Justia Contracts Opinion Summaries

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The plaintiff, SanJuana Andrade, filed a lawsuit against the Western Riverside Council of Governments (Council) on the basis that she had been fraudulently enrolled in a Property Assessed Clean Energy (PACE) program. She claimed that her signature was forged on the PACE loan agreements, resulting in a lien on her home and increased property tax assessments that she had not agreed to. Following an investigation by the state Department of Financial Protection and Innovation, which confirmed the contractors’ fraud, the Council released its assessment and the lien on Andrade’s home. In January 2022, Andrade filed a motion for attorney’s fees and costs under Civil Code section 1717, which provides for attorney’s fees in any action on a contract where the contract specifically provides for such fees. The trial court denied Andrade’s motion, concluding that the contractual fee provisions were limited in scope and did not entitle Andrade to attorney’s fees because they concerned fees for “a judicial foreclosure action.”On appeal, the California Court of Appeal, Fourth Appellate District, Division One, reversed the trial court's decision. It held that under section 1717, a fee provision must be construed as applying to the entire contract unless each party was represented by counsel in the negotiation and execution of the contract, and the fact of that representation is specified in the contract. The Court found that limiting the fee provisions to foreclosure proceedings would be the precise kind of lopsided arrangement that section 1717 prohibits. The Court remanded the case back to the trial court to determine whether Andrade is “the party prevailing on the contract” and therefore entitled to attorney's fees. View "Andrade v. Western Riverside Council of Governments" on Justia Law

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In the case before the Supreme Court of the State of Alaska, MJ Corporation, the owner of an automated teller machine (ATM), sued Societe Financial, LLC, an ATM processor, and its owner, James Dainis, for breach of contract, conversion, and for piercing the corporate veil. MJ Corp. alleged that it had not been receiving its full share of transaction fees and reimbursement for vault cash dispensed by the ATM as per their agreement.The court reversed summary judgment on the breach of contract claim and piercing the corporate veil, as the processor presented genuine issues of material fact pertaining to those claims. The court held that while MJ Corp. presented admissible evidence of an implied contract and breach of the same, Dainis's affidavit raised a genuine dispute of material fact regarding the damages, thus barring summary judgment on the breach of contract claim.The court affirmed the superior court’s decision to grant summary judgment on the conversion claim. It found that MJ Corp. satisfied its prima facie burden for summary judgment, and Societe's evidence was too conclusory to present a genuine dispute of material fact regarding conversion.Regarding the claim to pierce the corporate veil, the court found that there was insufficient evidence on summary judgment to hold Dainis personally liable or to pierce the corporate veils of Societe's subsidiary company and another company owned by Dainis. The case was remanded for further proceedings in line with the court's opinion. View "Societe Financial, LLC v. MJ Corporation" on Justia Law

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In a dispute between Tara Shaw and Tara Shaw Designs, Ltd. (collectively, "Shaw") and Restoration Hardware ("RH"), the United States Court of Appeals for the Fifth Circuit upheld the district court's dismissal of Shaw's claims. Shaw, a furniture designer, had entered into a contract with RH for the sale and licensing of certain furniture designs. However, Shaw alleged that RH breached an oral agreement by using Shaw's artisans to produce items not part of their licensing agreement without seeking Shaw's permission and providing additional compensation.Shaw brought claims of breach of contract, detrimental reliance, and unjust enrichment against RH. However, the district court dismissed these claims and denied Shaw's motions to reconsider and amend the complaint. On appeal, the Court of Appeals affirmed these decisions.Regarding the breach of contract claim, the court stated that the alleged oral agreement was unenforceable because it left key terms for future negotiation, making it an "agreement to agree" which is not enforceable under Louisiana law.The court dismissed Shaw's detrimental reliance claim since Shaw failed to provide any evidence of damages or detriment due to their reliance on RH's alleged promise. The only detriment Shaw suffered was an opportunity to negotiate compensation in the future, which the court deemed insufficient for a detrimental reliance claim.The court also dismissed Shaw's unjust enrichment claim. While Shaw argued that the dismissal of their other claims demonstrated a lack of alternative remedies, the court found that Shaw failed to provide evidence of detriment necessary to support an unjust enrichment claim.Lastly, Shaw's motion to further amend the complaint was denied. The court found that Shaw failed to show good cause for amendment and that proposed amendments were futile. View "Shaw v. Restoration Hardware" on Justia Law

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The case involves Consolidated Restaurant Operations (CRO), a company that owns and operates dozens of restaurants, and Westport Insurance Corporation (Westport). CRO had an "all-risk" commercial property insurance policy with Westport, which covered "all risks of direct physical loss or damage to insured property." When the COVID-19 pandemic hit, causing CRO to suspend or substantially curtail its operations due to the presence of the virus in its restaurants and government restrictions on nonessential businesses, CRO sought coverage for the ensuing loss of revenue. Westport denied coverage, stating that the coronavirus did not cause "direct physical loss or damage" to CRO's properties. CRO filed a lawsuit seeking a declaration of Westport's obligations under the policy and damages for breach of contract.The Supreme Court of New York dismissed the complaint, declaring that the policy did not cover CRO's alleged losses. The Appellate Division affirmed this decision, interpreting "direct physical loss or damage" to require a tangible alteration of the property, which CRO had not demonstrated.The case was then brought to the New York Court of Appeals. The court held that "direct physical loss or damage" requires a material alteration or a complete and persistent dispossession of insured property. The presence of the virus in the restaurants and the resulting cessation of in-person dining services did not meet this requirement. The court thus affirmed the lower courts’ dismissal of the complaint. View "Consolidated Rest. Operations, Inc. v Westport Insurance Corp." on Justia Law

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This case involves a group of plaintiffs who were minors at the time their guardians purchased and activated DNA test kits from Ancestry.com. The plaintiffs, through their guardians, provided their DNA samples to Ancestry.com for genetic testing and analysis. The plaintiffs later sued Ancestry.com, alleging that the company violated their privacy rights by disclosing their confidential genetic information to another business. Ancestry.com moved to compel arbitration based on a clause in its Terms & Conditions agreement, which the plaintiffs' guardians had agreed to when they purchased and activated the test kits.The United States Court of Appeals for the Seventh Circuit, applying Illinois law, held that the plaintiffs were not bound to arbitrate their claims under the agreement between their guardians and Ancestry.com. The court reasoned that the plaintiffs neither signed the agreement nor created Ancestry.com accounts, and did not independently engage with Ancestry.com's services. Furthermore, the court refused to bind the plaintiffs to the agreement based on equitable principles, including the doctrine of direct benefits estoppel. The court noted that while the plaintiffs theoretically could benefit from Ancestry.com's services, there were no allegations that the plaintiffs had actually accessed their DNA test results.The court therefore affirmed the district court's decision denying Ancestry.com's motion to compel arbitration. The court's holding clarified that under Illinois law, a minor cannot be bound to an arbitration agreement that their guardian agreed to on their behalf, unless the minor independently engaged with the services provided under the agreement or directly benefited from the agreement. View "Coatney v. Ancestry.com DNA, LLC" on Justia Law

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In this case heard before the Supreme Court of Kentucky, the primary issue was whether the Breathitt Circuit Court correctly dismissed Teresa Spicer's lawsuit against James Combs for intentional infliction of emotional distress (IIED). Spicer's suit arose from damages linked to Combs' actions, following a fatal ATV accident which resulted in the death of Tiara Combs, James Combs’ wife and Spicer's daughter. Prior to the lawsuit, Combs and Spicer, as co-administrators of Tiara's estate, had signed a release settlement with Progressive Casualty Insurance Company, effectively absolving both Combs and Progressive of any further liability relating to the accident.After learning that Combs was intoxicated at the time of the accident, a fact he allegedly hid from her, Spicer sought to sue Combs personally for IIED. Combs moved to dismiss Spicer's complaint on the grounds that the previous release signed by Spicer barred her claim, and that her complaint did not meet the standard for an IIED claim. The circuit court dismissed the action, holding that the release was intentionally broad and included all potential claims, including IIED.On appeal, the Court of Appeals reversed the dismissal, ruling that the release did not prevent Spicer from asserting a personal cause of action against Combs. The Supreme Court of Kentucky affirmed the Court of Appeals' decision. The court ruled that the language of the release only covered claims possessed by the estate and not Spicer's individual claims. Furthermore, the Court held that Spicer's complaint was sufficient to proceed under a motion to dismiss for failure to state a claim, leaving it to the circuit court to resolve whether Spicer can sufficiently establish her claim at a later time. View "COMBS V. SPICER" on Justia Law

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In Virginia, Bryant McCants arranged for his 1970 Ford Mustang Mach 1 to be repaired at a shop operated by CD & PB Enterprises, LLC, doing business as Maaco Collision Repair & Auto Painting. The repair shop was managed by Hanson Butler, a part owner and employee of CD & PB Maaco. After the work was completed, McCants inspected the vehicle and was unsatisfied with the work, prompting Butler to agree to repaint it. However, due to various personal circumstances, McCants was unable to pick up the vehicle for several months. In the meantime, Butler initiated the Virginia Department of Motor Vehicles' abandoned-vehicle process, which resulted in him acquiring title to the vehicle, which he later sold.McCants sued Butler for conversion, fraud, unjust enrichment, breach of contract, and violation of the Virginia Consumer Protection Act. The jury found in favor of McCants on the conversion claim only and awarded him $78,500. The Court of Appeals reversed the trial court's decision, finding that Butler had properly followed the abandoned-vehicle process and had obtained legal title to the vehicle.The Supreme Court of Virginia disagreed with the Court of Appeals, holding that a rational jury could have found that Butler wrongfully used the DMV's abandoned-vehicle process as a pretext for severing McCants's ownership rights in the vehicle and thereafter claiming it for himself. The Supreme Court reversed the judgment of the Court of Appeals, reinstated the jury’s verdict, and affirmed the trial court’s confirmation order. View "McCants v. CD & PB Enterprises, LLC" on Justia Law

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In a dispute between SmartSky Networks, LLC and DAG Wireless, Ltd., DAG Wireless USA, LLC, Laslo Gross, Susan Gross, Wireless Systems Solutions, LLC, and David D. Gross over alleged breach of contract, trade secret misappropriation, and deceptive trade practices, the United States Court of Appeals for the Fourth Circuit ruled that the district court did not have the jurisdiction to enforce an arbitration award. Initially, the case was stayed by the district court pending arbitration. The arbitration tribunal found in favor of SmartSky and issued an award, which SmartSky sought to enforce in district court. The defendants-appellants argued that, based on the Supreme Court decision in Badgerow v. Walters, the district court lacked subject matter jurisdiction to enforce the arbitration award. The Fourth Circuit agreed, noting that a court must have a basis for subject matter jurisdiction independent from the Federal Arbitration Act (FAA) and apparent on the face of the application to enforce or vacate an arbitration award. The court concluded that the district court did not have an independent basis of subject matter jurisdiction to confirm the arbitration award. As such, the court reversed and remanded the case to the district court for further proceedings. View "Smartsky Networks, LLC v. DAG Wireless, LTD." on Justia Law

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The City of Richmond Heights, Missouri filed a claim with Mt. Hawley Insurance Company under a commercial property policy for losses of tax revenue due to government-mandated COVID-19 closures. Mt. Hawley denied the claim and sued for a declaratory judgment that it was not obligated to cover the losses. Richmond Heights counterclaimed with five counts: (1) breach of contract, (2) vexatious refusal to pay, (3) fraudulent inducement and misrepresentation, (4) negligent misrepresentation, and (5) breach of fiduciary duty. The United States District Court for the Eastern District of Missouri dismissed the counterclaims, denied amendments to two of them, and granted declaratory judgment to Mt. Hawley. On appeal, the United States Court of Appeals for the Eighth Circuit affirmed the decision of the lower court.The appellate court held that the insurance policy required "direct physical loss of or damage to property" for coverage which was not met by the COVID-19 shutdowns. The court also rejected the city's argument that the Additional Covered Property Endorsement in the policy removed the "physical damage or loss" requirement for losses of sales tax revenues. Furthermore, the court found that the city's claims of fraud, misrepresentation and breach of fiduciary duty were not distinct from its breach of contract claim and thus were properly dismissed by the district court. Lastly, the court affirmed the district court's denial of the city's motion to amend its breach of contract and vexatious refusal claims, concluding that the proposed amendments would not have survived a motion to dismiss. View "Mt. Hawley Insurance Company v. City of Richmond Heights" on Justia Law

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In this case, BioCorRx, Inc., a publicly traded company engaged in providing addiction treatment services and related medication, was involved in a dispute with VDM Biochemicals, Inc., a company specializing in chemical synthesis and distribution. The dispute arose from a business relationship in which BioCorRx intended to partner with VDM to develop and commercialize a compound for treating opioid overdose, known as VDM-001. BioCorRx issued several press releases, allegedly making misrepresentations and improperly disclosing confidential information about the development of VDM-001. VDM filed a cross-complaint against BioCorRx and its president, Brady Granier, for breach of contract, fraud, and violation of trade secrets among other claims. In response, BioCorRx and Granier filed a motion to strike the allegations based on the anti-SLAPP statute, arguing that the press releases were protected speech under the statute.The Court of Appeal of the State of California, Fourth Appellate District, Division Three, ruled that the press releases fell within the commercial speech exemption of the anti-SLAPP statute, as they were representations about BioCorRx’s business operations made to promote its goods and services to investors. As such, these statements were not protected by the anti-SLAPP statute. Consequently, the court reversed the portion of the trial court’s order granting the anti-SLAPP motion as to the press releases. However, the court affirmed the portion of the order granting the anti-SLAPP motion as to Brady Granier, BioCorRx’s president, due to insufficient argument presented against this part of the ruling. View "BioCorRx, Inc. v. VDM Biochemicals, Inc." on Justia Law