Justia Contracts Opinion Summaries

A taxpayer challenged a California school district’s use of a “lease-leaseback” arrangement with a contractor for constructing a new middle school. The plaintiff alleged the $36 million construction contract violated California’s competitive bidding statutes and conflict of interest laws. The district had selected the contractor from a prequalified pool and entered into preconstruction agreements, then executed lease-leaseback contracts for the project. The project was funded entirely by the proceeds of bonds approved by local voters, not by contractor-provided financing.Previously, the Superior Court of Fresno County dismissed the complaint, but on the first appeal, the California Court of Appeal, Fifth Appellate District, held that the plaintiff had stated claims for both competitive bidding and conflict of interest violations. After further proceedings and another appeal, the California Supreme Court confirmed that the validation statutes did not bar the action, and the case proceeded to a bench trial. The trial court found the lease-leaseback arrangement qualified for the statutory exception to competitive bidding and rejected the conflict of interest claim, concluding the contractor was not an “officer” or “employee” for purposes of the conflict of interest statute.On appeal, the California Court of Appeal, Fifth Appellate District, held that the conflict of interest claim was properly rejected because the contractor did not act as an officer or employee of the district. However, the court concluded that the competitive bidding exception did not apply because the project was financed by public bonds, not by the contractor. The court held that the proper remedy under Education Code section 17406(d)—enacted after the initial appeal—was to require the contractor to disgorge its net profit ($236,129), not the full contract amount. The judgment was reversed in part, and the trial court was directed to enter judgment requiring the contractor to refund its profit to the district. View "Davis v. Fresno Unified School Dist." on Justia Law

Whitney Oil and Gas, which operates oil and gas production platforms off the Louisiana coast, entered into a Master Service Agreement (MSA) with Quality Process Services (QPS) in 2016. Under the MSA, QPS provided contract laborers, primarily production operators, who routinely used vessels to reach Whitney’s platforms where they performed maintenance and monitoring tasks. In 2021, after Hurricane Ida, a Whitney employee was injured while being transported on a Whitney vessel operated by a QPS employee. The injured employee sued both companies in Louisiana state court, prompting Whitney to file a federal limitation action, with QPS seeking indemnity from Whitney under the MSA for injuries to Whitney’s employees.The United States District Court for the Eastern District of Louisiana held a bench trial. The court found that the MSA was not a maritime contract because the parties did not expect vessels to play a substantial role in the completion of the contract beyond transporting workers. It concluded that under Louisiana law, the indemnity provision was unenforceable and dismissed QPS’s indemnity claim with prejudice. The court also ruled that Whitney was entitled to attorney fees under the MSA’s prevailing-party provision but deferred setting the amount until after any appeal.The United States Court of Appeals for the Fifth Circuit reviewed the case. It affirmed the district court’s judgment that the MSA was not a maritime contract, emphasizing that the parties’ expectations were that vessels served only as transportation and did not directly aid the performance of the contracted work. As a result, Louisiana law applied, and the indemnity provision was voided. The Fifth Circuit also dismissed without prejudice QPS’s appeal of the attorney-fee ruling, since the amount had not yet been determined. View "Quality Proc Svc v. Whitney Oil" on Justia Law

After defaulting on his home mortgage, the plaintiff entered into a loan modification agreement with his mortgage servicer. The agreement allowed for a portion of the loan balance to be forgiven if the plaintiff made timely payments and remained in good standing. However, the plaintiff quickly fell behind on the modified payment schedule and remained delinquent for an extended period. During this time, the servicer issued an IRS Form 1099-C to the plaintiff, listing the amount eligible for forgiveness as a "cancellation of debt." The plaintiff subsequently argued that this form, along with certain communications from the servicer and its successor, meant the debt had been forgiven, even though he had not met the agreement’s conditions.The case was originally filed in Massachusetts state court and removed to the United States District Court for the District of Massachusetts on diversity grounds. The defendants moved for summary judgment after discovery. The plaintiff opposed the motion, arguing that further discovery was needed, particularly regarding the servicer’s tax filings, to support his claim that the debt had been forgiven. The district court denied the plaintiff’s request for additional discovery, finding the requested information irrelevant, and granted summary judgment to the defendants on all claims, including breach of contract, breach of the covenant of good faith and fair dealing, and violation of the Massachusetts consumer protection statute.On appeal, the United States Court of Appeals for the First Circuit affirmed the district court’s rulings. The appellate court held that the issuance of an IRS Form 1099-C does not, by itself, discharge a debt if the conditions for forgiveness were not met. The court also found no abuse of discretion in denying additional discovery and concluded there was no material factual dispute as to whether the debt had been forgiven. The grant of summary judgment to the defendants was affirmed. View "Dworman v. PHH Mortgage Services" on Justia Law

Two individuals loaned money to entities for which a third person guaranteed repayment. When those loans went unpaid, the lenders obtained a default judgment of approximately $4.5 million against the guarantor. The guarantor did not pay the judgment, leading the lenders to initiate post-judgment proceedings to discover and collect his assets. They issued a citation on funds previously held in escrow by a lender as security for loans on properties owned by entities the guarantor controlled. After property sales fully repaid the loans, the escrowed funds remained frozen pending resolution of who was entitled to them. Several limited liability companies (LLCs) associated with the guarantor, as well as his estranged wife, intervened, each asserting claims to the funds.The United States District Court for the Northern District of Illinois appointed a Special Master to determine the ownership of the escrowed funds. After discovery and a hearing, the Special Master found that the funds belonged to the guarantor, not the LLCs, based on evidence that he exercised complete control over similar proceeds and used them for personal expenses without objection from the LLCs. The district court adopted these findings and ordered further proceedings to determine if the wife’s claim for unpaid child and spousal support had priority. Before those proceedings concluded, the wife and the lenders agreed to split the funds, and the district court approved this resolution, over objections from the LLCs.On appeal, the United States Court of Appeals for the Seventh Circuit held that it had jurisdiction over the LLCs’ appeal and dismissed the guarantor’s appeal for lack of standing. The court affirmed the district court’s determination that the escrowed funds belonged to the guarantor and could be used to satisfy the judgment. It also rejected the argument that the proceedings improperly pierced the corporate veil or violated procedural requirements under Illinois law. View "Zhu Zhai Holdings Limited v Ivankovich" on Justia Law

Several patients brought class action lawsuits against Indiana health care providers, alleging that their medical information was improperly shared with Facebook through the use of the Meta Pixel embedded in online patient portals. The plaintiffs asserted state law claims including breach of implied contract, unjust enrichment, and violations of the Indiana Deceptive Consumer Sales Act and Indiana Wiretapping Act. The health care providers had established these online portals to comply with federal regulations encouraging electronic health records, which offered incentive payments and imposed penalties for non-compliance.The health care providers removed the cases from Indiana state court to the United States District Court for the Southern District of Indiana, arguing that federal jurisdiction was proper under 28 U.S.C. § 1442(a)(1). They claimed they were “acting under” the Department of Health and Human Services when creating and maintaining their portals. District courts in multiple consolidated cases rejected this argument, finding that the providers did not meet the statutory requirements for removal under § 1442(a)(1). The courts concluded that while the providers were highly regulated and incentivized by federal policies, their actions did not amount to performing basic governmental tasks or operating under the direction of a federal officer.The United States Court of Appeals for the Seventh Circuit reviewed the consolidated appeals de novo. It held that compliance with federal regulations and incentives for patient portals did not constitute “acting under” a federal officer. The court found that the health care providers’ relationship to the federal government lacked the unusually close supervision and delegation required for federal officer removal. The court affirmed the district courts’ remand orders, holding that federal subject matter jurisdiction was not established under § 1442(a)(1). View "Chiaro v Methodist Hospitals, Inc." on Justia Law

A Montana company that provides mold remediation services was contacted to perform emergency work at a home in Idaho. The homeowner’s father, a long-time acquaintance of the company’s owner, facilitated the arrangement. Although the company disclosed it was not registered as a contractor in Idaho, it entered into an agreement with the homeowner and completed the remediation work. The company billed over $44,000 for its services, but the homeowner, after receiving insurance funds, refused to pay, claiming the work was not properly completed and instead used the funds to pay another contractor.The company then filed a complaint for unjust enrichment in the District Court of the First Judicial District of Idaho, Bonner County. The homeowner moved to dismiss, arguing that under the Idaho Contractor Registration Act (ICRA), unregistered contractors are barred from bringing actions in Idaho courts to recover compensation for work performed. The district court treated the motion as one for summary judgment and dismissed the complaint, finding that the company’s failure to register precluded its claim and that no equitable exception applied.On appeal, the Supreme Court of the State of Idaho reviewed whether the district court erred in granting summary judgment. The Supreme Court held that the plain language of ICRA unambiguously bars unregistered contractors from seeking compensation through Idaho courts, even under equitable theories such as unjust enrichment, when the claim is against a member of the general public—the party the statute is designed to protect. The court affirmed the district court’s decision and declined to award attorney fees on appeal, concluding that the appeal raised legitimate legal questions, though the arguments did not prevail. View "Samuel Lee Services LLC v. Bangeman" on Justia Law

The case concerns a dispute between two individuals who cohabited for nearly a decade before marrying. During their relationship, the parties agreed to pool their efforts and share any property acquired during this period, which included contributions to one party’s government pension. After the relationship ended, the non-employee party claimed entitlement to a share of the pension accrued during their pre-marital cohabitation, based on their agreement.After separation and the filing of a civil action for breach of contract, the Superior Court of the City and County of San Francisco consolidated the proceedings. The court found that the parties had an implied-in-fact contract—known as a Marvin agreement—to share equally in all property acquired during their relationship, including pension contributions. The trial court held that the non-employee party was entitled to an equal share of the pension benefits accrued during the period of cohabitation, even though the parties were not married at the time.The California Court of Appeal, First Appellate District, Division Five, reviewed only the question of whether Public Utilities Code section 12337 barred the non-employee party from receiving a share of the pension. The appellate court held that section 12337, which generally renders such pensions unassignable and exempt from execution, does not preclude enforcement of an ownership interest in the pension arising from a Marvin agreement. The court reasoned that the non-employee party’s claim was not as a creditor but as an owner by virtue of contract, and therefore section 12337’s restrictions did not apply. The appellate court affirmed the trial court’s order, concluding that the non-employee party was entitled to an equal share of the pension benefits accrued during the Marvin period. View "Seiwald v. Irias" on Justia Law

A customer dined at a Mississippi restaurant specializing in local seafood, ordering premium snapper on three occasions between 2013 and 2018. The restaurant, along with its supplier and several managers, was later criminally charged for a long-running scheme to mislabel imported frozen fish as locally caught premium fish. All parties pled guilty, admitting to substituting and fraudulently selling over 29 tons of imported fish as local species during a multi-year period. The customer alleged that he paid high prices for what he believed to be premium Gulf snapper, but was instead served inferior imported fish, and he brought a class action seeking damages under federal and state law.The United States District Court for the Southern District of Mississippi dismissed the complaint under Rule 12(b)(1), finding no cognizable Article III injury. The court reasoned that since the plaintiff consumed his meals without complaint, paying for fish he would not have otherwise purchased was not a concrete injury. It also found the allegations insufficiently particularized, as the plaintiff did not specifically allege that imported fish was served on the dates he dined or that all snapper sold on those dates was misbranded. The court denied motions to amend the judgment and complaint, concluding any amendments would be futile.The United States Court of Appeals for the Fifth Circuit reviewed the case de novo and reversed the district court’s dismissal. The Fifth Circuit held that the plaintiff plausibly suffered a concrete and particularized injury in fact under Article III, either by being fraudulently induced to purchase inferior fish or by overpaying due to fraud. The court concluded that the allegations of widespread and routine fish substitution at the restaurant plausibly affected the plaintiff’s meals, particularly his August 21, 2018, visit. The denial of leave to amend was vacated, and the case was remanded for further proceedings. View "McCain v. Mary Mahoney's" on Justia Law

This dispute arose from a series of business dealings among several corporate parties involved in the repurposing of ammonium nitrate water from a landfill in Mobile County, Alabama. The plaintiffs, two corporate entities, accused certain defendants of disrupting long-standing contracts and business relationships by sharing confidential information in violation of a 2013 contract. The alleged conduct resulted in the plaintiffs being cut out of relationships they had developed over many years. The 2013 contract at issue contained a forum-selection clause requiring that disputes be brought exclusively in courts located in New York, New York.After the plaintiffs initiated suit in the Monroe Circuit Court, the defendants sought dismissal for improper venue, citing the forum-selection clause and arguing in the alternative that, even if venue were proper in Alabama, it was not proper in Monroe County. The defendants also asserted that the plaintiffs’ tort claims failed to state a claim. While these motions were pending, disputes arose over the scope and timing of discovery. The trial court issued a series of discovery-related orders, culminating in a January 6, 2026, order requiring the defendants to provide broad discovery, including depositions and responses to interrogatories, before the motion to dismiss would be heard.The Supreme Court of Alabama granted the defendants’ petition for a writ of mandamus. The Court held that venue is a threshold issue that should be addressed as soon as practicable and that the trial court exceeded its discretion by requiring the defendants to participate in extensive merits-based discovery before ruling on the venue motion. The Court directed the trial court to vacate its January discovery order and to rule expeditiously on the motion to dismiss. Pending that ruling, any discovery must be limited to issues relevant to venue. View "In re: Southern Logistics, Inc. v. UOP, LLC" on Justia Law

A landlord and a tenant, a ballet studio, entered into two lease agreements for suites in a shopping center. The leases contained provisions for indemnification, default, and attorney fees. After the ballet studio vacated the premises, alleging that the landlord failed to address mold issues that caused personal injuries to two individuals associated with the studio and damage to the studio’s property, the studio and the individuals filed a multi-count complaint against the landlord. The landlord counterclaimed for unpaid rent and sought defense and indemnity from the ballet studio for the claims made by the individuals.The Montgomery Circuit Court addressed a partial summary judgment motion filed by the landlord, which concerned only the claims between the landlord and the ballet studio, not the individuals’ personal injury claims. The ballet studio and the individuals filed a response to the summary judgment motion, but it was submitted one business day late. The trial court granted the landlord’s motion to strike the late response and, later, denied the plaintiffs’ attempt to resubmit the same response. The court then entered a partial summary judgment in favor of the landlord. Subsequently, the court certified this partial summary judgment as final under Rule 54(b), Alabama Rules of Civil Procedure, but also included language purporting to dismiss the entire case.On appeal, the Supreme Court of Alabama affirmed the trial court’s orders striking the untimely response and denying its resubmission, holding that the trial court did not abuse its discretion. The Supreme Court also affirmed the certification of the partial summary judgment as final but reversed the dismissal of the entire case, noting that claims by the individuals against the landlord and the determination of damages owed to the landlord remained unresolved. The case was remanded for further proceedings. View "Commercial Properties, Inc. v. Charalambidou" on Justia Law