Justia Contracts Opinion Summaries

Kratzer Construction entered into a subcontract with Hardy Construction Co. to perform work on a building addition for Ekalaka Public Schools. Kratzer completed the work and submitted pay applications, including one for $92,856.45, which Hardy partially disputed due to unapproved change orders. Hardy offered to pay $81,153 upon Kratzer signing a release, but Kratzer refused, demanding the full amount plus interest. Hardy later offered the same amount without requiring a release, but Kratzer still declined, insisting on interest.The Sixteenth Judicial District Court granted summary judgment to Kratzer, ruling that Hardy owed $81,153 plus 18% interest from January 6, 2022, and attorney fees, as Kratzer was deemed the prevailing party. Hardy appealed, arguing that Kratzer failed to meet a condition precedent in the subcontract requiring submission of releases from his subcontractors before final payment.The Supreme Court of Montana reviewed the case and concluded that the subcontract's provisions were clear and unambiguous. The court determined that Kratzer's failure to submit the required releases constituted a breach of the subcontract, and Hardy was entitled to withhold payment. The court found that Hardy's offers to settle did not constitute a waiver of the condition precedent or a novation of the contract.The Supreme Court reversed the District Court's summary judgment in favor of Kratzer, including the awards for interest and attorney fees. The court remanded the case for entry of judgment in favor of Hardy, requiring Hardy to pay Kratzer $81,153 for services rendered under the subcontract, less reasonable attorney fees and costs incurred by Hardy. View "Kratzer Construction v. Hardy Construction" on Justia Law

In 2016, Tucker Cianchette secured a multimillion-dollar judgment in Maine Superior Court against his father, step-mother, and two LLCs after they backed out of a 2015 agreement that would have given him sole control of a Ford dealership. Following this, in 2021, Eric and Peggy Cianchette, along with Cianchette Family, LLC, and Better Way Ford, LLC, filed a lawsuit alleging that Ford Motor Company violated state and federal laws during the failed 2015 negotiations and through false testimony by Ford employees in Tucker's 2016 suit.The 2021 lawsuit was initially filed in Maine Superior Court but was removed to the United States District Court for the District of Maine. The District Court dismissed all claims against Ford, leading the plaintiffs to appeal. The plaintiffs argued that Ford's actions during the 2015 negotiations and the 2016 lawsuit constituted violations of Maine's civil perjury statute, the Dealers Act, the federal Automobile Dealers' Day in Court Act, and also amounted to breach of contract and tortious interference with contract.The United States Court of Appeals for the First Circuit reviewed the case and affirmed the District Court's dismissal. The Court of Appeals held that the plaintiffs failed to plausibly allege that Ford made any false representations or that any reliance on such representations was justified. The court also found that the plaintiffs' claims under the Dealers Act were barred by res judicata due to a prior ruling by the Maine Motor Vehicle Franchise Board. Additionally, the court concluded that the implied covenant of good faith and fair dealing did not apply to the breach of contract claims under Michigan law, as the SSA explicitly granted Ford the right to approve changes in ownership. View "Better Way Ford, LLC v. Ford Motor Company" on Justia Law

Mark Radford and the State Board of Land Commissioners and the Idaho Department of Lands (collectively, "the State") were involved in a contract dispute over the State's easement on Radford's property. The State used the easement to access and manage state endowment lands leased for grazing. Historically, the State accessed the easement through the Hallo Property, which Radford purchased in 2020, subsequently revoking the State's access. Radford claimed that an email from the State indicated the easement was no longer needed, leading him to file a lawsuit alleging the State breached the termination clause of the easement agreement by not providing a statement confirming termination.The District Court of the Seventh Judicial District of Idaho granted summary judgment in favor of the State, determining that the termination clause gave the State sole and subjective power to decide whether the easement was necessary. The court found that the State had not made any determination that the easement was no longer needed, thus dismissing Radford's breach of contract claim. Radford appealed the decision.The Supreme Court of the State of Idaho reviewed the case and affirmed the district court's decision. The court held that the State had no contractual duty to assess whether the easement was necessary for its granted purposes. The agreement's termination clause did not impose an obligation on the State to periodically reassess the easement's necessity. The court also rejected Radford's argument that the State's refusal to terminate the easement violated the covenant of good faith and fair dealing, as the State had not determined the easement was no longer needed. The court awarded attorney fees and costs on appeal to the State, concluding that Radford's appeal was unreasonably pursued. View "Radford v. Van Orden" on Justia Law

Just Funky, LLC, an Ohio company, and Think 3 Fold, LLC, an Arkansas company, entered into a business relationship in 2020 to supply plush toys to Walmart. Think 3 Fold issued purchase orders to Just Funky in late 2021, but the parties could not agree on a final price. Concurrently, Just Funky provided a loan to Think 3 Fold, which defaulted on the payments. The parties attempted to settle the loan dispute, but Think 3 Fold's late payment complicated matters. They also discussed a larger plush toy deal as part of the settlement, but no agreement was reached. Think 3 Fold paid for a smaller plush toy order, which Just Funky did not deliver.The United States District Court for the Western District of Arkansas ruled in favor of Think 3 Fold, granting summary judgment on Just Funky's breach of contract claim for the larger plush deal, finding no contract was formed due to lack of agreement on essential terms. The court also ruled in favor of Think 3 Fold on its counterclaim for the smaller plush deal, rejecting Just Funky's setoff defense.The United States Court of Appeals for the Eighth Circuit reviewed the case. The court affirmed the district court's summary judgment, agreeing that no contract was formed for the larger plush deal as there was no meeting of the minds on the price term. The court also upheld the rejection of Just Funky's setoff defense, finding that the $173,000 was part of settlement negotiations and never became due. The judgment of the district court was affirmed. View "Just Funky, LLC v. Think 3 Fold, LLC" on Justia Law

An investor, Snowden Investment LLC, was denied its contractual right to purchase a membership interest in two companies, Boomerang Franchise LLC and Ashburn Indoor Play LLC, both related to a children's indoor play facility business called Hyper Kidz. The right was stipulated in a Loan and Security Agreement with Maryland Indoor Play, LLC (MIP), which required MIP to notify Snowden of new ventures and offer an opportunity to invest. Snowden was not given the required notice for either Boomerang or Ashburn.The Circuit Court for Howard County granted summary judgment to Snowden on liability for breach of contract and awarded specific performance for Boomerang and compensatory damages for Ashburn. Snowden's expert valued the damages for Ashburn at $453,333 using a "fair value" approach, which the court accepted. The court also ordered specific performance for Boomerang, requiring the Founders to offer Snowden the opportunity to invest on the same terms as the original members.The Supreme Court of Maryland reviewed the case and found that the Circuit Court erred in its rulings. The court held that the proper measure of damages for the breach of the investment right should be general damages, calculated using the fair market value of the interest at the time of the breach, not "fair value" as used by Snowden's expert. The court also found that specific performance was not appropriate for Boomerang because the Circuit Court failed to consider all relevant facts and circumstances, including whether Snowden was ready, willing, and able to meet the terms of membership.The Supreme Court of Maryland reversed the judgment for specific performance regarding Boomerang and vacated the compensatory damages award for Ashburn, remanding the case for further proceedings consistent with its opinion. The court also vacated the award for attorneys' fees, costs, and interest, instructing the Circuit Court to revisit these in light of the new findings. View "Maryland Indoor Play v. Snowden Investment" on Justia Law

Michigan Electric Transmission Company (METC) owns a high-voltage transmission line with Michigan Public Power Agency (MPPA) and Wolverine Power Supply Cooperative. The case concerns the ownership of new transmission facilities, or "network upgrades," connecting a new solar generation park to the transmission line. METC claims exclusive ownership based on existing agreements, while MPPA and Wolverine disagree.The Federal Energy Regulatory Commission (FERC) reviewed the case and found that no agreement conclusively determined ownership rights. FERC declined to decide the ownership question, leading METC to petition for review.The United States Court of Appeals for the District of Columbia Circuit reviewed the case. The court agreed with FERC's interpretation that the relevant agreements did not grant METC exclusive ownership of the network upgrades. The court found that the Styx-Murphy line qualifies as a "system" under the Transmission Owners Agreement (TOA), and since METC is not the sole owner, it cannot claim exclusive ownership. The court also found that the Styx-Murphy Agreements did not preclude MPPA and Wolverine from owning network upgrades.The court denied METC's petitions for review, upholding FERC's decision. View "Michigan Electric Transmission Company, LLC v. FERC" on Justia Law

The plaintiff, a Belgian company, agreed to ship car parts made in Mexico to a Mexican plant operated by the defendants, a Delaware LLC and a Delaware corporation. The initial contract documents included a forum-selection clause pointing to a Mexican venue. However, the plaintiff later sued in Michigan, alleging that the parties had switched to a Michigan forum-selection clause during their transactions. The defendants moved to dismiss the suit under Federal Rule of Civil Procedure 12(b)(6) and the forum non conveniens doctrine, arguing that the Mexican forum-selection clause applied.The United States District Court for the Eastern District of Michigan granted the defendants' Rule 12(b)(6) motion, dismissing the suit without conducting a forum non conveniens analysis. The court found that the forum-selection clause in the initial contract documents, which pointed to a Mexican venue, was controlling.The United States Court of Appeals for the Sixth Circuit reviewed the case and found that the complaint plausibly alleged that the parties had switched to a Michigan forum-selection clause. The court noted that a factual dispute existed over which forum-selection clause applied to the plaintiff’s breach-of-contract claims. The court held that this venue issue could not be resolved on the pleadings under Rule 12(b)(6) or under the forum non conveniens doctrine without factual findings. Therefore, the Sixth Circuit reversed the district court's decision and remanded the case for further proceedings to resolve the factual disputes regarding the applicable forum-selection clause. View "VCST Int'l B.V. v. BorgWarner Noblesville, LLC" on Justia Law

Power Rental Op Co, LLC ("Power Rental") is a Florida-based company providing water and energy services. The Virgin Islands Water and Power Authority ("WAPA") is a municipal corporation in the U.S. Virgin Islands. In 2012, WAPA entered into a rental agreement with General Electric International, which Power Rental later acquired. By 2019, WAPA owed Power Rental over $14 million, which was reduced to approximately $9.3 million through a promissory note governed by New York law. WAPA defaulted on the note in 2020, leading Power Rental to sue in Florida state court for breach of the note and other claims.The case was removed to the Middle District of Florida, which dissolved pre-judgment writs of garnishment issued by the state court, granted partial summary judgment in favor of Power Rental, and ordered WAPA to complete a fact information sheet. The court found that WAPA waived its sovereign immunity defenses under the terms of the note. WAPA's appeal to the Eleventh Circuit was voluntarily dismissed.Power Rental registered the judgment in the U.S. District Court for the District of Puerto Rico, which issued a writ of execution served on WAPA's account at FirstBank in Puerto Rico. WAPA filed an emergency motion to quash the writ, arguing that the funds were exempt under Virgin Islands law and that the Puerto Rico court lacked jurisdiction. The District of Puerto Rico denied the motion, finding that the separate entity rule did not apply and that it had jurisdiction to issue the writ.The United States Court of Appeals for the First Circuit affirmed the District of Puerto Rico's order. The court held that the separate entity rule was outdated and did not apply, allowing the Puerto Rico court to have jurisdiction over the writ. The court also upheld the lower court's finding that WAPA had waived its statutory immunity defenses. View "Power Rental OP CO, LLC v. Virgin Islands Water and Power Authority" on Justia Law

SMS Financial Recovery Services, LLC ("SMS") sued Samaritan Senior Village, Inc. and Samaritan Medical Center, Inc. (collectively, "Samaritan") for breach of contract after Samaritan canceled two contracts during the COVID-19 pandemic. The contracts, signed in December 2019, required Harmony Healthcare International Inc. ("Harmony"), SMS's predecessor, to provide healthcare consulting services to Samaritan for three years. Samaritan canceled the contracts in May 2020, citing financial constraints and the inability to allow Harmony's representatives on-site due to state COVID-19 restrictions.The United States District Court for the District of Massachusetts granted summary judgment in favor of Samaritan, finding that Samaritan's performance was excused under the doctrine of impracticability. The court reasoned that New York State Department of Health guidelines made it illegal for Harmony representatives to enter Samaritan's facilities, thus excusing Samaritan from its contractual obligations.The United States Court of Appeals for the First Circuit reviewed the case and found that a genuine dispute of material fact remained regarding whether Harmony could have performed its contractual obligations remotely, despite the state visitation restrictions. The court noted that the doctrine of frustration of purpose might apply, but it was unclear whether the temporary nature of the restrictions substantially frustrated the overall purpose of the three-year contracts. The court also found that the issue of whether Samaritan's performance was excused only temporarily should be determined by a factfinder.The First Circuit reversed the district court's grant of summary judgment in part and remanded the case for further proceedings. The court affirmed the district court's grant of summary judgment on SMS's claims of breach of the covenant of good faith and fair dealing and violations of Massachusetts General Law Chapter 93A, finding no evidence of bad faith or consumer protection violations by Samaritan. View "SMS Financial Recovery Services, LLC v. Samaritan Senior Village, Inc." on Justia Law

The City of Oakland entered into agreements with Oakland Bulk and Oversized Terminal, LLC (OBOT) to develop a bulk cargo shipping terminal at the former Oakland Army Base, including a 66-year Ground Lease. Amid public backlash over potential coal transportation, the City moved to block coal, leading to extensive litigation. The City terminated OBOT’s Ground Lease, claiming OBOT failed to meet the Initial Milestone Date for construction. OBOT and its subtenant, Oakland Global Rail Enterprise (OGRE), sued the City for breach of the Ground Lease, breach of the implied covenant of good faith and fair dealing, and sought declaratory relief, alleging the City’s actions made it impossible for OBOT to meet the milestone and triggered a force majeure provision.The Alameda County Superior Court, after a bifurcated bench trial, found the City liable for breaching the Ground Lease and the implied covenant of good faith and fair dealing. The court issued a detailed statement of decision, highlighting the City’s failure to cooperate, its obstructionist actions, and its bad faith efforts to terminate the lease. The court awarded OBOT attorney fees and costs.The City appealed to the California Court of Appeal, First Appellate District, Division Two, arguing that the trial court misinterpreted the force majeure provision, improperly applied the implied covenant of good faith and fair dealing, erroneously declined to apply claim preclusion, and improperly entered judgment for OGRE. The appellate court affirmed the trial court’s judgment and orders, concluding that the City’s arguments lacked merit. The court held that the City’s actions constituted force majeure events, excusing OBOT’s performance delays, and that the City breached the implied covenant of good faith and fair dealing by obstructing OBOT’s efforts to develop the terminal. The court also found that claim preclusion did not apply as the federal case involved different issues and contracts. View "Oakland Bulk and Oversized Terminal v. City of Oakland" on Justia Law