Justia Contracts Opinion Summaries

RSL Funding, LLC had arbitration agreements with three individuals (collectively, Individuals) who owned annuity contracts they agreed to sell to RSL or its designee. Neither RSL nor the Individuals had arbitration agreements with the companies that wrote the annuity contracts (collectively, MetLife). After MetLife refused to honor contracts by which the Individuals sold their annuities, RSL sued MetLife and the Individuals in the County Court at Law (CCL) for a declaratory judgment. A district court suit was also initiated involving the same parties and subject matter. The Individuals initially joined forces with RSL but disputes subsequently arose. RSL initiated arbitration with the Individuals and moved to stay the CCL suit pending completion of arbitration. The CCL denied the motion. The court of appeals affirmed, concluding that RSL waived its right to arbitrate through its litigation conduct in the trial courts. The First Circuit affirmed but on different grounds, holding (1) the court of appeals erred by determining that RSL waived its right to arbitrate by litigation conduct; but (2) RSL did not challenge a separate ground on which the trial court court have denied RSL’s motion to stay the litigation - that RSL failed to join its assignees in the arbitration. View "RSL Funding, LLC v. Pippins" on Justia Law

In May 2013, plaintiffs Annemarie Morgan and Tiffany Dever filed suit against defendants Sanford Brown Institute, its parent company, Career Education Corporation, and Sanford Brown's chief executive officer, admission and financial aid officers, and clinical director. Sanford Brown was a private, for-profit educational institution with a campus in Trevose, Pennsylvania, that offered medical-related training programs. In the complaint, plaintiffs claimed that defendants misrepresented the value of the school's ultrasound technician program and the quality of its instructors, instructed students on outdated equipment and with inadequate teaching materials, provided insufficient career-service counseling, and conveyed inaccurate information about Sanford Brown's accreditation status. The complaint further alleged that Sanford Brown employed high-pressure and deceptive business tactics that resulted in plaintiffs financing their education with high-interest loans, passing up the study of ultrasound at a reputable college, and losing career advancement opportunities. The Sanford Brown enrollment agreement included payment terms for tuition and fees, disclaimers, and an arbitration provision. Without answering the complaint, defendants filed a motion to compel arbitration and to dismiss plaintiffs' claims. The Appellate Division found the parties clearly and unmistakably agreed an arbitrator would determine issues of arbitrability and that plaintiffs failed to specifically attack the delegation clause. The panel therefore determined that arbitrability [was] for the arbitrator to decide. The Supreme Court reversed, finding that the Appellate Division and trial court did not have the benefit of "Atalese v. U.S. Legal Servs. Grp.," (219 N.J. 430, 436 (2014), cert. denied, __ U.S. __, 135 S. Ct. 2804, 192 L. Ed.2d 847 (2015)) at the time they rendered their decisions. The New Jersey Court held in "Atalese" that an arbitration provision in a consumer contract that fails to explain in some minimal way that arbitration is a substitute for a consumer s right to pursue relief in a court of law was unenforceable. This case was therefore remanded for further proceedings in light of Atalese. View "Morgan v. Sanford Brown Institute" on Justia Law

Kentucky Shakespeare Festival, Inc. (KSF) and Brantley Dunaway entered into an employment agreement. Two years later, KSF terminated Dunaway’s employment. When KSF informed Dunaway that he was not entitled to a bonus for the 2013 fiscal year, Dunaway filed an action for breach of contract. Nearly one year later, KSF filed a motion for partial summary judgment and declaratory relief, arguing that KSF’s determination that Dunaway was not entitled to a bonus was a binding “arbitration award” issued by an independent accounting firm. The circuit court denied relief, concluding that the employment agreement did not contain an agreement to forgo litigation and arbitrate any bonus dispute. The court of appeals affirmed. The Supreme Court affirmed, holding that no arbitration agreement existed between KSF and Dunaway, and because no arbitration proceeding occurred, there was no arbitration award to be confirmed. View "Kentucky Shakespeare Festival, Inc. v. Dunaway" on Justia Law

In 1993, plaintiff Dean Altobelli began working as an attorney for Miller, Canfield, Paddock and Stone, P.L.C. (“the Firm”). Upon joining the Firm, plaintiff signed the “Miller Canfield Operating Agreement” (“Operating Agreement”), a document governing the Firm’s internal affairs. By January 2006, plaintiff had become a senior principal at the Firm. However, in late May or early June 2010, plaintiff decided he wanted to pursue a new opportunity as an assistant coach for the University of Alabama football team. Plaintiff proposed a 7- to 12-month leave of absence from the Firm to defendant Michael Hartmann, the Firm’s CEO, and defendant Michael Coakley, who was the head of the Firm’s litigation group but was not a managing director. Plaintiff suggested that the Firm permit him to maintain his ownership interest and return to the Firm as a senior principal any time before June 1, 2011. Plaintiff avers that Hartmann initially promised plaintiff that he could spend as much time at the University of Alabama as he wanted and still receive certain allocated income from his clients. Hartmann disputed this, claiming that plaintiff voluntarily withdrew from the partnership. Plaintiff claimed he was improperly terminated, and that the Firm shorted plaintiff's income as a result. Plaintiff's attempt to resolve the matter through the direct settlement and mediation process, as outlined in the arbitration clause of the Operating Agreement, was unsuccessful. In November 2011, plaintiff filed a demand for arbitration as provided for in the arbitration clause. Despite having made the demand for arbitration, he filed suit alleging that the seven individuals named as defendants were responsible for engaging in tortious conduct with regard to plaintiff's request for a leave of absence and retention of his equity ownership in the Firm. Defendants moved for summary judgment and a motion to compel arbitration as required by the arbitration clause. Plaintiff moved for summary judgment too. The circuit court denied defendants’ motions and granted plaintiff's motion for partial summary judgment, finding as a matter of law that plaintiff did not voluntarily withdraw from the Firm. Rather, the circuit court concluded that defendants had improperly terminated plaintiff's ownership interest without authority. The Court of Appeals affirmed. The Supreme Court reversed the part of the Court of Appeals’ opinion regarding the motion to compel arbitration and instead held that this case was subject to binding arbitration under the arbitration clause of the Operating Agreement. Accordingly, the lower courts should not have reached the merits of plaintiff’s motion for partial summary disposition, as the motion addressed substantive contractual matters that should have been resolved by the arbitrator. The case was remanded back to the trial court for further proceedings. View "Altobelli v. Hartmann" on Justia Law

Plaintiff signed a contract with Defendant for the construction of a house. The contract contained an arbitration clause. Plaintiff later brought suit against Defendant, claiming that there were defects in the house. Defendant filed a motion to dismiss and compel arbitration. The circuit court denied the motion, finding that the arbitration clause was unconscionable. Defendant appealed, arguing that the circuit court erred by ruling on questions of arbitrability despite the existence of a delegation provision in the arbitration agreement that vested the arbitrator with authority to determine issues of arbitrability relating to the dispute. The Supreme Court determined that the circuit court was within its rights not to enforce the delegation language because the language did not reflect the parties’ clear and unmistakable intention to delegate issues about the validity, revocability, or enforceability of the arbitration agreement to an arbitrator. The United States Supreme Court granted Defendant’s requested writ of certiorari, vacated the Supreme Court’s opinion, and remanded for further consideration in light of their decision in DIRECTV, Inc. v. Imburgia. The Supreme Court reversed the circuit court’s order, holding that because Plaintiffs never specifically challenged the delegation language before the circuit court or Supreme Court, Plaintiffs waived any right to challenge the delegation language. Remanded for arbitration. View "Schumacher Homes of Circleville v. Spencer" on Justia Law

Bayles rolled over his 401(k) retirement account, signing an Ameriprise Brokerage Individual Retirement Account Application. Bayles later signed an Active Portfolios Application-IRA Account Application. The first page of each application states that a copy of the related Brokerage Agreement must be provided to the client; the IRA Application states: You acknowledge that you have received and read the Ameriprise Brokerage Client Agreement and agree to abide by its terms….. This brokerage account is governed by a predispute arbitration clause which is found on Section 26.... You acknowledge receipt of the predispute arbitration clause." Similar language appears in the Portfolios Application. Bayles died in 2013. His wife thought she was the beneficiary, but decedent’s children were the designated primary beneficiaries on both accounts. Mrs. Bayles challenged Ameriprise’s payout of the proceeds. The defendants unsuccessfully moved to compel arbitration. The trial court found the absence of a signature on a brokerage agreement created an ambiguity that invalidated the arbitration clause. The Supreme Court of Appeals of West Virginia reversed and remanded. Decedent signed the IRA Application, expressly acknowledging the arbitration clause, but there are unresolved issues, including whether the arbitration clause is unconscionable and whether anyof Mrs. Bayles’ claims “fall within the substantive scope of that arbitration agreement.” View "Jeffrey N. Evans/Ameriprise Fin. Servs. v. Bayles" on Justia Law

Plaintiff’s initial attorneys were discharged for cause and replaced by successor counsel. Initial counsel had been hired on a contingency basis. When discharged, they asserted a lien against any settlement or judgment entered in the underlying action and in favor of the plaintiff. The underlying action was subsequently settled, and successor counsel filed a motion to void the lien. Initial counsel responded by moving to strike successor counsel’s motion and to compel arbitration, based on an arbitration clause contained in initial counsel’s contingent fee agreement with the plaintiff. The district court ultimately concluded that this dispute was between the lawyers, and thus, the arbitration clause contained in initial counsel’s contingent fee agreement with the plaintiff did not apply. The court then determined that initial counsel was not entitled to fees because it had been discharged for cause, and under the express terms of the contingent fee agreement, it had forfeited the right to those fees. Initial counsel appealed, and a division of the court of appeals reversed. The Supreme Court reversed, concluding that successor counsel’s motion to void the lien at issue was properly filed in the underlying action and that the underlying action was a “proper civil action.” In light of this determination, the Supreme court further concluded that the lien dispute was between initial and successor counsel and that therefore, the matter: (1) was not subject to arbitration pursuant to the arbitration clause in initial counsel’s contingent fee agreement with the plaintiff; and (2) was properly before the district court. View "Martinez v. Mintz" on Justia Law

26th Street Hospitality, LLP appealed a district court's order granting a motion to compel arbitration; order lifting a stay in the proceedings, confirming the arbitration award, and awarding post-judgment interest; and final judgment. The Partnership argued the district court erred in ordering arbitration because the court was required to determine the validity of the contract before arbitration could be ordered and not all of the claims and parties were subject to arbitration. Finding no reversible error in the district court's judgment, the Supreme Court affirmed. View "26th Street Hospitality v. Real Builders" on Justia Law

Plaintiff filed suit against Santander, seeking damages for breach of contract and alleging a violation of the Maryland Credit Grantor Closed End Credit Provisions (CLEC), Md. Code, Comm. Law 12-1001, et seq. The dispute stemmed from plaintiff's use of a loan she obtained through a retail installment contract (RISC) to finance the purchase of a vehicle. The court concluded that the district court correctly enforced the parties' arbitration agreement because the district court properly concluded that the arbitration agreement was a term of a contract that the parties entered into, and that the arbitration agreement was enforceable under the Federal Arbitration Act, 9 U.S.C. 2. Accordingly, the court affirmed the judgment. View "Galloway v. Santander Consumer USA, Inc." on Justia Law

Respondents entered into a loan agreement with Nationstar Mortgage, LLC. As part of the mortgage loan transaction, Respondents signed an arbitration agreement. Respondents later filed a complaint alleging that Nationstar engaged in predatory lending practices and abusive and unlawful debt collection in connection with the mortgage loan. Nationstar filed a motion to compel arbitration. The circuit court denied the motion, concluding that the arbitration agreement was both procedurally and substantively unconscionable. The Supreme Court reversed, holding that Respondents did not demonstrate that the arbitration agreement was either procedurally or substantively unconscionable. Remanded. View "Nationstar Mortgage, LLC v. West" on Justia Law