Justia Contracts Opinion Summaries

This dispute centers on the competitive conduct between United Therapeutics Corporation (UTC), the manufacturer of the brand-name drug Remodulin, and Sandoz, Inc. and its marketing partner RareGen, LLC, which sought to launch a generic version of treprostinil for treating pulmonary arterial hypertension. After Sandoz received FDA approval to market injectable generic treprostinil, UTC and Smiths Medical took steps to restrict the supply of cartridges necessary for subcutaneous administration, ultimately requiring specialty pharmacies to distribute cartridges exclusively for Remodulin. As a result, Sandoz was unable to launch its generic drug for subcutaneous use until an alternative cartridge was developed and FDA-approved several years later. Sandoz and RareGen alleged that UTC’s conduct violated federal antitrust and state tort laws and breached a settlement agreement arising from prior patent litigation.The U.S. District Court for the District of New Jersey dismissed the antitrust and state-law tort claims, granted summary judgment in favor of Sandoz as to liability on its breach-of-contract claim, and awarded damages after a bench trial. The court also denied UTC’s motion to exclude Sandoz’s damages expert. RareGen was dismissed from the case following the grant of summary judgment, and both UTC and Sandoz appealed various rulings.The United States Court of Appeals for the Third Circuit reversed the grant of summary judgment in favor of Sandoz on liability for the breach-of-contract claim, finding the relevant provisions ambiguous and remanding for trial. It also reversed the grant of summary judgment in favor of UTC on the tortious interference claim, instructing the District Court to analyze it independently from the antitrust claims. The Third Circuit affirmed the dismissal of the antitrust and unfair and deceptive trade practices claims, concluding that UTC demonstrated procompetitive justifications for its conduct. The appellate court affirmed the denial of UTC’s Daubert motion to exclude the damages expert, and vacated the damages award, remanding for further proceedings. View "Sandoz Inc v. United Therapeutics Corporation" on Justia Law

A couple began constructing a residential barndominium and lived in an RV on their property in Sandpoint, Idaho. After a heavy snowstorm caused the collapse of the partially constructed dwelling and damaged utility connections to their RV, they made claims under their State Farm homeowner’s insurance policy for structural losses, personal property damage, demolition and outbuilding losses, additional living expenses (ALE), and alleged unreasonable delays. State Farm paid over $120,000 but denied further claims, citing lack of required documentation and inventories.The couple filed suit in the District Court of the First Judicial District, Bonner County, alleging breach of contract, bad faith, and negligent adjustment. State Farm moved for partial summary judgment, arguing the plaintiffs failed to substantiate their losses and did not incur ALE as defined under the policy. The district court struck several exhibits as inadmissible hearsay, including a letter from a medical expert and a timeline of events, and granted summary judgment to State Farm. The court concluded that the plaintiffs had not complied with policy conditions, failed to substantiate their claimed losses, and that their claims were fairly debatable.On appeal, the Supreme Court of the State of Idaho reviewed evidentiary rulings for abuse of discretion and the grant of summary judgment de novo. The Court affirmed the district court’s exclusion of evidence as inadmissible hearsay and lack of personal knowledge. It held that the plaintiffs did not establish entitlement to ALE, failed to substantiate structural and personal property losses, and provided insufficient evidence of bad faith or negligent adjustment. The judgment of the district court was affirmed, with State Farm awarded costs on appeal. View "Espinosa v. State Farm" on Justia Law

Several business entities collectively known as the Merit Entities entered into loan agreements with International Bank of Commerce (IBC Bank) to finance the expansion of an auto dealership group. After discovering alleged fraudulent conduct by the dealership’s operator and his subsequent death, the Merit Entities entered negotiations with IBC Bank to restructure their debt, resulting in new loan agreements in October 2020 containing arbitration provisions with an anti-waiver clause. Despite ongoing disputes regarding outstanding debt and the validity of certain contract terms, the central issue on appeal was whether these disputes should be resolved in court or through arbitration.After the Merit Entities filed suit in the District Court, IBC Bank responded with both a motion to dismiss and an alternative motion to compel arbitration, citing the anti-waiver provision. The trial court denied the motion to dismiss in part and, following an evidentiary hearing, compelled arbitration, finding the arbitration agreement enforceable and applicable to the plaintiffs’ claims. On appeal, the Oklahoma Court of Civil Appeals reversed the trial court’s decision, holding that IBC Bank’s participation in litigation constituted a waiver of its right to arbitrate.The Supreme Court of the State of Oklahoma reviewed the case de novo and vacated the opinion of the Court of Civil Appeals, affirming the District Court’s order compelling arbitration. The Court held that IBC Bank did not waive its right to arbitrate because its conduct fell within the scope of activity expressly permitted by the anti-waiver provision in the arbitration agreement. Additionally, the Court found that the Merit Entities failed to establish fraudulent inducement specifically directed at the arbitration provisions. The parties’ disputes must therefore be resolved in arbitration as agreed. View "MERIT HOLDINGS v. INTERNATIONAL BANK OF COMMERCE" on Justia Law

Investors in an e-commerce company alleged they were defrauded by the founder and former CEO, claiming that their decisions to purchase preferred shares in early 2021 were based on false representations about the company’s profitability and financial health. The founder repeatedly refused to provide audited financial statements before closing, and pressured the investors to move quickly, warning that their allocation would be lost to other parties if they delayed for due diligence. The investors relied on unaudited financial statements and entered into two stock purchase agreements in February and March 2021. After the transactions, the company failed to provide audited financial statements by the contractual deadline, and the founder sold significant personal stock. In June 2022, the investors finally received audited statements revealing substantial losses and inconsistencies with previous unaudited reports.The investors initially filed suit in New Jersey in August 2024. After enforcement of the Delaware forum-selection clause, they dismissed the New Jersey action and refiled in the Superior Court of the State of Delaware in April 2025, asserting claims for fraud, negligent misrepresentation, unjust enrichment, and a New Jersey statutory claim. The Superior Court dismissed the complaint, holding that the claims accrued no later than March 2021 and were barred by Delaware’s three-year statute of limitations. The court found no basis for tolling under fraudulent concealment or inherently unknowable injury doctrines, reasoning the investors were on inquiry notice when they executed the agreements without the requested information.On appeal, the Supreme Court of the State of Delaware reviewed the statute of limitations question de novo. The Court held that, regardless of tolling doctrines, inquiry notice was triggered in April 2021 when the company breached its obligation to provide audited financials. Because the investors filed more than three years later, their claims were time-barred. The Supreme Court affirmed the Superior Court’s dismissal. View "Cornice Ventures I LLC v. Silberstein" on Justia Law

A patient underwent surgery in Texas, during which a specific surgical stapler and staple product were used to reconnect sections of his colon. After initial success, he suffered severe complications days later, including sepsis, allegedly caused by a defect in the staple line. This resulted in months of treatment and ultimately his death. His widow and children sued several product manufacturers and sellers, asserting claims for breach of implied warranty of merchantability and other product liability theories.Initially, the plaintiffs brought suit in the United States District Court for the Western District of Texas against Johnson & Johnson, Ethicon, and Ethicon Endo-Surgery, Inc. (“Phillips I”). Discovery revealed confusion about the identity of the actual seller, prompting the plaintiffs to file an amended complaint against Ethicon Endo-Surgery, Inc. alone, asserting only breach of warranty claims. The magistrate judge recommended dismissing the claim for breach of implied warranty of merchantability without prejudice, primarily due to lack of presuit notice required under Texas law. The district court instead dismissed both claims with prejudice and denied leave to amend, finding that amendment would be futile and that the plaintiffs had not provided proper notice or shown how they could cure the defect.After dismissal in Phillips I, the plaintiffs filed a second suit in state court (“Phillips II”) against additional parties. This case was removed to federal court, where the defendants moved for dismissal based on res judicata and collateral estoppel. The district court adopted the magistrate judge’s recommendation and dismissed Phillips II with prejudice. On appeal, the United States Court of Appeals for the Fifth Circuit affirmed both district court judgments, holding that plaintiffs failed to state a claim due to lack of presuit notice, the denial of leave to amend was not an abuse of discretion, and preclusion doctrines properly barred the second suit. View "Phillips v. Ethicon Endo-Surgery" on Justia Law

A group of medical students attended the University of Science, Arts and Technology (USAT), an international medical school based in Montserrat. USAT was licensed in Montserrat and, for years, was listed in the International Medical Education Directory, allowing its graduates to seek U.S. medical licensure. After a volcanic eruption in 2007, USAT began offering classes online and at alternative sites in the United States and Puerto Rico. In 2018, the Educational Commission for Foreign Medical Graduates (ECFMG) changed its policy, restricting certification to students educated in the country where the school was authorized. USAT students who took courses outside Montserrat after 2018 were no longer eligible for ECFMG certification, affecting their ability to obtain U.S. medical licenses. The students alleged that USAT misrepresented its accreditation and educational legitimacy, leading them to pay substantial tuition under false pretenses.The students filed suit in the United States District Court for the District of Puerto Rico, asserting federal RICO claims, as well as Puerto Rico law claims for fraudulent inducement, breach of contract, and unjust enrichment. The district court granted summary judgment in favor of the defendants, holding that the students failed to establish a “pattern of racketeering activity” as required under RICO, and dismissed the federal claims with prejudice. The court declined to exercise jurisdiction over the Puerto Rico law claims.On appeal, the United States Court of Appeals for the First Circuit reviewed the grant of summary judgment de novo. The court held that the students did not present sufficient evidence of closed- or open-ended continuity to establish a pattern of racketeering activity under RICO. As a result, the First Circuit affirmed the district court’s dismissal of the RICO claim and its decision not to exercise supplemental jurisdiction over the remaining claims. View "Pena-Torres v. University of Science, Arts and Tech" on Justia Law

Basin Electric Power Cooperative is a not-for-profit, member-owned electric cooperative that sells wholesale electricity to its member systems, including Tri-State Generation and Transmission Association. Tri-State, in turn, provides power to its own members such as Northwest Rural Public Power District, which distributes electricity in Nebraska and accounts for a notable share of Tri-State’s Eastern Interconnection energy demands. Two contracts govern the parties’ relationships: one between Basin and Tri-State (the Basin/Tri-State Agreement) and another between Tri-State and Northwest Rural. In 2022, Northwest Rural notified Tri-State of its intent to withdraw from membership and terminate its agreement, prompting Basin to argue that such a withdrawal would breach its contract with Tri-State.Initially, Basin sought relief in the United States District Court for the District of North Dakota, but the court dismissed the case, deferring to the Federal Energy Regulatory Commission (FERC) for primary jurisdiction. After further proceedings, FERC considered a complaint by Northwest Rural seeking confirmation that its withdrawal was permissible under the Basin/Tri-State Agreement. FERC found that the contract expressly contemplated such member withdrawals and provided a mechanism for Tri-State and Basin to address the implications, holding that Northwest Rural’s withdrawal would not constitute a breach by Tri-State. Basin’s subsequent motions for rehearing were denied, and it filed petitions for review.The United States Court of Appeals for the District of Columbia Circuit reviewed the FERC orders. The court held that Section 9 of the Basin/Tri-State Agreement unambiguously permits Tri-State to transfer assets—such as allowing a member to withdraw—without Basin’s approval, provided certain conditions are met. The court found FERC’s interpretation neither arbitrary nor capricious and denied Basin’s petitions for review, affirming that Northwest Rural’s withdrawal does not breach the Basin/Tri-State Agreement. View "Basin Electric Power Cooperative v. FERC" on Justia Law

Two individuals formed a limited liability company to purchase a jet, with one contributing funds that he had embezzled from a client. The company secured an aircraft insurance policy from an insurer, which later renewed the policy without investigating the source of funds used for the purchase. Eventually, the United States government seized the jet in connection with criminal charges against the member who committed the embezzlement. The other member had no knowledge of the crime.After the seizure, the company filed a claim with the insurer, seeking compensation under the policy for the loss. The insurer denied coverage and rescinded the policy, citing concealment of the material fact that embezzled funds were used to purchase the aircraft. The company sued for breach of contract and breach of the implied covenant of good faith and fair dealing. Following trial in the Superior Court of Santa Barbara County, the trial court denied the insurer’s motion for judgment based on concealment, and the jury found in favor of the company, awarding substantial damages, including punitive damages.The Court of Appeal of the State of California, Second Appellate District, Division Six, reviewed the case. Applying a de novo standard, the court held that an applicant for insurance has an affirmative duty to disclose material facts, even if the insurer does not specifically inquire about them. The court determined that the use of embezzled funds was a material fact, and the manager’s knowledge of the embezzlement was imputed to the company. Therefore, the insurer was entitled to rescind the policy. The judgment in favor of the company was reversed, and the company’s cross-appeal was dismissed. View "Passport 420, LLC v. Starr Indemnity & Liability Co." on Justia Law

A tavern operating in Washington, D.C., was required to maintain a security plan as a condition of its liquor license. The plan, approved by the District’s Alcoholic Beverage and Cannabis Board, included a statement that “[p]olice and/or EMS are called for any emergency situation” under a section describing the training provided to security personnel. In May 2023, after a physical altercation occurred between a patron and the tavern’s security guards outside the establishment, the tavern did not contact the police, although the patron later filed a police report.Following the incident, the District of Columbia Alcoholic Beverage and Cannabis Board initiated a show-cause proceeding to determine whether the tavern violated D.C. Code § 25-823(a)(6) by failing to adhere to its security plan. After a hearing, the Board found that the tavern was required by its plan to call the police during “any emergency situation,” determined that the incident qualified as such, and imposed a $1,000 fine alongside other sanctions. The Board interpreted the security plan in a manner akin to contract interpretation, concluding that the relevant provision imposed an affirmative obligation to contact the authorities during emergencies.The District of Columbia Court of Appeals reviewed the Board’s order. The court held that, when read in context, the security plan provision in question described the content of the training provided to security personnel rather than imposing a standalone requirement that the tavern call the police in every emergency situation. There was no evidence presented that the required training had not been provided. Thus, the court ruled that the tavern did not violate its security plan and consequently did not violate D.C. Code § 25-823(a)(6). The court reversed the Board’s order. View "2461 Corporation T/A Madam's Organ v. District of Columbia Alcoholic Beverage and Cannabis Board" on Justia Law

A dispute arose between the principal members of a defense contracting company after Martin Kao, who had become the CEO and major owner, was charged with crimes related to fraudulent misuse of Paycheck Protection Program funds. The company, which relied on government contracts requiring strict security clearance, suffered significant harm when Kao’s actions led to the invalidation of its facility security clearance and placed it at risk of suspension from federal contracting. The original owner and another entity sought Kao’s disassociation and damages, citing breach of fiduciary duty, fraud, and gross negligence. The parties were bound by an operating agreement requiring arbitration for disputes.After a civil complaint was filed in the Circuit Court of the First Circuit, an amended operating agreement and voting trust limited Kao’s control, but the company continued to face loss of contracts and financial harm. Arbitration proceedings began, but Kao, citing pending federal criminal charges, unsuccessfully moved to stay the arbitration, arguing his rights against self-incrimination would be prejudiced. The arbitrator denied the stay and ultimately awarded significant damages, including punitive damages, to the plaintiffs.Kao moved to vacate the arbitration award in circuit court, arguing the arbitrator erred in refusing to postpone and in awarding punitive damages. The circuit court denied the motion, finding no “sufficient cause” for postponement and affirming the arbitrator’s authority. The Intermediate Court of Appeals (“ICA”) largely affirmed, holding the arbitrator did not abuse discretion and the punitive damages award was within authority.Upon review, the Supreme Court of the State of Hawai‘i held that the proper standard for “sufficient cause for postponement” under Hawai‘i law is “good cause,” and articulated three factors for courts to consider, grounded in the Hawai‘i Constitution. Applying these, the court found Kao had not met the standard, and affirmed the ICA’s judgment. View "Navatek Capital Inc. v. Kao" on Justia Law