Justia Contracts Opinion Summaries

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Joel and Evelyn Hirschhorn filed suit against their homeowners insurer, Auto-Owners Insurance Company, for breach of contract and bad faith, claiming that Auto-Owners was liable for the total loss of their vacation home. The Hirschhorns alleged that their vacation home became uninhabitable and unsaleable as a result of the accumulation of bat guano between the home's siding and walls. The circuit court granted summary judgment in favor of Auto-Owners, concluding that Auto-Owners' insurance policy's pollution exclusion clause excluded coverage for the Hirschhorns' loss. The court of appeals reversed, concluding that the pollution exclusion clause was ambiguous and therefore must be construed in favor of coverage. The Supreme Court reversed, holding that the circuit court properly dismissed the Hirschhorns' complaint against Auto-Owners, as the pollution exclusion clause excluded coverage for the loss of the Hirschhorns' home that allegedly resulted from the accumulation of bat guano.

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Ira B. Warne executed a partial revocation of and amendment to the Ira B. Warne family protection trust, the purpose of which was to terminate the interest of one of Ira's sons, Thomas Warne, who had been designated as a beneficiary in the original trust instrument. On summary judgment, the district court (1) invalidated the partial revocation based on the Supreme Court's holding in Bans v. Means; and (2) held that Thomas was entitled to one-half of the personal property of Ira's estate pursuant to the distribution provisions of Ira's will. The Supreme Court reversed, holding (1) the partial revocation complied with Utah Code 75-7-605, which statutorily overruled the holding in Banks; and (2) the distribution of Ira's personal property was governed by the terms of the trust, rather than by Ira's will, and therefore the district court erred in awarding Thomas one-half of that property. Remanded for consideration of whether Ira's partial revocation was a product of undue influence.

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In 2007, Scottie and Dawn Pederson (the Pedersons) and Rocky Mountain Bank (the Bank) entered into a construction loan agreement pursuant to which the Bank agreed to lend the Pedersons several thousand dollars. In 2008, the Pedersons and the Bank agreed to finance the construction loan through three short term loans. In 2009, the Pedersons tried to refinance their loans but were unable to do so. Due to alleged failures on the part of the Bank, the Pedersons brought suit against the Bank in 2011, asserting claims for, inter alia, negligence, constructive fraud, and negligent misrepresentation. After it was served with the complaint, the Bank filed a Mont. R. Civ. P. 12(b)(6) motion to dismiss, asserting the statutes of limitations had run on all of the Pedersons' claims. The district court granted the Bank's motion and dismissed the Pedersons' claims. The Supreme Court affirmed, holding (1) the applicable statutes of limitations began to run in 2008 because the Pedersons' claims had accrued and they had discovered the facts constituting the claims; and (2) by filing their complaint more than three years later, the Pedersons failed to commence their action within any of the applicable statutes of limitations.

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Judith Newman (Newman), mother and personal representative of the estate of Karlye Newman (Karlye), appealed from certain pretrial and trial rulings made in the district court concerning the suicidal death of Karlye while at a boarding school for troubled teenagers. Newman named as Defendants Robert Lichfield and the World Wide Association of Specialty Programs and Schools. A jury found Defendants were not negligent, did not commit deceit or negligent misrepresentation, and were not liable for the possible wrongful acts of other defendants regarding Karlye's death. The Supreme Court reversed in part, holding that the district court abused its discretion in limiting the scope of evidence regarding foreseeability, as the exclusion of the evidence was highly prejudicial to Newman and largely prevented her from being able to argue foreseeability, duty, and negligence on the part of Defendants. Remanded for a new trial.

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H&H Development, LLC hired Jim Ramlow for legal services. In 2007, H&H filed a pro se complaint in Lake County against Ramlow and his law firm for professional negligence. Eleven days later, H&H, through counsel, filed a complaint in Flathead County against Eagle Bend, seeking damages based on allegations similar to those in the Lake County complaint. H&H settled with Eagle Bend. In 2010, H&H filed an amended Flathead County complaint that named Ramlow and his firm as defendants and included a lawyer's signature. The district court subsequently declared the Lake County complaint null and void after determining that a non-lawyer could not file a complaint on behalf of a limited liability company. Thereafter, the court granted summary judgment to Defendants on the amended complaint based upon the running of the applicable statute of limitations. The Supreme Court reversed, holding that a district court has discretion to determine whether a corporation should be able to relate back to an amended complaint signed by a lawyer, to its original, pro se complaint. Remanded to assess whether Mont. R. Civ. P. 15(c) permitted H&H's amended complaint in Flathead County to relate back to H&H's pro se Lake County complaint.

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Missouri Title Loans appealed from a judgment finding that a class arbitration waiver contained in its loan agreement, promissory note, and security agreement (agreement) was unenforceable. The Supreme Court affirmed the judgment insofar as it held that the arbitration waiver was unconscionable and reversed that part of the judgment ordering that the claim be submitted to an arbitrator to determine suitability for class arbitration, holding that the appropriate remedy was to strike the entire arbitration agreement. The U.S. Supreme Court vacated the Court's judgment and remanded for further consideration in light of AT&T Mobility, LLC. v. Concepcion. Applying Concepcion, the Supreme Court affirmed in part and reversed in part, holding (1) the presence and enforcement of the class arbitration waiver did not make the arbitration clause unconscionable; (2) the formation of the agreement was unconscionable; and (3) therefore, the appropriate remedy was revocation of the arbitration clause contained within the agreement. Remanded.

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Fifty-four individuals and business entities sued Appellants-Defendants Tyson Foods, Inc., Tyson Poultry, Inc., and Russell Adams (collectively, Tyson), in association with contracts under which they were to raise chickens owned by Tyson on feed supplied by the company. Tyson moved to sever the claims for separate trials. The trial judge denied the motion, allowing the plaintiffs to select eleven individuals and entities to proceed to trial under theories of violation of the Oklahoma Consumer Protection Act and fraud. The poultry growers contended that Tyson targeted them for failure by delivering unhealthy birds and feed in retaliation for their refusal to modernize operations. The jury, in a nine to three split, awarded the growers compensatory and punitive damages approaching $10 million. Alleging evidentiary errors and juror misconduct, Tyson filed a motion for new trial. The trial judge recused and the new trial motion was heard by an assigned judge. Acknowledging concerns about the conduct of the trial, the substitute judge denied the motions for new trial and judgment notwithstanding the verdict, staying further proceedings pending resolution of the appeal. Upon review, the Supreme Court held that: 1) where attorneys were advised that voir dire would be limited to questions not covered in the juror questionnaire and jurors gave incomplete, untruthful, and/or misleading answers in those documents, Appellants were entitled to a new trial; and 2) a poultry grower having no title to the chickens or feed placed with the grower for fattening and future marketing of the birds by the flock's owner is not an "aggrieved consumer" for purposes of the Consumer Protection Act. The case was remanded for further proceedings.

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San Juan Coal Company and the International Union of Operating Engineers Local 953 entered into binding arbitration to determine whether union members on a certain schedule were entitled to holdover pay. The arbitrator concluded that the union members were entitled to the extra pay, but on review, the district court overturned the arbitral award. Because the arbitrator’s interpretation was colorable, the Tenth Circuit held that the district court improperly substituted its interpretation of the agreement: "[a]n arbitrator's interpretation of an agreement, even one that is flawed or based on questionable findings of fact, is due the utmost judicial deference. It matters not that a reviewing court might offer a more cogent reading of the agreement; the arbitrator's interpretation must be upheld wholly unless it is without any textual basis."

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Plaintiff Arnold Oil Properties, LLC hired Defendant Schlumberger Technology Corp. to perform a specialized cement job on its deep-zone gas well. After Schlumberger poured too much cement into the well, Arnold sued for breach of contract and negligence. The district court concluded as a matter of law that an alleged exculpatory provision in the parties' contract was an indemnification provision and therefore did not bar Arnold's recovery. After a jury found the parties were in unequal bargaining positions, the district court denied Schlumberger's request to enforce the contractual limitation-of-liability provision. Schlumberger appealed the district court's denial of summary judgment and its denial of judgment as a matter of law. Finding that the evidence supported the jury's finding, the Tenth Circuit affirmed the district court's grant of summary judgment in favor of Arnold.

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In April and June of 2008, Best of the Best Auto Sales, Inc. purchased seven vehicles from Dealers Auto Auction of Idaho and Brasher's Idaho Auto Auction with checks that were returned for insufficient funds. As a result, Dealers and Brasher refused to provide Best of the Best with the titles to the vehicles. Best of the Best then sold the vehicles to Idaho consumers without providing them with titles. Dealers and Brasher filed claims with CNA Surety d/b/a Western Surety Company which acted as a surety for a "$20,000 Vehicle/Vessel Dealer Bond." Best of the Best was the principal. Upon Best of the Best's failure to provide evidence or defenses for Dealers' and Brasher's claims, Western Surety alleged that it lawfully settled those claims in good faith upon the condition that the consumers received their titles, even though they were not based on final judgments. Plaintiff Nick Hestead submitted his claim, which was based on a final judgment. Plaintiff's claim involved fraud and fraudulent representation concerning a separate vehicle that he purchased from Best of the Best that was previously branded a lemon in California. Western Surety responded by asserting that the Dealer Bond was exhausted. Plaintiff contended that the plain meaning of I.C. 49-1610(4) provides that his claim should be given priority because it was submitted thirty days after a final judgment was entered, unlike Dealers' and Brasher's claims. Western Surety asserted that the plain meaning of I.C. 41-1839(3) permits sureties to settle Dealer Bond claims in good faith. Upon review, the Supreme Court found that the payments on the surety bond were lawfully made in good faith pursuant to I.C. 49-1610(1) and I.C. 41-1839(3) because Dealers' and Brasher's claims were undisputed and supported by competent evidence.