must give state court judgments the same preclusive effect they would have under state law, pursuant to the Full Faith and Credit Act. The court ruled that Michigan claim preclusion law applied, and that the prior divorce judgment barred the new lawsuit because the claim could have been raised in the divorce proceedings. The court also rejected arguments that federal law or preemption required a different result. View "Ramgoolam v. Gupta" on Justia Law

After Jet Midwest International Co., Ltd. made a $6.5 million loan to Jet Midwest Group, LLC (JMG) for the purchase of a Boeing 737-700, JMG defaulted on repayment. Jet Midwest sued for breach of contract, and when it could not collect on its judgment due to JMG’s lack of funds, Jet Midwest brought claims under the Missouri Fraudulent Transfer Act against several individuals and entities (the Ohadi/Woolley defendants), alleging the improper transfer of assets to avoid payment. Following a bench trial, Jet Midwest prevailed on its claims, and the district court awarded money damages, interest, and set a schedule for further motions on attorney’s fees and costs.Previously, the United States District Court for the Western District of Missouri awarded Jet Midwest over $6.5 million in attorney’s fees and costs. The United States Court of Appeals for the Eighth Circuit vacated this award, finding the district court had not properly performed a lodestar calculation for attorney’s fees and had not analyzed which costs were recoverable under federal law. On remand, Jet Midwest reduced its fee request but sought a multiplier; the district court ultimately awarded $5.8 million in attorney’s fees, granted prejudgment interest at 14 percent, and included expert witness fees and other litigation costs. Both sides appealed aspects of this award.The United States Court of Appeals for the Eighth Circuit held that the district court properly calculated and awarded $5.8 million in attorney’s fees but erred in awarding expert witness fees as part of attorney’s fees, as Jet Midwest failed to provide sufficient evidence that such fees were recoverable under the relevant standards. The Eighth Circuit also held that the district court erred in applying a 14 percent prejudgment interest rate and ordered that Missouri’s statutory rate of nine percent should apply. Additionally, the court clarified that, after August 6, 2020, the federal postjudgment interest rate under 28 U.S.C. § 1961(a) governs. The case was affirmed in part, reversed in part, and remanded for further proceedings consistent with these rulings. View "Jet Midwest International Co., Ltd v. Ohadi" on Justia Law