Justia Contracts Opinion Summaries

Plaintiff Jenny-Ashley Colon-Perez sued her former employer, Security Industry Specialists, Inc. (SIS), alleging multiple causes of action related to her employment. After SIS moved to compel arbitration, the parties agreed to arbitrate, and the trial court ordered the claims to arbitration and stayed the court action. SIS paid two arbitration fee invoices but failed to pay the third invoice within the 30-day period required by California Code of Civil Procedure section 1281.98. Colon-Perez elected to withdraw from arbitration and moved to vacate the arbitration and stay order. The trial court granted the motion, ruling that SIS had materially breached the arbitration agreement and Colon-Perez was entitled to proceed with her claims in court. SIS then moved to vacate the order under section 473(b), which the trial court denied.The trial court ruled that the Federal Arbitration Act (FAA) did not preempt section 1281.98 and that SIS had materially breached the arbitration agreement by failing to pay the fees on time. The court also found that section 1281.98 did not violate the contracts clause of the United States and California Constitutions. SIS appealed, arguing that the FAA preempted section 1281.98, that section 1281.98 violated the contracts clause, and that it was entitled to relief under section 473(b).The California Court of Appeal, First Appellate District, Division One, affirmed the trial court's orders. The court held that the FAA did not preempt section 1281.98, as the state law could be applied concurrently with federal law. The court also found that section 1281.98 did not violate the contracts clause because it served a significant and legitimate public purpose and was appropriately tailored to achieve that purpose. Additionally, the court ruled that section 473(b) relief was not available for SIS's failure to timely pay arbitration fees, as the statute's strict 30-day deadline was intended to be inflexible. View "Colon-Perez v. Security Industry Specialists" on Justia Law

The case involves a dispute between Hyundai Construction Equipment North America, Inc. and Hyundai Heavy Industries Co., Ltd. (collectively "Hyundai") and Southern Lift Trucks, LLC ("Southern"). Southern sued Hyundai after Hyundai terminated one of their agreements and appointed another dealer in Southern's sales territory. Southern's claims included breach of contract, tort claims, and claims under the Alabama Heavy Equipment Dealer Act (AHEDA). The agreements between the parties included an arbitration clause for resolving disputes.The Washington Circuit Court initially denied Hyundai's motion to compel arbitration. Hyundai appealed, and the Supreme Court of Alabama held that all of Southern's claims, except for portions of the declaratory-judgment claim relating to the enforceability of the dealer agreements, should be sent to arbitration. The trial court then entered an order compelling arbitration for all claims except the declaratory-judgment claim. Southern did not initiate arbitration and instead filed a motion to enjoin or stay the arbitration proceedings initiated by Hyundai.The Supreme Court of Alabama reviewed the trial court's order enjoining the arbitration. The court held that the arbitration provision required all disputes to be resolved by arbitration, except for declaratory judgments on the enforceability of any provision of the agreements. The court found that the trial court erred in enjoining the arbitration, as the arbitration provision did not prevent arbitrators from adjudicating disputes over the agreements' enforceability. The court emphasized that the Federal Arbitration Act requires arbitration of all claims except for the non-arbitrable portions of the declaratory-judgment claim and that judicial economy or the possibility of inconsistent results does not justify staying arbitration.The Supreme Court of Alabama reversed the trial court's order enjoining the arbitration and remanded the case for further proceedings consistent with its opinion. View "HD Hyundai Construction Equipment North America, Inc. v. Southern Lift Trucks, LLC" on Justia Law

Technical Security Integration, Inc. ("Technical Security") and EPI Technologies, Inc. ("EPI") entered into a Sales Representative Agreement in which EPI agreed to sell Technical Security's products in exchange for commissions. The agreement included a clause requiring disputes to be submitted to mediation, and if mediation failed within 180 days, the prevailing party in any subsequent litigation would be entitled to attorneys' fees. A dispute arose, and EPI demanded mediation, but Technical Security did not respond promptly. EPI then sued Technical Security in state court, where it mostly lost. Technical Security sought attorneys' fees in federal court, which the district court denied, ordering each party to pay its own fees.The Circuit Court of Cook County, Illinois, granted partial summary judgment for Technical Security on the commissions dispute. EPI's remaining claims were dismissed, and the state court denied Technical Security's motion for attorneys' fees, citing a factual dispute. Technical Security then demanded mediation to resolve the fee dispute, but EPI did not respond. Technical Security subsequently sued EPI in the Northern District of Illinois, seeking fees and costs from the state court litigation. The district court granted summary judgment for EPI, concluding that Technical Security had delayed the mediation process.The United States Court of Appeals for the Seventh Circuit reviewed the case. The court found that the agreement did not specify a timeline for mediation demands or responses, creating ambiguity. The court held that the district court erred in faulting Technical Security for preventing mediation without considering whether EPI's actions were reasonable. The Seventh Circuit vacated the district court's summary judgment for EPI and remanded the case for further proceedings to determine the reasonableness of each party's conduct regarding the mediation timeline. View "Technical Security Integration, Inc. v EPI Technologies, Inc." on Justia Law

Digital Forensics Corporation, LLC ("DFC") was retained by King Machine, Inc. and Hartford Fire Insurance Company to perform electronic-discovery services related to a discovery order in litigation in the Etowah Circuit Court. The plaintiffs alleged that DFC misrepresented its capabilities on its website and through its representatives, leading them to believe DFC could perform the required services. Despite paying DFC $35,291.93, the plaintiffs claimed DFC failed to deliver the data in a usable format, resulting in additional costs and sanctions totaling $50,291.93, plus $107,430.44 in attorneys' fees and expenses.The plaintiffs filed a lawsuit in the Jefferson Circuit Court, alleging breach of contract and fraud in the inducement. DFC removed the case to federal court, which later remanded it back to the circuit court. DFC then filed a motion to compel arbitration based on a clause in their agreement, which included a multi-step dispute resolution process culminating in binding arbitration. The plaintiffs opposed the motion, arguing that the arbitration clause was fraudulently induced.The Jefferson Circuit Court denied DFC's motion to compel arbitration. DFC appealed to the Supreme Court of Alabama, arguing that the arbitration provision should be enforced. The Supreme Court of Alabama reviewed the case de novo and determined that the plaintiffs' fraud claims were directed at the entire agreement, not solely the arbitration clause. Therefore, the allegations of fraud in the inducement did not provide a basis to avoid arbitration.The Supreme Court of Alabama reversed the circuit court's order denying DFC's motion to compel arbitration and remanded the case for further proceedings consistent with its opinion. View "Digital Forensics Corporation, LLC v. King Machine, Inc." on Justia Law

In January 2019, Raymond Robinson and his son sued Emerald Homes, L.L.C., and 21st Mortgage Corporation in the Baldwin Circuit Court. Robinson had contracted with Emerald to purchase a mobile home, financed by a loan from 21st Mortgage. After tearing down his existing house in preparation for the new mobile home, the loan was not completed, allegedly due to Emerald and/or 21st Mortgage's refusal to finalize the transaction. The complaint included claims of breach of contract, misrepresentation, suppression, and negligence, seeking compensatory and punitive damages.The trial court compelled arbitration for claims against Emerald and granted summary judgment in favor of 21st Mortgage on Raymond's claims. The case proceeded to a jury trial on Robinson's claims against 21st Mortgage. The jury found in favor of Robinson on promissory fraud and the tort of outrage, awarding him $2,980,000 in total damages. 21st Mortgage's post-trial motions, including for judgment as a matter of law (JML), were denied.The Supreme Court of Alabama reviewed the case. It held that Robinson did not present substantial evidence of promissory fraud, as he failed to prove that 21st Mortgage had no intention to perform the loan promise at the time it was made or intended to deceive him. The court also found that Robinson did not meet all the conditions required for the loan, and the failure to close the loan was not due to any fraudulent intent by 21st Mortgage.Regarding the tort of outrage, the court held that the conduct of 21st Mortgage did not meet the extreme and outrageous standard required for such a claim. The court reversed the trial court's judgment and remanded the case for further proceedings consistent with its opinion. View "21st Mortgage Corporation v. Robinson" on Justia Law

In January 2023, the Keenums and Karibu Home Builders, LLC entered into a real-estate sales contract where the Keenums agreed to sell seven lots and construct a paved road before the closing date. The contract included dispute-resolution provisions for mediation and arbitration. The Keenums did not complete the road or appear for the closing. Karibu sued for specific performance and damages, claiming the Keenums breached the contract. The Keenums argued the contract was void due to Karibu's failure to meet obligations and the requirement for mediation and arbitration.The Colbert Circuit Court granted summary judgment in favor of the Keenums, dismissing the case with prejudice. The court concluded it lacked subject-matter jurisdiction due to the contract's mediation and arbitration provision, implying Karibu should have filed directly with the American Arbitration Association.The Supreme Court of Alabama reviewed the case de novo and found that the trial court erred in concluding it lacked jurisdiction. The court held that the trial court had the authority to determine whether the mediation and arbitration provision applied and should have compelled arbitration rather than dismissing the case. The summary judgment was reversed, and the case was remanded for further proceedings consistent with the opinion. View "Karibu Home Builders, LLC v. Keenum" on Justia Law

A customer, Davie Montes, purchased a used car from National Buick GMC (National) and signed two agreements: a Purchase Agreement and an Arbitration Agreement. The Purchase Agreement included an integration clause stating it was the complete and exclusive statement of terms. The Arbitration Agreement, which did not have an integration clause, covered disputes related to the purchase or financing of the vehicle. After experiencing issues with the car, Montes sued National, which then moved to compel arbitration based on the Arbitration Agreement.The Fourth District Court in Provo denied National's motion, ruling that the Purchase Agreement's integration clause made it the sole agreement between the parties. The Utah Court of Appeals affirmed this decision, interpreting Utah precedent to mean that the integration clause precluded consideration of the Arbitration Agreement.The Supreme Court of the State of Utah reviewed the case and reversed the lower courts' decisions. The Supreme Court held that contemporaneous, executed agreements related to the same transaction should be construed together, even if one contains an integration clause. The court found that the Purchase Agreement and the Arbitration Agreement were part of the same transaction and should be considered together. The case was remanded for further proceedings consistent with this opinion. View "Montes v. National Buick GMC" on Justia Law

Amanda Leigh Huskins and Jay R. Huskins purchased a house from Mungo Homes, LLC, and signed a contract that included an arbitration clause. This clause required any demand for arbitration to be made within ninety days, effectively shortening the statute of limitations for any claims. The Huskins later filed a lawsuit against Mungo Homes, alleging various claims related to the sale. Mungo Homes moved to dismiss the complaint and compel arbitration based on the contract. The Huskins argued that the arbitration clause was unconscionable and unenforceable.The Circuit Court of Richland County granted Mungo Homes' motion to compel arbitration. The Huskins appealed, and the Court of Appeals found the clause limiting the statute of limitations to be unconscionable and unenforceable. However, the Court of Appeals severed this clause from the rest of the arbitration agreement and affirmed the order compelling arbitration.The Supreme Court of South Carolina reviewed the case and reversed the decision of the Court of Appeals. The Supreme Court held that the clause shortening the statute of limitations was void and illegal as a matter of public policy, and therefore unenforceable. The court determined that the absence of a severability clause, the presence of a merger clause, and the fact that the contract was an adhesion contract indicated that the parties did not intend for the arbitration agreement to stand if any part of it fell. Consequently, the entire arbitration agreement was deemed unenforceable. The case was remanded to the circuit court for further proceedings, with the remainder of the contract unaffected by this ruling. View "Huskins v. Mungo Homes, LLC" on Justia Law

Plaintiffs BSI Group LLC and International Business Solutions Group, LLC, financial service companies, contracted with EZBanc Corp for financial services. EZBanc collaborated with Solid Financial Technologies, Inc. and Evolve Bank & Trust to provide these services. Plaintiffs alleged that Defendants mishandled funds, withdrawing nearly $9 million from their accounts and failing to process approximately $300,000 in third-party payments. Defendants sought to compel arbitration, arguing that although EZBanc’s contracts with Plaintiffs lacked an arbitration clause, the contracts referred to other terms that included such a clause.The United States District Court for the Eastern District of Arkansas denied Defendants' motions to compel arbitration. The court found that the language in the contracts was too vague to incorporate the Evolve Agreement by reference and that there was a factual dispute regarding whether the terms of the Evolve Agreement were known or easily available to Plaintiffs.The United States Court of Appeals for the Eighth Circuit reviewed the case. The court held that the district court erred in its interpretation of the contract and its denial of the motion to compel arbitration. The appellate court found that there were material disputes of fact regarding whether the Evolve Agreement was effectively communicated to Plaintiffs, which necessitated a trial. Consequently, the Eighth Circuit reversed the district court’s decision and remanded the case for trial to determine if Plaintiffs agreed to be bound by the terms in the Evolve Agreement through the “pop-up” or other aspects of EZBanc’s website. View "BSI Group LLC v. Solid Financial Technologies Inc." on Justia Law

Bluebird Property Rentals, LLC, a Montana limited liability company, and its sole member, Alaina Garcia, received a $450,000 loan from World Business Lenders, LLC (WBL) and its subsidiaries in December 2020. The loan, secured by real property in Gallatin County, had an annual percentage rate of approximately 85% and required weekly payments. Bluebird signed several agreements, including a Business Promissory Note and Security Agreement, which listed Axos Bank as the lender, although Bluebird had no prior dealings with Axos. After falling behind on payments, Bluebird sold the collateral property in a distress sale and paid off the loan in October 2022, having paid a total of $945,990.39.Bluebird sued WBL, alleging that WBL engaged in a "rent-a-bank" scheme to evade Montana's usury laws, claiming that Axos Bank was merely a front and that WBL was the true lender. Bluebird sought a declaration that Montana law applied and sought double the interest paid above the maximum allowable rate under Montana law. WBL filed a motion to dismiss and compel arbitration based on the agreements' arbitration and choice-of-law provisions.The Eighteenth Judicial District Court denied WBL's motion, ruling that Montana law must be applied to determine the enforceability of the arbitration and choice-of-law provisions. The court treated WBL's motion as a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction and found that the validity of the arbitration clause was for the court to decide, not an arbitrator.The Supreme Court of the State of Montana affirmed the District Court's decision, holding that the general rule that courts determine arbitrability was not overcome by the facts of this case. The court found no clear and unmistakable evidence that the parties agreed to arbitrate arbitrability, despite WBL's arguments regarding the incorporation of AAA rules. The court did not address the merits of the enforceability of the arbitration agreement or the choice-of-law provision. View "Bluebird v. World Business Lenders" on Justia Law