Justia Contracts Opinion Summaries

After disputes arose between a general contractor and two of its subcontractors, an arbitrator awarded the subcontractors money for the labor and material they had provided the general contractor along with associated costs, attorneys' fees, interest, and other sums. The general contractor declared bankruptcy before paying up, and the surety company that issued a bond guaranteeing the subcontractors would be paid tendered amounts representing only the part of the awards that compensated for labor and material (and some interest). But the subcontractors (or in one case, the subcontractor's assignee) wanted the whole of the awards and sued in federal court to get it.   The district court sided with the surety and granted it summary judgment. The Eighth Circuit reversed and remanded the district court’s decision granting summary judgment to the surety. The court held that the bond at issue obligates the surety to pay not only for labor and material but also for other related items to which Plaintiffs’ subcontracts entitle them (or their assignees). The court explained that the bond provided that if the subcontractors were not paid in full, which is the case here, they were entitled to sums "justly due," which included costs, attorneys' fees and interest. View "Owners Insurance Company v. Fidelity & Deposit Company" on Justia Law

Técnicas Reunidas de Talara S.A.C., a Peruvian corporation, subcontracted with SSK Ingeniería y Construcción S.A.C., another Peruvian corporation, to provide electromechanical work on the refinery project. In response to a contract dispute, the arbitral panel issued a $40 million award to SSK. During the arbitration, two of Técnicas's attorneys withdrew and joined the opposing party’s law firm. More than a month later Técnicas objected in the International Court of Arbitration to alleged conflicts of interest held by the arbitrators, but its objection made no mention of the attorney side switching.   The district court agreed with Técnicas that a public policy against attorney side-switching exists in the United States but concluded that the public policy was not contravened in this case because there was no actual prejudice and Técnicas waived its objection. At issue on appeal concerns whether a party to an international arbitration can obtain a vacatur of an adverse arbitral award because two of its attorneys withdrew and joined the opposing party’s law firm during the arbitral proceedings.     The Eleventh Circuit affirmed the judgment. The court explained that Técnicas waived its right to complain. The court explained thatTécnicas, the losing party in the arbitration, had knowledge of the attorney side-switching but did not object until Técnicas received an adverse award more than a year later, The court wrote that its conclusion is consistent with the well-settled principle “that a party may not sit idle through an arbitration procedure and then collaterally attack that procedure on grounds not raised . . . when the result turns out to be adverse.” View "Tecnicas Reunidas De Talara S.A.C. v. SSK Ingenieria Y Construccion S.A.C." on Justia Law

Plaintiff Crystal Point Condominium Association, Inc. obtained default judgments against two entities for construction defect claims. Kinsale Insurance Company was alleged to have insured those entities, under the Direct Action Statute, N.J.S.A. 17:28-2. The relevant policies both contained an arbitration agreement providing in part that “[a]ll disputes over coverage or any rights afforded under this Policy . . . shall be submitted to binding Arbitration.” Crystal Point filed a declaratory judgment action against Kinsale, alleging that it was entitled to recover the amounts owed by the entities under the insurance policies issued by Kinsale. Kinsale asserted that Crystal Point’s claims were subject to binding arbitration in accordance with the insurance policies. Kinsale argued that the Direct Action Statute did not apply because Crystal Point had not demonstrated that neither entity was insolvent or bankrupt. In the alternative, Kinsale contended that even if the statute were to apply, it would not preclude enforcement of the arbitration provisions in the policies. The trial court granted Kinsale’s motion to compel arbitration, viewing the Direct Action Statute to be inapplicable because there was no evidence in the record that either insured was insolvent or bankrupt. An appellate court reversed the trial court’s judgment, finding the evidence that the writs of execution were unsatisfied met the Direct Action Statute’s requirement that the claimant present proof of the insured’s insolvency or bankruptcy and determining that the Direct Action Statute authorized Crystal Point’s claims against Kinsale. The appellate court concluded the arbitration clause in Kinsale’s insurance policies did not warrant the arbitration of Crystal Point’s claims, so it reinstated the complaint and remanded for further proceedings. The New Jersey Supreme Court determined Crystal Point could assert direct claims against Kinsale pursuant to the Direct Action Statute in the setting of this case. Based on the plain language of N.J.S.A. 17:28-2, however, Crystal Point’s claims against Kinsale were derivative claims, and were thus subject to the terms of the insurance policies at issue, including the provision in each policy mandating binding arbitration of disputes between Kinsale and its insureds. Crystal Point’s claims against Kinsale were therefore subject to arbitration. View "Crystal Point Condominium Association, Inc. v. Kinsale Insurance Company " on Justia Law

After plaintiff filed this class-action complaint against defendants, defendants filed a motion to compel arbitration. The trial court granted the motion. Plaintiff appealed, and the Court of Appeals affirmed. The Oregon Supreme Court granted review of the matter, finding that plaintiff and defendants executed a contract—the “Driver Services Agreement” (DSA)—for plaintiff to provide delivery services for defendants. The DSA stated that drivers are independent contractors. The DSA includes a section on dispute resolution. That section provides that any party “may propose mediation as appropriate” as a means for resolving a dispute arising out of or relating to the DSA. It then provided that, if the parties did not pursue mediation or mediation failed, “any dispute, claim or controversy” arising out of or relating to the DSA—including disputes about “the existence, scope, or validity” of the DSA itself—would be resolved through binding arbitration conducted by a panel of three arbitrators. The DSA also included a savings clause, which allowed for the severance of any invalid or unenforceable term or provision of the DSA. On review, plaintiff argued, inter alia, that the arbitration agreement within the DSA was unconscionable because it required him to arbitrate his wage and hour claims but prohibited the arbitrators from granting him relief on those claims. Plaintiff based his argument on a provision of the arbitration agreement that stated that the arbitrators could not “alter, amend or modify” the terms and conditions of the DSA. The Court of Appeals agreed with defendant’s reading of the DSA, as did the Supreme Court: read in the context of the DSA as a whole, the provision that the arbitrators may not “alter, amend or modify” the terms and conditions of the DSA “is not plausibly read as a restriction on their authority to determine what terms are enforceable or what law is controlling.” View "Gist v. Zoan Management, Inc." on Justia Law

The Court of Chancery granted summary judgment in favor of Respondents and confirmed a May 10, 2021 arbitration award, holding that this court was obliged to grant Respondents' cross-motion for summary judgment to confirm the award.Respondent commenced an arbitration proceeding against Petitioner asserting several claims relating to amendments to the parties' LLC agreement. After the arbitrator issued decisions, Petitioner filed a petition to vacate the award in part. Respondent and affiliated entities filed a counterclaim to confirm the arbitration award. All parties moved for summary judgment. The Court of Chancery granted summary judgment in favor of Respondents and confirmed the arbitration award, holding that Petitioner's challenges to the award failed. View "Polychain Capital LP v. Pantera Venture Fund II LP" on Justia Law

The Supreme Court affirmed the order of the district court granting a motion to approve a settlement agreement reached in mediation involving siblings Lily Smith and Sam, Dan, and Vernon Lindemulder, holding that Petitioners were not entitled to relief on their claims of error.The agreement at issue resolved claims involving the Alice M. Lindemulder Trust, established by the parties' mother, which held more than 2,000 acres of land in Stillwater County. Sam appealed the district court's decision to approve the settlement agreement, arguing that the agreement was unenforceable because he lacked the capacity to enter it and had been subjected to undue influence. The Supreme Court affirmed, holding that the district court (1) did not err in concluding that Sam validly consented to the agreement; and (2) did not err in holding that the agreement was valid and enforceable. View "Smith v. Lindemulder" on Justia Law

CCC and Tractable use algorithms and data generated by repair centers to provide estimates of the cost to repair damaged vehicles. Tractable dispatched its employee to obtain a license for CCC’s software. Using a false name, the employee purported to represent “JA,” a small, independent appraiser. CCC issued a license. The contract forbids assignment of the license without consent and represents that JA is acting on its own behalf, not as an agent for any third party, and forbids disassembly of the software or its incorporation into any other product. Tractable disassembled the software and incorporated some features into its own product. In CCC’s subsequent suit, Tractable moved for arbitration under the agreement between CCC and JA., arguing that “JA” is a name that Tractable uses for itself. The Seventh Circuit affirmed the denial of the motion. Tractable is not a party to the agreement. CCC could not have discovered that Tractable uses the name “JA.” Contractual meaning reflects words and signs exchanged between the negotiators, not unilateral, confidential beliefs. If a misrepresentation as to the character or essential terms of a proposed contract induces conduct that appears to be a manifestation of assent by one who neither knows nor has reasonable opportunity to know of the character or essential terms of the proposed contract, his conduct is not effective as a manifestation of assent.. The identity of CCC’s trading partner was a vital element of the deal. View "CCC Intelligent Solutions Inc. v. Tractable Inc." on Justia Law

SUNZ Insurance Company (“SUNZ”) appealed from the denial of its motion to dismiss or, in the alternative, to compel arbitration of the crossclaims filed in a complex insurance dispute. SUNZ argued the district court lacked subject matter jurisdiction over the crossclaims between non-diverse parties in the underlying interpleader action and otherwise erred by denying arbitration.   The Eighth Circuit reversed and remanded the district court’s denial of Defendant’s motion to compel arbitration of the crossclaims. The court explained arbitration agreements are generally favored under federal law. Further, a court may not rule on the potential merits of the underlying claim that is assigned by contract to an arbitrator, even if it appears to be frivolous.Here, the Program Agreement sets forth the terms and conditions of the Policy and contains the disputed statements pertaining to collateral, costs, and fees. The Policy cannot be read without the Program Agreement, which explicitly controls the administration of the Policy and only becomes binding and enforceable after its execution. While the other party’s crossclaim alleges that SUNZ breached the Policy, it is the Program Agreement that drives the question of liability. And, under the Program Agreement, both parties agreed to submit to arbitration any disagreement regarding its terms. This is a challenge to the contract’s validity that, under Buckeye, shall be considered by an arbitrator, not a court. Thus, the district court erred when it denied SUNZ’s alternative motion to compel arbitration. View "SUNZ Insurance Company v. Butler American Holdings Inc." on Justia Law

After a construction project fell through, Plaintiff sued Defendant. Defendant filed a motion to compel arbitration. At issue in this case is whether the party who signed the contract on behalf of Plaintiff had authority to do so. The district court concluded they did not and the Eighth Circuit affirmed.The Eighth Circuit found that the signing party neither had actual or apparent authority to sign the contract containing the arbitration agreement. Apparent authority is created by the conduct of the principal, not of the agent. View "GP3 II, LLC v. Litong Capital, LLC" on Justia Law

The Supreme Court reversed the order of the district court denying SR Construction, Inc.'s motion to compel arbitration because its master subcontract agreement (MSA) with Peek Brothers Construction, Inc. constituted a valid arbitration provision that applied to the parties' underlying dispute, holding that the dispute was arbitrable.On appeal, SR argued that the district court erred in holding that the underlying dispute fell outside the bounds of the parties' arbitration agreement.The Supreme Court agreed and reversed, holding (1) as applied, the MSA provision was broad, and an attendant presumption of arbitrability applied; and (2) Peek's dispute was presumptively arbitrable under the parties' agreement. View "SR Construction, Inc. v. Peek Brothers Construction, Inc." on Justia Law