Justia Contracts Opinion Summaries

A homeowners association filed suit against a property owner, seeking declaratory judgment and injunctions to prohibit the use of the property for short-term rentals. The owner admitted operating short-term rentals and argued that the restrictive covenants did not clearly prohibit such activity, contending the terms were ambiguous. The association imposed fines and assessments for violations, and neighbors reported nuisance activities such as late-night parties and disruptive behavior by renters. The owner counterclaimed for breach of contract, asserting unequal enforcement and lack of due process.After a five-day bench trial, the District Court of Oklahoma County found that the owner’s use of the property constituted a prohibited business under the clear and unambiguous language of the restrictive covenant, awarded damages based on accumulated fines, issued an injunction, and dismissed the owner’s breach of contract claim. The court found the association to be the prevailing party and awarded attorney fees to be determined later.The owner appealed, and the Oklahoma Court of Civil Appeals, Division II, partially reversed, vacating the injunction and prevailing party status, and remanded for further proceedings on nuisance claims unrelated to restrictive covenants. The association petitioned for certiorari.The Supreme Court of the State of Oklahoma granted certiorari, vacated the appellate court’s opinion, and affirmed the District Court’s judgment. The Court held that the owner’s short-term rental activities violated the clear and unambiguous language of the restrictive covenant, the challenges to fines and assessments lacked merit, the injunction was supported by the evidence, and no abuse of discretion occurred regarding the denial of a new trial. The owner’s challenge to the attorney fees was not preserved for review. The judgment of the District Court was affirmed in full. View "SILVERHAWK HOMEOWNERS ASSOCIATION, INC. v. TAWOSE" on Justia Law

Maria Diaz contracted with a franchisee, SOL Pools, LLC, to build a swimming pool, while SOL Pools operated as a franchisee of Premier Franchise Management, LLC. Diaz initially brought a small claims action in 2022 against SOL for breach of contract and property damage, resulting in a default judgment in her favor. Subsequently, in 2023, Diaz filed suit in district court against both SOL and Premier, alleging breach of contract, fraud, negligence, and violations of the Home Repair Fraud Act, including claims against Premier based on apparent authority. SOL again failed to appear, leading to a default judgment against SOL for damages and punitive damages.The District Court of Oklahoma County allowed Premier to amend the pretrial conference order to assert the defense of res judicata, relying on the prior small claims judgment. The district court then vacated the default judgment against SOL, dismissed Diaz’s claims against SOL with prejudice, and dismissed Diaz’s apparent authority claims against Premier based on claim preclusion. The district court certified its order for immediate appeal under Oklahoma law, and Diaz sought review by petition for certiorari.The Supreme Court of the State of Oklahoma granted certiorari. It held that the district court did not abuse its discretion by permitting Premier to amend the pretrial conference order to add the defense of res judicata. However, it found that the district court erred in dismissing Diaz’s apparent authority claims against Premier without first developing the necessary factual record to determine whether claim preclusion applies under Oklahoma law. The Supreme Court reversed the district court’s certified interlocutory order in part and remanded for further proceedings consistent with its opinion. View "DIAZ v. PREMIER FRANCHISE MANAGEMENT, LLC" on Justia Law

After the foreclosure sale of a residential property in Charles Town, West Virginia, the purchasers sought to evict the previous owners, who had defaulted on their mortgage. The former owners responded by filing counterclaims and third-party claims against the mortgage servicing company and others, alleging breach of contract, tortious conduct, and violations of West Virginia’s consumer protection laws. The litigation centered on whether the mortgage servicer had properly handled a payment intended to cure the default: the former owners claimed they mailed a cashier’s check that was delivered before the sale, but were repeatedly told by customer service representatives that the check had not been received. The dispute focused on what actually happened to the payment and what representations were made by the servicer’s employees.The Circuit Court of Jefferson County initially denied the mortgage servicer’s request for a protective order and granted the former owners’ motion to compel depositions of two customer service employees located outside the United States. The circuit court determined these individuals were “managing agents” because they made decisions regarding the disputed payment and its investigation, thus subject to deposition upon notice alone. PHH Mortgage Corporation argued that international procedures, such as those in the Hague Convention, were required and that the depositions would be unduly burdensome and duplicative.The Supreme Court of Appeals of West Virginia reviewed the petition for a writ of prohibition. The court held that, under West Virginia’s procedural rules, a corporate party’s managing agents located outside the United States may be deposed upon notice alone, without resort to international procedures. It clarified the factors courts should consider in determining “managing agent” status. Finding no clear legal error or abuse of discretion by the circuit court, the Supreme Court of Appeals denied the requested writ of prohibition and upheld the circuit court’s discovery order. View "State ex rel. PHH Mortgage Corp. v. Hammer" on Justia Law

The plaintiff entered into an oral lease agreement with the defendant for the rental of a dump trailer for seven days at a flat rate. During the lease period, the plaintiff was arrested while using the trailer, and the trailer was impounded by law enforcement. The defendant retrieved the trailer from the impound lot before the lease term ended. The plaintiff was released from custody before the lease expired and alleged that the defendant breached the contract by repossessing the trailer early and converted his property contained in the trailer, which he claimed to be valuable.The District Court of Cass County, East Central Judicial District, granted summary judgment in favor of the defendant, Muddy Boyz Drywall LLC, dismissing the plaintiff’s claims. The court concluded there were no genuine issues of material fact regarding the alleged breach of contract and conversion. After procedural steps involving the dismissal of counterclaims and certification under Rule 54(b), the plaintiff appealed the certified judgment.The Supreme Court of North Dakota reviewed the case de novo. The Court held that genuine issues of material fact existed regarding the terms of the oral contract, whether its conditions were breached, whether the defendant’s performance was rendered impossible, and whether the plaintiff suffered damages. The Court also found that the plaintiff’s complaint sufficiently alleged a conversion claim and that factual disputes existed regarding ownership, value, and the defendant’s disposal of the plaintiff’s property. The Supreme Court of North Dakota reversed the judgment dismissing the plaintiff’s claims and remanded the case to the district court for further proceedings. View "Gum v. Muddy Boyz Drywall" on Justia Law

The dispute centers on a commercial contract between two companies, one providing live-chat and visitor-monitoring software services and the other purchasing licenses for these services. The contract, first executed in 2008 and amended multiple times, included automatic annual renewal, a termination-for-convenience clause, and a late-payment-charge clause. In 2022, the parties agreed to a two-year term without modifying the termination or late-payment provisions. About seven months into the new term, the buyer exercised its right to terminate for convenience. The seller then invoiced the buyer for the entire remaining balance of the two-year term, asserting that full payment was due despite the early termination. The buyer disputed this, arguing it owed only for services rendered up to the termination date.The case was tried without a jury in the Madison Circuit Court. The trial court found the termination-for-convenience clause ambiguous regarding payment obligations upon early termination. Relying on witness testimony and email correspondence to resolve this ambiguity, the court concluded the buyer owed the full remaining contract balance and imposed a late-payment charge, also awarding the seller its costs and attorneys’ fees.On appeal, the Supreme Court of Alabama reviewed whether the contract’s termination and late-payment provisions were ambiguous. The court held that the termination-for-convenience clause was unambiguous: the buyer was obligated to pay only for services received up to the termination date, not the full contract term. The court further found the late-payment-charge clause inapplicable because the invoice in question was disputed and not for a quarterly period as required by the contract. As a result, the Supreme Court of Alabama reversed the trial court’s judgment, including the award of attorneys’ fees and expenses, and remanded for further proceedings consistent with its opinion. View "LG Electronics Alabama, Inc. v. Velaro, Inc." on Justia Law

Derek and Keisha Hall hired Jose Silva to construct their new home and financed the project through Priority One Bank, where Harvey Lott served as the loan officer. The Halls later discovered construction defects and alleged that Silva, Lott, and the bank engaged in a secret arrangement for personal profit, including unauthorized loan disbursements and a failure to conduct proper inspections. The Halls also claimed Silva lacked a contractor’s license and that the relationship between Silva and Lott involved improper payments. Both Lott and the bank denied these allegations, asserting that bank inspections were for their own benefit and that loan advances sometimes occurred before work was completed, in line with their agreement.The Halls brought several claims against the bank, Lott, and Silva in the Jefferson Davis County Circuit Court, including breach of contract, fraud, and conspiracy. In response, the bank and Lott sought summary judgment, but the circuit court denied their motion, finding that genuine issues of material fact remained. Subsequently, the Halls moved to strike a provision in the loan agreement, arguing it was unconscionable and deprived them of legal remedies. The circuit court granted this motion, holding the provision was void, invalid, and unconscionable.The Supreme Court of Mississippi reviewed the case on interlocutory appeal. It held that the Halls’ “Motion to Strike Contract Provision” was not an appropriate procedural vehicle to challenge the enforceability of a contract provision, as motions to strike under Mississippi Rule of Civil Procedure 12(f) are limited to pleadings, not contract clauses. The court reversed the circuit court’s order striking the provision and remanded the case for further proceedings, directing that any challenge to the provision’s enforceability must follow the proper procedures for dispositive motions. View "Priority One Bank v. Hall" on Justia Law

Three siblings contracted with a funeral home for the cremation of their mother’s remains. The transaction involved two documents: a Purchase Agreement, signed only by one sibling, and an Authorization for Cremation, signed by all three. The Purchase Agreement contained an arbitration clause. The siblings later claimed that the funeral home failed to provide notice and an opportunity to cancel the cremation, as they had allegedly been promised. After the cremation was performed without further notice, the siblings and the decedent’s estate sued the funeral home for breach of contract and various torts.The case was first heard by the Eighth Judicial District Court in Clark County. The funeral home moved to compel arbitration under the agreement. The district court denied the motion, reasoning that factual issues remained as to the enforceability of the agreement and the arbitration provision. Specifically, the court found uncertainty regarding the right to cancel and determined that only the signing sibling could potentially be bound by the arbitration clause, pending resolution of factual disputes. The court also concluded that the nonsignatory siblings and the estate were not bound by the arbitration clause, rejecting the funeral home’s equitable estoppel arguments.On appeal, the Supreme Court of the State of Nevada reviewed whether the enforceability of the contract containing an arbitration clause must be decided by the arbitrator under NRS 38.219(3), regardless of whether a delegation provision was invoked below, and whether nonsignatories could be bound to arbitrate under equitable estoppel. The Supreme Court held that under NRS 38.219(3), the arbitrator must resolve the contract’s enforceability, and the district court erred in denying arbitration on that basis. The court further held that the two nonsignatory siblings are equitably estopped from avoiding arbitration because they seek a direct benefit from the agreement, but the estate is not bound. The order was affirmed in part, reversed in part, and remanded for further proceedings. View "LEGACY FUNERAL HOLDINGS OF NEV., LLC VS. OUZENIAN" on Justia Law

A dispute arose between two parties who had entered into a contractual agreement to jointly develop and market a therapeutic tabletop role-playing game. The plaintiffs, including the individual who originally developed the game and his company, had created intellectual property related to the game and later formed a business entity to market and distribute it. The defendants, including a psychologist and his companies, operate a business that integrates therapeutic practices with “geek” culture, and they sought to develop and sell the game using their resources. The parties executed a second licensing agreement (SLA) that allowed the defendants to use, market, and sell the game content, while the plaintiffs retained ownership of the intellectual property until a future sale was negotiated. Disagreements arose after a potential change to a third-party game license led the plaintiffs to propose significant changes to the game, which the defendants opposed due to business concerns. Communication broke down, and the plaintiffs eventually demanded that the defendants cease use of the game and related intellectual property.The United States District Court for the Northern District of Texas found in favor of the defendants, granting summary judgment and dismissing all claims. The district court determined that the SLA was a valid, binding contract authorizing the defendants to use the content, and that the plaintiffs’ failure to bill for certain services did not constitute a breach allowing them to terminate the agreement. The court also rejected claims related to derivative works, trademark use, and the use of the individual plaintiff’s name and likeness, finding the actions authorized by the contract.On appeal, the United States Court of Appeals for the Fifth Circuit affirmed the district court’s judgment. The Fifth Circuit held that the SLA was valid and enforceable, that it authorized the defendants’ use of the game content and associated intellectual property, and that the plaintiffs’ claims for intellectual property infringement, name-and-image misappropriation, and unjust enrichment were properly dismissed. View "Thomas v. Leyline Publishing" on Justia Law

Two companies that compete in the financial technology sector became involved in a dispute after one, SS&C (which had acquired Advent), alleged that its competitor, Arcesium, misappropriated trade secrets from its Geneva portfolio accounting software. Previously, Advent and Arcesium had entered into a Hosted Reseller Agreement (HRA) that allowed Arcesium to sublicense Geneva to its own customers and provide related services, subject to confidentiality and non-disclosure provisions. The HRA specifically prohibited Arcesium from using Geneva to develop competing products. After the HRA expired, SS&C alleged that Arcesium used its access to Geneva to develop competing software, Trinity and Nautilus, by copying proprietary features and methods, in violation of their agreements.The United States District Court for the Southern District of New York dismissed SS&C’s trade secret misappropriation claims, holding that while SS&C sufficiently alleged the existence of trade secrets, it did not adequately allege that Arcesium misappropriated those secrets. The district court also denied SS&C’s motion to vacate the dismissal and to amend its complaint, after considering documents referenced in the complaint and crediting Arcesium’s interpretations of those documents.The United States Court of Appeals for the Second Circuit reviewed the district court’s order de novo. The appellate court held that SS&C’s complaint contained sufficient factual allegations to plausibly state a claim for trade secret misappropriation under the Defend Trade Secrets Act, including direct and circumstantial allegations of use and improper acquisition. The Second Circuit found that the district court improperly engaged in fact-finding and inappropriately credited Arcesium’s version of contested facts at the pleading stage. The court reversed the district court’s dismissal of the trade secret misappropriation claims and remanded the case for further proceedings. View "SS&C Technologies Holdings, Inc. v. Arcesium LLC" on Justia Law

Two Oklahoma cattle ranchers entered into an agreement with an Idaho-based cattle breeder concerning the ownership and profits from a Hereford bull named Guardian. The arrangement involved the Plaintiffs bidding on Guardian at an Oklahoma auction, acquiring a partial ownership interest, and receiving a share of profits from the sale of Guardian’s semen. The agreement also contemplated that Guardian would spend part of each year in Oklahoma. After the auction, Guardian remained in the Defendant’s custody out of state. Plaintiffs alleged that the Defendant’s negligent care led to Guardian’s death and sought compensation and an accounting of profits.The District Court of Oklahoma County dismissed the Plaintiffs’ action for lack of both general and specific personal jurisdiction, finding that the Defendant’s contacts with Oklahoma were insufficient. After the judgment, a dispute arose over the timeliness of the Plaintiffs’ appeal, because proof of service of the judgment was not immediately filed. The Defendant moved to dismiss the appeal as untimely, arguing the appellate deadline had passed.The Supreme Court of the State of Oklahoma held that the Plaintiffs’ appeal was timely, as the thirty-day period to appeal began when proof of service was filed, not when the judgment was originally served. The Supreme Court further found that, although Oklahoma lacked general jurisdiction over the Defendant, specific personal jurisdiction existed because the Defendant purposefully directed activities toward Oklahoma by facilitating the auction transaction and ongoing custodial arrangement. Plaintiffs’ claims “arose out of or related to” these contacts. The Supreme Court denied the motion to dismiss the appeal, reversed the district court’s order dismissing for lack of personal jurisdiction, and remanded for further proceedings. View "SCHRAMMEL & WARD v. COLYER HEREFORDS AND ANGUS, INC." on Justia Law