Justia Contracts Opinion Summaries

When Hampton Court Nursing Father admitted Father to its nursing home facility, Son and Hampton Court signed a a nursing home contract that included an arbitration clause. Father did not sign the contract. Son later filed suit on Father’s behalf, alleging negligence and statutory violations. The circuit court granted Hampton Court’s motion to compel arbitration and stay the judicial proceedings. The Third District Court of Appeal affirmed, concluding that Father was the intended third-party beneficiary of the nursing home contract, and therefore, Hampton Court could bind him to its contract, which Father never signed. The Supreme Court quashed the Third District’s decision, holding that the third-party beneficiary doctrine did not bind Father to the arbitration agreement in the nursing home admission agreement. View "Mendez v. Hampton Court Nursing Center, LLC" on Justia Law

The Michigan office of Alix, an international company, administers payroll and benefits for U.S. employees and is directly involved in U.S. hiring. In 2013, Alix hired Brewington, a Texas resident, for its Dallas Corporate Services team. The employment agreement provides that it “will be construed and interpreted in accordance with the laws of the State of Michigan” and states, “any dispute arising out of or in connection with any aspect of this Agreement and/or any termination of employment . . ., shall be exclusively subject to binding arbitration under the . . . American Arbitration Association . . . decision of the arbitrator shall be final and binding as to both parties.” In 2014, Brewington was terminated. He filed a demand for arbitration, asserting claims under Title VII, 42 U.S.C. 2000e, on behalf of himself and a purported nationwide class of current, former, and potential Alix employees. The Michigan district court ruled that Brewington was precluded from pursuing arbitration claims on behalf of any purported class. The Sixth Circuit affirmed that court’s refusal to dismiss, finding that Brewington had sufficient contacts with Michigan to establish personal jurisdiction, and upheld summary judgment in favor of Alix. An agreement must expressly include the possibility of classwide arbitration to indicate that the parties agreed to it. This clause is silent on the issue and is limited to claims concerning “this Agreement,” as opposed to other agreements. It refers to “both parties.” View "AlixPartners, LLP v. Brewington" on Justia Law

Kurtrina Smith and Rickey Levins separately initiated actions against defendants the African Methodist Episcopal Church, Inc. ("the AME Church"); James L. Davis, bishop and presiding officer of the AME Church's Ninth Episcopal District (collectively, "the Ninth District"); and Lincoln National Life Insurance Company ("Lincoln National") after Lincoln National denied their respective claims for benefits filed pursuant to a group life-insurance policy Davis had purchased from Lincoln National on behalf of the Ninth District. Smith and Levins alleged the group policy provided coverage for Smith's mother and Levins's father. The defendants moved the trial court hearing each action to compel arbitration pursuant to arbitration provisions that were allegedly part of the group policy and certificates. The trial court denied those motions, and defendants appealed. Finding that the trial court erred in denying the motion, the Supreme Court reversed and remanded for arbitration proceedings. View "African Methodist Episcopal Church, Inc. v. Levins" on Justia Law

The South Carolina Supreme Court granted certiorari to review a Court of Appeals' decision affirming a circuit court order denying petitioner's John Wieland Homes and Neighborhoods of the Carolinas, Inc.'s ("JWH") motion to compel arbitration. JWH sold lots and "spec" homes on a sixty-five acre residential subdivision. In 2007, respondents ("the Parsons") executed a purchase agreement to buy a home built and sold by JWH ("the Property"). In 2008, the Parsons discovered PVC pipes and a metal lined concrete box buried on their Property. The PVC pipes and box contained "black sludge," which tested positive as a hazardous substance. JWH entered a cleanup contract with the South Carolina Department of Health and Environmental Control. JWH completed and paid for the cleanup per the cleanup contract. The Parsons claim they were unaware the Property was previously an industrial site and contained hazardous substances. In 2011, the Parsons filed the present lawsuit alleging JWH breached the purchase agreement by failing to disclose defects with the Property, selling property that was contaminated, and selling property with known underground pipes. The Parsons further alleged breach of contract, breach of implied warranties, unfair trade practices, negligent misrepresentation, negligence and gross negligence, and fraud. JWH moved to compel arbitration and dismiss the complaint. The motion asserted that all of the Parsons' claims arose out of the purchase agreement, and the Parsons clearly agreed that all such disputes would be decided by arbitration. The circuit court denied the motion and found the arbitration clause was unenforceable. The Court of Appeals affirmed the circuit court's finding that the scope of the arbitration clause was restricted to Warranty claims and declined to address the circuit court's application of the outrageous torts exception doctrine. The Supreme Court disagreed with the appellate court's conclusion and reversed. View "Parsons v. John Wieland Homes" on Justia Law

In 2011 Bankers leased Chicago office space from CBRE. Another tenant, Groupon, needed more office space. CBRE asked Bankers to sublease to Groupon and relocate. Bankers and CBRE signed a Listing Agreement, including terms required by 225 ILCS 454/15-5(a), 15-75. Bankers told CBRE that it wanted to net $7 million from its deals with Groupon and the lessor of the replacement space. CBRE presented Bankers with cost-benefit analyses (CBAs), comparing the costs of leasing new space with the benefits of subleasing the old space to Groupon. A May 2011 CBA showed a net savings of $6.9 million to Bankers from relocating to East Wacker Drive. Bankers responded by subleasing to Groupon and leasing that space. CBRE’s calculation was inaccurate. It omitted Bankers’ promise to give Groupon a $3.1 million tenant improvement allowance. Had Bankers known it would profit by only $3.8 million, it would have rejected the deal; CBRE would not have obtained $4.5 million in commissions. In an arbitration proceeding, the panel issued three “final decisions,” all favoring CBRE, and awarded costs. The Seventh Circuit reversed. The panel exceeded its authority. It was authorized to interpret the contract (Listing Agreement), which did not include the CBAs or a disclaimer contained in the CBAs. View "Bankers Life & Cas/ Ins. Co. v. CBRE, Inc." on Justia Law

CEEG (Shanghai) Solar Science & Technology Co., Ltd. (“CEEG”), a Chinese company, agreed to sell solar energy products to LUMOS, LLC, a U.S. company. After receiving certain shipments, LUMOS filed a warranty claim alleging workmanship defects, and refused to remit the balance due. After two years of "fitful" negotiations, CEEG filed an arbitration proceeding pursuant to the parties’ agreements. Although the parties had communicated exclusively in English to that point, CEEG served LUMOS with a Chinese-language notice of the proceedings, and LUMOS did not immediately realize what the notice was. After the arbitration panel ruled in its favor, CEEG moved for the district court to confirm the award. LUMOS filed a motion to dismiss, arguing that the Chinese-language notice caused it to miss the deadline to participate in appointing the arbitration panel. The district court granted the motion, finding that the notice was not reasonably calculated to apprise LUMOS of the arbitration proceedings. The Tenth Circuit agreed and affirmed. View "CEEG (Shanghai) Solar Science v. Lumos" on Justia Law

In 2012, GNP Parent, LLC entered into a sales agreement to purchase compressed natural gas from Xpress Natural Gas, LLC as fuel for the Great Northern Paper Mill. Cate Street Capital, Inc., the corporate owner of GNP, guaranteed the amounts payable by GNP up to $1,500,000. GNP failed to make the required payments for natural gas, and an arbitrator found Cate Street liable to Xpress for $1,500,000 on the guarantee. Xpress applied to the superior court to confirm the arbitration award. Cate Street and GNP moved to vacate the award in part, arguing that the arbitrator exceeded his authority in awarding Xpress $1,500,000 in damages on the guarantee of payments. The superior court entered a judgment confirming the award and denying the motion to vacate the award. The Supreme Judicial Court affirmed, holding that the arbitrator did not exceed his authority in this case because his interpretation was rationally derived from the sales agreement. View "Xpress Natural Gas, LLC v. Cate St. Capital, Inc." on Justia Law

A mandatory arbitration clause is contained in each deposit agreement for customers of appellee SunTrust Bank. The clause permits an individual depositor to reject the agreement’s mandatory arbitration clause by giving written notice by a certain deadline. SunTrust claimed it drafted the arbitration clause in such a way that only an individual depositor may exercise this right to reject arbitration on his or her own behalf, thereby permitting that individual to file only an individual lawsuit against the bank. But SunTrust asserted that even if, as it has been determined here, the filing of a lawsuit prior to the expiration of the rejection of arbitration deadline operated to give notice of the individual plaintiff’s rejection of arbitration, the complaint could not be brought as a class action because the filing of a class action could not serve to reject the arbitration clause on behalf of class members who have not individually given notice. Jeff Bickerstaff, Jr., who was a SunTrust Bank depositor, filed a complaint against SunTrust on behalf of himself and all others similarly situated alleging the bank’s overdraft fee constitutes the charging of usurious interest. At the time Bickerstaff opened his account (thereby agreeing to the terms of SunTrust’s deposit agreement), that agreement included a mandatory arbitration provision. In response to the ruling of a federal court in an unrelated action finding the arbitration clause in SunTrust’s deposit agreement was unconscionable at Georgia law, and after Bickerstaff’s complaint had been filed, SunTrust amended the arbitration clause to permit a window of time in which a depositor could reject arbitration by sending SunTrust written notification that complied with certain requirements. SunTrust had not notified Bickerstaff or its other customers of this change in the arbitration clause of the deposit agreement at the time Bickerstaff filed his complaint, but the complaint, as well as the first amendment to the complaint, was filed prior to the amendment’s deadline for giving SunTrust written notice of an election to reject arbitration. It was only after Bickerstaff’s complaint was filed that SunTrust notified Bickerstaff and its other existing depositors, by language printed in monthly account statements distributed on August 24, 2010, that an updated version of the deposit agreement had been adopted, that a copy of the new agreement could be obtained at any branch office or on-line, and that all future transactions would be governed by the updated agreement. SunTrust appealed the order denying its motion to compel Bickerstaff to arbitrate his claim, and the Court of Appeals affirmed the trial court, finding that the information contained in the complaint filed by Bickerstaff’s attorney substantially satisfied the notice required to reject arbitration. Bickerstaff appealed the order denying his motion for class certification, and in the same opinion the Court of Appeals affirmed that decision, holding in essence, that the contractual language in this case requiring individual notification of the decision to reject arbitration did not permit Bickerstaff to reject the deposit agreement’s arbitration clause on behalf of other putative class members by virtue of the filing of his class action complaint. The Georgia Supreme Court reversed that decision, holding that the terms of the arbitration rejection provision of SunTrust’s deposit agreement did not prevent Bickerstaff’s class action complaint from tolling the contractual limitation for rejecting that provision on behalf of all putative class members until such time as the class may be certified and each member makes the election to opt out or remain in the class. Accordingly, the numerosity requirement of OCGA 9-11-23 (a) (1) for pursuing a class complaint was not defeated on this ground. View "Bickerstaff v. SunTrust Bank" on Justia Law

The College Network, Inc. (TCN) appealed an order denying its motion to compel arbitration of a consumer fraud and breach of contract action brought by Plaintiffs Bernadette Magno, Rosanna Garcia, and Sheree Rudio. TCN argued the arbitration provision in Plaintiffs' purchase agreements was valid and enforceable and contended the trial court erred when it ruled the provision unconscionable. Alternatively, TCN argued that if the forum selection clause was unconscionable, the court abused its discretion in voiding the arbitration provision altogether rather than severing the objectionable provisions and enforcing the remainder. After review of the provision at issue, the Court of Appeal concluded the trial court correctly determined the arbitration provision to be procedurally and substantively unconscionable and did not abuse its discretion in voiding it in its entirety. View "Magno v. The College Network, Inc." on Justia Law

In August 2005, D.R. Horton, Inc. completed construction of the Smiths' home, and the Smiths closed on the property and received the deed. Thereafter, the Smiths experienced a myriad of problems with the home that resulted in severe water damage to the property. D.R. Horton attempted to repair the alleged construction defects on "numerous occasions" during the next five years, but was ultimately unsuccessful. In 2010, the Smiths filed a construction defect case against D.R. Horton and seven subcontractors. In response, D.R. Horton filed a motion to compel arbitration. The Smiths opposed the motion, arguing, inter alia, that the arbitration agreement was unconscionable and therefore unenforceable. The circuit court denied D.R. Horton's motion to compel arbitration, finding that the arbitration agreement was unconscionable. D.R. Horton appealed, but finding no error in the circuit court's decision, the South Carolina Supreme Court affirmed. View "Smith v. D.R. Horton, Inc" on Justia Law