Justia Contracts Opinion Summaries
Fain, et al. v. Integrity Environmental, et al.
Scotty Fain, Sr., Scotty Fain, Jr., and Kris Durham appealed a district court judgment entered following findings that there was no contract between the parties, no transfer of ownership interest in Integrity Environmental, LLC, and no violation of fiduciary duties as alleged in the complaint against Integrity Environmental, LLC, Andrea Vigen, Lewis Vigen, and Kelly Harrelson. They also challenged the court’s findings that a substitute arrangement agreed upon by all parties led to an accord and satisfaction, novation, and waiver of contractual rights. Finding no reversible error in that judgment, the North Dakota Supreme Court affirmed. View "Fain, et al. v. Integrity Environmental, et al." on Justia Law
Trosen, et al. v. Trosen, et al.
Jeff Trosen appealed a judgment and amended judgment awarding damages for a breach of contract claim to the Estate of Shirley Trosen and the Trosen Family Trust and dismissing Jeff’s counterclaim and third-party complaint. A dispute arose over Jeff’s lease of farmland from Shirley. The lease covered the farming seasons of 2017 through 2022. Partial payments were made in 2020 and 2021, leaving balances owed for those years. Shirley and the Trust sued Jeff for breach of contract and to cancel the lease. Jeff argued the district court erred in granting summary judgment on the breach of contract claim and by dismissing his counterclaim and third-party complaint. Finding no reversible error, the North Dakota Supreme Court affirmed the judgments. View "Trosen, et al. v. Trosen, et al." on Justia Law
GWG DLP Funding V, LLC v. PHL Variable Insurance Co.
GWG DLP Funding V, LLC was the policy owner and beneficiary of a life insurance policy issued by PHL Variable Insurance Company. After GWG transferred beneficiary rights and ownership to Wells Fargo, PHL terminated the policy. GWG and Wells Fargo disputed the termination, and the parties attempted to settle the dispute. After some negotiations, the insured died, and PHL refused to honor the alleged agreement the parties had reached. GWG and Wells Fargo sued PHL for breach of contract and breach of the covenant of good faith and fair dealing and sought a declaratory judgment that prevents PHL from terminating the policy. Plaintiffs appealed the district court’s dismissal of their claims. The Eighth Circuit affirmed. The court concluded that the alleged agreement in early February was incomplete and that Plaintiffs have failed to state a claim for breach of contract. Further, the court wrote that Plaintiffs have failed to state a claim for breach of the covenant of good faith and fair dealing. First, there is no enforceable agreement based on the email exchange. Thus, there was no contract under which PHL could have breached the duty of good faith. Second, even if the parties were bound by the early February communications, Plaintiffs alleged no dishonest motive on PHL’s part. View "GWG DLP Funding V, LLC v. PHL Variable Insurance Co." on Justia Law
Supreme Foodservice GmbH v. Director of the Defense Logistics Agency
In 2005, the Defense Logistics Agency (DLA) awarded Supreme a contract to provide food to U.S. forces in Afghanistan. During negotiations concerning deliveries to forward operating bases, Supreme submitted inflated cost proposals. Supreme threatened to withhold payments to subcontractors (potentially cutting off supplies to troops), The parties executed a Modification, including Supreme’s proposed rates, subject to verification. The Defense Contract Audit Agency concluded that Supreme’s documentation was not adequate and questioned more than $375 million of claimed costs. The contracting officer, in 2011, determined that DLA had overpaid Supreme by $567,267,940. DLA withheld $540 million from Supreme’s monthly payments. Supreme submitted unsuccessful “reverse image” claims. In 2014, Supreme pled guilty to fraud and entered into a civil settlement in a False Claims Act suit. During the investigations, with Supreme’s contract expiring, the parties entered into two extensions. In 2015, based on Supreme’s guilty plea, DLA demanded the return of all money paid under the contract. In 2020, the Armed Services Board of Contract Appeals concluded that Supreme’s contract claims against the government were barred by Supreme’s prior material breach.The Federal Circuit affirmed. The government did not waive its prior material breach defense. While DLA had some notice of Supreme’s fraudulent behavior in 2009, it had no “known right” until Supreme’s guilty plea, after which DLA never extended Supreme’s contract. Supreme cannot treat the bridge contracts as separate only to evade the government’s affirmative defenses. The parties treated the original contract and the extensions as inextricably intertwined; DLA’s prior material breach defense applies to those contracts. View "Supreme Foodservice GmbH v. Director of the Defense Logistics Agency" on Justia Law
Ex parte Sunset Digital Communications, Inc.
Defendant-petitioner Sunset Digital Communications, Inc. ("Sunset") sought a writ of mandamus to direct an Alabama circuit court vacate its order denying a motion to dismiss the complaint filed by plaintiffs Point Broadband, LLC ("Point Broadband"), and Point Broadband Fiber Holding, LLC ("PBFH") (collectively, "plaintiffs"). In 2018, Sunset and Sunset Fiber, LLC, entered into a "First Amended and Restated Asset Purchase Agreement" ("the APA") with PBFH, which was then known as Sunset Digital Holding, LLC. In 2021, plaintiffs filed a complaint against Sunset seeking a judgment declaring that PBFH was not liable for certain unpaid taxes and penalties; that PBFH did not owe defense or indemnity obligations to Sunset relating to those unpaid taxes; that PBFH did not owe legal fees in connection with any audits or other investigations relating to Sunset's tax liability; and that Sunset owed PBFH defense and indemnity obligations in the event a third party sought to bring a claim or attempted to collect any unpaid taxes from PBFH. Sunset moved to dismiss the complaint pursuant to Rule 12(b), Ala. R. Civ. P., in which it alleged, among other things, that the APA included a mandatory outbound-forum selection clause that "requires the parties to submit exclusively to the jurisdiction of the United States federal courts or the Virginia state courts located in Bristol, Virginia." In its order denying the motion to dismiss, the trial court stated, in pertinent part: "At issue is if the language ('may') creates a mandatory forum selection clause or clause that consents to jurisdiction. Language such as 'shall' or 'must' would be used in cases where the clause was to be considered mandatory. As this is a consent to jurisdiction clause and not a mandatory one, Alabama Courts have held that imperative language such as 'shall' or 'must' are required to find that the clause is a mandatory one. However, the word 'may' results in language that is much more permissive or rather a 'consent to jurisdiction' clause." Sunset argued the trial court erroneously found that the forum-selection clause in the APA was permissive rather than mandatory. Specifically, it asserted that the trial court "wholly ignored the 'exclusive jurisdiction' language of the forum selection clause." To this the Alabama Supreme Court concurred, granted the writ and directed the trial court to vacate its February 2022 order denying Sunset's motion to dismiss. View "Ex parte Sunset Digital Communications, Inc." on Justia Law
Drinkard, et al. v. Perry, et al.
Milton Turner died on July 25, 2018. On September 20, 2018, Mildred Williamson petitioned for letters of administration of Turner's estate in the probate court. In her petition, Williamson asserted that Turner had died intestate and that Williamson was Turner's only surviving heir. In 2019, Williamson, individually and in her capacity as the personal representative of Turner's estate, entered into a contract agreeing to sell to Matthew Drinkard and Jefferson Dolbare ("the purchasers") real property belonging to the estate for $880,650. The real-estate sales contract specified that the closing of the sale was to occur on or before May 31, 2019. On February 7, 2019, Williamson, individually and in her capacity as personal representative of Turner's estate, executed a deed conveying other real property that was part of Turner's estate to Marcus Hester. On February 13, 2019, Callway Sargent, alleging to be an heir of Turner's, filed a claim of heirship in Turner's estate. Sargent also moved for injunctive relief in which he acknowledged the February 7, 2019, deed, but asserted that Williamson had agreed to sell and had conveyed real property belonging to Turner's estate without the approval of the probate court, and requested that the probate court enjoin "Williamson from engaging in any further administration of [Turner's] estate until so ordered by [the probate court]." Williamson petitioned to have the case removed fro probate to the circuit court. From February 28, 2019, to March 18, 2019, a number of individuals came forward, all claiming to be Turner's heirs. Williamson moved to have the circuit court approve the pending property sales. Williamson and the purchasers did not close on the sale of the property that was the subject of their real-estate sales contract by May 31, 2019, as required by the contract. Some of the purported heirs petitioned the circuit court to stay or vacate the order approving the purchasers contact until matters regarding the heirs was resolved. Drinkard and Dolbare filed a motion to intervene in the proceedings regarding the administration of Turner's estate, but the circuit court denied the motion. The Alabama Supreme Court affirmed the circuit court's denial of the purchasers' motion to intervene in the administration of Turner's estate. View "Drinkard, et al. v. Perry, et al." on Justia Law
Watercolor Salon, LLC v. Hixon
A Mississippi trial court denied Watercolor Salon LLC’s motion for a temporary restraining order and preliminary injunction filed against Watercolor’s former employee Nealie Hixon. The motion was based on an employment, confidentiality, and noncompetition agreement. Because Nealie was twenty years old and thus legally a minor when she entered the agreement, the trial court held the agreement was unenforceable. On appeal, Watercolor argues its employment agreement meets the statutory exception that permits minors eighteen years or older to enter into enforceable contracts “affecting personal property.” The Mississippi Supreme Court found Watercolor's logic was flawed and stretched the statutory minor disability exception too far. "Just because an employment contract restricts an employee from taking intellectual property or covers what happens upon breach or termination does not completely change the fundamental nature of the contract. And here the fundamental nature of the contract was a noncompetition agreement that Nealie would give up her ability to work in a certain geographical area for a fixed time in exchange for continued employment at a higher hourly wage. So this employment contract was simply a contract affecting Nealie’s right to work, not her personal property. Thus, the statutory exception does not apply. And because Nealie disaffirmed the contract, it is unenforceable against her." The Court affirmed the denial of Watercolor's motion for injunctive relief, which was based solely on the unenforceable agreement. Whether Watercolor had any remaining claims against Nealie that were not based on the contract, such as the taking of trade secrets, remained to be determined on remand. View "Watercolor Salon, LLC v. Hixon" on Justia Law
Pacific Fertility Cases
On engaging services from Pacific Fertility Center, the plaintiffs signed “ ‘Informed Consent and Agreement to Perform Egg Cryopreservation” forms, providing that medical malpractice disputes were subject to arbitration. The plaintiffs signed separate arbitration agreements. Chart, which manufactures Pacific’s cryogenic storage tanks, and Praxair, which sold those tanks to Pacific and assisted with installation, were not signatories to either the informed consent or arbitration agreements.Following the failure of Tank Four, the plaintiffs in 54 coordinated cases filed suit. As to Chart and Praxair, the complaint alleged negligent failure to recall the tank, strict products liability (failure to warn, manufacturing defect, and design defect based on both the consumer expectations test and the risk-utility test), general negligence, and violation of the Unfair Competition Law. After the plaintiffs agreed to arbitrate their claims against Pacific, Chart and Praxair moved to compel arbitration, citing equitable estoppel. The court of appeal affirmed the denial of their motions. The plaintiffs’ claims are not premised on, nor did they arise out of, the plaintiffs’ fertility services agreements with Pacific. The issue of comparative fault and joint liability on certain issues does not inform the equitable estoppel analysis; the joint liability is not based on the same or similar legal theories and/or facts that underlie the obligations under the Pacific contracts. View "Pacific Fertility Cases" on Justia Law
Access Funding, LLC v. Linton
In this appeal centering on the existence of a valid arbitration agreement the Court of Appeals affirmed the decision of the court of appeals reversing the judgment of the circuit court, holding that the circuit court erred in compelling arbitration of the question of whether the arbitration clause in the agreements at issue was valid.The arbitration clause in this case stemmed from transactions between lead paint tort plaintiffs who received structured settlements and affiliated factoring companies that specialize in purchasing structured settlement rights. Defendants filed motions to compel arbitration and stay the case, but Plaintiffs challenged the existence of a valid agreement to arbitrate. The trial court granted the motion to compel arbitration, finding that the arbitrator was to determine the issue of arbitrability. The Court of Special Appeals reversed. The Court of Appeals affirmed, holding that the circuit court erroneously compelled arbitration and that the issue of whether a valid arbitration agreement exists is an issue for the court to determine. View "Access Funding, LLC v. Linton" on Justia Law
Black v. Bureau of Parks & Lands
The Supreme Judicial Court vacated the judgment of the business and consumer docket entered in favor of Plaintiffs vacating the Bureau of Parks and Lands' lease of public reserved land to NECEC Transmission LLC and Central Maine Power Co. (CMP) for construction of a high-capacity transmission line, holding that the Bureau acted within its constitutional and statutory authority in granting the lease.CMP appealed and Plaintiffs cross-appealed the trial court's decision not to address the substantive question of whether the Bureau had the constitutional authority to lease to the public reserved land. Plaintiffs later moved to dismiss the appeals on the ground that a citizen's initiative rendered the appeals moot. The Supreme Judicial Court denied the motion to dismiss and vacated the judgment below, holding (1) retroactive application of section 1 of the Initiative did not violate the Contract Clause of the United States Constitution, and therefore, the lease was not voided by the initiative; and (2) the record established that the Bureau acted within its constitutional and statutory authority in granting the lease. View "Black v. Bureau of Parks & Lands" on Justia Law