Justia Contracts Opinion Summaries

A Swedish private equity firm specializing in veterinary products sought to acquire a company that manufactured orthopedic implants for animals. At the time of negotiations, the target company was involved in ongoing patent litigation initiated by a third party, which posed significant financial risk. To address this uncertainty, the parties included a broad indemnification provision in their agreement, requiring the sellers to cover losses “as a result of, or in connection with” the patent litigation. After the sale closed, the litigation expanded to include additional products and patents, culminating in a $70 million settlement and a license for one of the company’s products. The buyer financed the settlement with a loan. Most former owners settled indemnity claims, but the company’s founder did not, prompting the new owners to sue for enforcement of the indemnity.The Superior Court of the State of Delaware initially granted summary judgment to the buyers on certain defenses but otherwise denied both parties’ motions, proceeding to trial. Following trial, the court held that the founder was required to indemnify the buyers for damages arising from the patent litigation, but not for the cost of the patent license. It awarded only half of the requested attorneys’ fees for patent litigation, citing allocation challenges, and also denied recovery of fees incurred to enforce the indemnification provision. The court did, however, award prejudgment interest, including on the loan interest expense.On appeal, the Supreme Court of the State of Delaware affirmed in part and reversed in part. It held that the indemnification provision covered losses arising from post-transaction conduct and did not violate public policy, and that the implied covenant defense was inapplicable. The court found error in awarding prejudgment interest on the loan-interest expense, which resulted in a double recovery. For the cross-appeal, it held that the buyers were entitled to the license cost and the full amount of attorneys’ fees from the patent litigation, but not fees for enforcing the indemnification provision. The case was remanded for further proceedings. View "Gendreau vs Movora LLC" on Justia Law

A developer began constructing and selling duplex-style condominiums in Bonner County, Idaho, using a standard real estate purchase and sale agreement (PSA) form. The buyers, including a real estate agent and his wife, entered into PSAs for two units, planning to use them as personal and investment properties. The PSAs referenced detailed “Plans and Specifications” for the construction and finishes of the units, but no such documents were attached or ever created. Disputes later arose over the scope and quality of the promised finishes, especially after the developer communicated price increases and clarified the options for base and upgraded finishes. The buyers sued to enforce the contracts and sought specific performance, while the developer counterclaimed for a declaration that the PSAs were invalid due to indefiniteness.The District Court of the First Judicial District, Bonner County, conducted a bench trial. It found that the PSAs for the disputed units were missing essential material terms, specifically the absent Plans and Specifications, which left the scope of work, finishes, and price adjustments undefined. The court concluded that no enforceable contract was formed and denied the buyers’ request for specific performance. The developer was ordered to return deposits but was deemed the prevailing party, entitling him to attorney fees and costs. The district court also conditioned a stay of its judgment pending appeal on the posting of an additional bond.On appeal, the Supreme Court of the State of Idaho affirmed the district court’s judgment. It held that the PSAs were invalid and unenforceable because they omitted material terms necessary to define the contractual obligations. The buyers’ challenge to the additional bond was deemed moot given the disposition of the contract claims. The award of attorney fees to the developer was upheld, and the Supreme Court granted him attorney fees and costs for the appeal as the prevailing party. View "SCHUSTER v. MILBRATH" on Justia Law

The dispute involved two sets of co-owners of a Kentucky limited liability company operating a pharmacy. In 2019, the Dotsons acquired a 50 percent ownership interest from the Ingrams, with a promissory note and security agreement (the “Ingram debt”), making the Dotsons and the Andersons equal owners. In 2023, the Andersons and the LLC filed suit against the Dotsons, who counterclaimed. In early 2024, the parties participated in a mediation and reached a settlement agreement, which was recorded on video during a Zoom call. The mediator recited the terms, including payment arrangements and asset/debt allocations, and the parties affirmed the terms verbally. Subsequently, disputes arose regarding the nature of the Ingram debt (whether corporate or personal), leading both sides to refuse to fulfill their respective payment obligations.The Rowan Circuit Court, after a hearing, found the settlement agreement valid, enforceable, and unambiguous. The court determined the Ingram debt was personal to the Dotsons and not assumed by the Andersons, and held that the agreement did not violate Kentucky’s Statute of Frauds. The court did not address the applicability of Kentucky Rule of Civil Procedure 99.10. The Kentucky Court of Appeals affirmed and concluded that the requirements of CR 99.10 were satisfied.On discretionary review, the Supreme Court of Kentucky affirmed the Court of Appeals. It held that a video recording of an oral settlement agreement, where parties knowingly affirm the terms, constitutes a valid “electronic record” and “electronic signature” under the Uniform Electronic Transactions Act and satisfies the Statute of Frauds and CR 99.10. The court also found the settlement terms unambiguous and complete, and that the parties mutually assented to them. Issues of alleged breach of contract were deemed premature and not addressed. View "DOTSON V. CIA DRUG, LLC" on Justia Law

In December 2020, an individual was injured at a ski resort owned by a corporation when he collided with a snowmobile operated by an employee. After the incident, he filed several claims against both the corporation and the employee. While the litigation was ongoing, he purchased a ski pass for the 2022-23 season, during which he electronically signed an online waiver releasing any and all claims, including those arising from past events, against the corporation and its employees.The District Court for Summit County, Colorado, concluded that the online waiver signed during the purchase of the 2022-23 pass operated as a release of all existing claims, not merely as a pre-injury exculpatory agreement. The court dismissed the plaintiff’s remaining claims with prejudice, including his claims for willful and wanton conduct and his request for exemplary damages. On appeal, the Colorado Court of Appeals affirmed that the waiver was a valid release, enforceable under general contract principles, and rejected arguments that it was unconscionable or lacked mutual assent. The appellate court also held that claims for willful and wanton conduct and exemplary damages were not independent, cognizable causes of action.The Supreme Court of Colorado, reviewing the case, affirmed the appellate court’s decision. It held that the 2022 online waiver was a post-injury release, not an exculpatory agreement, and was enforceable under traditional contract principles. The Court further held that claims for willful and wanton conduct and exemplary damages were properly dismissed, as they are not independent causes of action. Additionally, it found that its prior decision in Miller v. Crested Butte, LLC, which concerned pre-injury waivers, was not applicable to this post-injury release. View "Litterer v. Vail Summit Resorts, Inc." on Justia Law

Several individuals filed a putative class action against two related corporate defendants, alleging that the defendants’ website terms and conditions violated a California statute known as section 1670.8, or the “Yelp Law.” The plaintiffs argued that certain provisions in the website’s terms—specifically, language related to trademark use and website access—prohibited or penalized negative statements about the defendants, their employees, or their goods and services. The plaintiffs claimed these provisions constituted unlawful non-disparagement clauses in consumer contracts.The Superior Court of Los Angeles County reviewed the case and sustained the defendants’ demurrer to the consolidated class action complaint, first with leave to amend and then, after an amended complaint was filed, without leave to amend. The court found that the challenged terms were limited to intellectual property protections and did not restrict consumer speech. It also determined that the statute did not create a private right of action for merely including a violative provision unless there was a threat to enforce that provision or penalize speech. The court concluded that neither the trademark nor the termination provisions in the defendants’ terms constituted actionable violations of section 1670.8 and entered judgment dismissing the case.Upon appeal, the Court of Appeal of the State of California, Second Appellate District, Division Five, affirmed the trial court’s judgment. The appellate court held that the website’s trademark language did not waive consumers’ rights to make critical statements about the defendants, and the website access termination clause was not a restriction on consumer speech. The court concluded that plaintiffs had not stated a cause of action under section 1670.8 and confirmed that the inclusion of these provisions, without a threat or attempt to enforce against protected speech, does not violate the statute. View "Scott v. Ulta Beauty, Inc." on Justia Law

A physician who practiced at Corona Regional Medical Center alleged that the hospital and three individual doctors conspired to defame him, destroy his professional reputation, and summarily suspended his admitting privileges under false pretenses. He claimed these actions were motivated by competitive and financial interests, and that the hospital and defendants orchestrated a campaign using fabricated internal reports to target him, resulting in financial and emotional harm. The physician entered into an agreement with the hospital to lift his suspension, subject to several conditions, and avoided having the suspension reported to the California Medical Board. His wife separately claimed loss of consortium due to the defendants’ actions.The Superior Court of Riverside County reviewed the case and granted summary judgment for the defendants. The court found that the physician had failed to exhaust the administrative remedies available to him through the hospital’s peer review process before suing for damages. The trial court also partially granted the defendants’ motion for attorney fees based on a provision in the hospital’s bylaws, but denied fees against the wife, and reduced the fee amounts for certain attorneys.The Court of Appeal of the State of California, Fourth Appellate District, Division Two, affirmed the judgment and the postjudgment order. The court held that the physician did not establish he was excused from exhausting his administrative remedies, as the agreement to lift his suspension was conditional and did not provide the maximum relief available through the peer review process. The court also upheld the attorney fee award to defendants under the bylaws, finding the fee provision valid and not preempted by statute, and concluded that the trial court correctly denied fees against the wife and for certain attorney billing records. View "Sujan v. UHS Corona" on Justia Law

Programmers who published open-source code on GitHub sued GitHub, Microsoft, and various OpenAI entities, alleging that GitHub Copilot and Codex—AI tools trained on publicly available code from GitHub—reproduce portions of their code without attribution. These programmers claimed that the AI’s omission of copyright management information (CMI), such as attribution and license terms required by open-source licenses, violated the Digital Millennium Copyright Act (DMCA), specifically 17 U.S.C. § 1202(b). Plaintiffs alleged that Copilot’s outputs sometimes consist of verbatim or near-verbatim reproductions of their code, but the AI-generated outputs do not include the original CMI.The United States District Court for the Northern District of California reviewed the case and dismissed the DMCA claims under Rule 12(b)(6, first with leave to amend and then with prejudice, concluding that plaintiffs failed to allege that Copilot’s outputs were “identical” to their code and that only identical copies from which CMI had been removed could support a DMCA claim. The court allowed breach of contract claims to proceed. It certified the DMCA dismissal for interlocutory appeal under 28 U.S.C. § 1292(b), noting the issue of whether § 1202(b) imposes an identicality requirement.The United States Court of Appeals for the Ninth Circuit affirmed the district court’s dismissal. The court held that plaintiffs had Article III standing due to a plausible risk of injury. However, it determined that under their “output” theory, Copilot and Codex do not “remove or alter” CMI from copies of existing protected works; instead, they generate new works that never contained CMI. The court declined to consider the plaintiffs’ “input” theory as it was forfeited. The main holding is that generating new works without CMI does not violate § 1202(b) of the DMCA. View "DOE V. GITHUB, INC." on Justia Law

Island Creek Associates, LLC was awarded a multiple award contract (MAC) known as SeaPort-NxG by the United States Navy, alongside two other companies, Don Selvy Enterprises, Inc. (DSE) and Precise Systems Inc., each receiving contracts on identical terms. In 2022, DSE and Precise formed a joint venture, Secise, under the Small Business Administration’s Mentor-Protégé Program (MPP). In 2024, the Navy issued a modification to the SeaPort-NxG MAC, allowing MPP joint ventures, as well as their mentor and protégé members, to each hold a separate MAC, creating an exception to the previous “One Prime Contract Per Company” rule. Following this modification and the issuance of a task order to Secise, Island Creek filed a five-count complaint in the United States Court of Federal Claims, raising challenges to the contract modification, its implementation, and an alleged organizational conflict of interest involving a Navy contracting official and a Precise employee.After Island Creek’s complaint, the Navy took corrective action by rescinding the challenged portions of the contract modification, thereby reverting to the original rules. The Navy then moved to dismiss the complaint, arguing that the corrective action mooted four counts and that the remaining count was barred by statutory restrictions. The United States Court of Federal Claims dismissed the complaint, holding that Island Creek lacked statutory standing as an “interested party” under 28 U.S.C. § 1491(b)(1), but did not rule on mootness or the application of the Federal Acquisition Streamlining Act (FASA).On appeal, the United States Court of Appeals for the Federal Circuit affirmed the dismissal, but on alternative grounds. The appellate court held that Counts I–III and V were moot due to the Navy’s corrective action, which eradicated the effects of the challenged modification. It further held that Count IV was barred under the FASA’s task order protest provision, 10 U.S.C. § 3406(f), and Island Creek lacked statutory standing to challenge Precise’s award. The judgment of the Court of Federal Claims was affirmed. View "ISLAND CREEK ASSOCIATES, LLC v. US " on Justia Law

A plaintiff who won a substantial lottery prize in Maine sought to protect his identity and that of his minor daughter from public disclosure. He entered into a non-disclosure agreement (NDA) with the mother of his child, intending to keep details of his lottery win and finances private. After the plaintiff believed the NDA was breached, he sued for injunctive relief and damages in the United States District Court for the District of Maine. Throughout the proceedings, both parties were initially allowed to litigate under pseudonyms, and a local news organization intervened to advocate for public access. As trial approached, the plaintiff moved to close the courtroom to the public and to continue using pseudonyms, arguing that disclosure could jeopardize his family’s safety and his daughter’s privacy.The District Court for the District of Maine denied both requests. It issued a detailed opinion emphasizing the strong presumption of public access to judicial proceedings, citing common-law tradition and relevant federal rules. The court found that while the case involved sensitive financial and familial information, such concerns did not outweigh the public’s right to access. The court determined that the plaintiff’s wealth and desire for privacy did not constitute “unusually severe harm” justifying deviation from established principles. Additionally, the court noted that any potential harm to the minor child would be mitigated by identifying her only by initials, a standard protocol. The plaintiff timely appealed these rulings.The United States Court of Appeals for the First Circuit reviewed the case under the abuse of discretion standard. It affirmed the District Court’s decision, holding that neither the plaintiff’s wealth nor purported risks to his family met the exceptional circumstances required for trial closure or continued pseudonymity. The appellate court found no abuse of discretion in the lower court’s balancing of public access against privacy interests and awarded costs to the appellees. View "Doe v. Smith" on Justia Law

A television production company maintained insurance coverage for its shows, including one chronicling the struggles of obese individuals to lose weight. In 2011, the insurer added an exclusion to the general liability portion of the policy, barring coverage for “any/all reality shows.” The company did not object to this exclusion. Years later, several participants or their families sued the production company for injuries allegedly arising from the show’s filming. The insurer refused to defend or indemnify the company, citing the “reality show” exclusion.The insurer brought a declaratory judgment action in the United States District Court for the Southern District of Texas, seeking confirmation that it had no duty to defend or indemnify. The production company counterclaimed for breach of contract, fraudulent inducement, and violations of Texas consumer protection statutes. The district court granted summary judgment to the insurer, finding that the exclusion unambiguously barred coverage for bodily injuries arising from reality shows like the one at issue. At a subsequent bench trial, the district court rejected the company’s fraud and statutory claims, finding no misrepresentation by the insurer and concluding the company could not have justifiably relied on any representation given its knowledge of the exclusion and the show’s nature.On appeal, the United States Court of Appeals for the Fifth Circuit affirmed. The Fifth Circuit held that the company forfeited its argument about the ambiguity of "reality show" by not raising it in the district court and, in fact, previously represented the show as a “reality show.” The appellate court also found no clear error in the district court’s factual findings rejecting the fraud and consumer protection claims, noting substantial evidence of the company’s understanding of the exclusion. The district court’s judgment was affirmed in full. View "Megalomedia v. Philadelphia Indemnity" on Justia Law