Justia Contracts Opinion Summaries

Plaintiffs were two shareholders of a closely held corporation. They attempted to tender their shares to the corporation pursuant to a buy-sell agreement. Unhappy with the corporation's purchase offer, the shareholders brought suit in Chancery Court, and the court in turn submitted the matter to binding arbitration as required by the agreement. The chancellor ultimately rejected the arbitrators' valuations and ordered the corporation to buy plaintiffs' shares at a much higher price. The corporation appealed the chancellor's rejection of the arbitrator's award, and plaintiffs cross-appealed claiming they were entitled to additional damages. Finding no legal basis for setting aside the arbitration award, the Supreme Court reversed the Chancery Court and reinstated the arbitration award. View "Bailey Brake Farms, Inc. v. Trout" on Justia Law

The issue before the Supreme Court in this case concerned the scope of an arbitration clause under the Federal Arbitration Act (FAA). Respondent Christopher Landers served as Appellant Atlantic Bank & Trust's executive vice president pursuant to an employment contract. The contract contained a broad arbitration provision. Respondent alleged five causes of action, namely that he was constructively terminated from his employment as a result of Appellant Neal Arnold's tortious conduct towards him. Appellants moved to compel arbitration pursuant to the employment contract. The trial court found that only Respondent's breach of contract claim was subject to the arbitration provision, while his other four causes of action comprised of several tort and corporate claims were not within the scope of the arbitration clause. Upon review, the Supreme Court disagreed: "Landers' pleadings provide a clear nexus between his claims and the employment contract sufficient to establish a significant relationship to the employment agreement. We find the claims are within the scope of the agreement's broad arbitration provision." The Court reversed the trial court's order and held that all of Respondent's causes of action must be arbitrated. View "Landers v. Fed. Deposit Ins. Corp." on Justia Law

Plaintiffs, prospective luxury home buyers, alleged that Toll Brothers, a real estate development company, unlawfully refused to return deposits when plaintiffs could not obtain mortgage financing. The district court denied Toll Brothers' motion to dismiss or stay the suit pending arbitration, finding that the Agreement of Sale's arbitration provision lacked mutuality of consideration under Maryland law because it required only the buyer - but not the seller - to submit disputes to arbitration. The court held that the appeal was properly before it under 9 U.S.C. 16(a), and that the Agreement of Sale's arbitration provision was unenforceable for lack of mutual consideration under Maryland law. Accordingly, the court affirmed the judgment. View "Noohi v. Toll Bros., Inc." on Justia Law

This case arose from the sale of a truck by Appellant to Appellee. The parties executed a document titled "customer sales order" formalizing the deal that contained a binding arbitration provision. The provision failed to require the arbitration to be held in Kentucky but stated that the Federal Arbitration Act (Act) governed its interpretation and enforcement. After the truck was delivered, Appellee filed suit against Appellant, alleging fraud and intentional misrepresentation. The trial court denied Appellant's motion to compel arbitration under the arbitration clause. The court of appeals affirmed, concluding that Kentucky courts have no jurisdiction to enforce an arbitration agreement unless the agreement provides that the arbitration will occur in Kentucky. The Supreme Court reversed, holding (1) Appellant made a prima facie showing of an agreement requiring arbitration of the dispute between the parties; and (2) because that agreement stated that the Act controls, the circuit court had jurisdiction to enforce it, unless Appellee could meet its burden to show there was no valid agreement. View "MHC Kenworth-Knoxville/Nashville v. M & H Trucking, LLC" on Justia Law

Plaintiffs Joe F. Watkins, Patricia M. Smith, and RE/MAX Lake Martin Properties, LLC sued Bear Brothers, Inc., ETC Lake Development, LLC ("ETC Lake"), and E.T. "Bud" Chambers, among others, asserting claims related to the construction and development of a condominium project on Lake Martin. ETC Lake and Chambers crossclaimed against Bear Brothers seeking to recover losses suffered on the project as well as indemnification for the costs of litigating the plaintiffs' action and any damages for which they might be found liable to the plaintiffs. In January 2010, Bear Brothers moved the circuit court to compel arbitration of the cross-claim against it. The circuit court did not rule on that motion. Bear Brothers renewed its motion in July 2011, and the circuit court granted the motion to compel arbitration of the cross-claim in December. Bear Brothers then moved the circuit court "to stay [the] proceedings [in the plaintiffs' action] pending the outcome of a related arbitration." After a hearing, the circuit court denied the motion to stay. Bear Brothers appealed the circuit court's order denying the motion to stay to the Supreme Court; ETC Lake and Chambers moved to dismiss the appeal. Upon review, the Supreme Court concluded that the motion at issue in this case was a motion to stay related proceedings pending the arbitration of a crossclaim between codefendants and was filed separately from the initial motion to compel arbitration of the cross-claim and subsequent to the circuit court's order granting the motion. Thus, Bear Brothers did not demonstrate a right to appeal the denial of the motion to stay at this time, and accordingly the Court dismissed the appeal as being from a nonfinal judgment. View "Bear Brothers, Inc. v. ETC Lake Development, LLC" on Justia Law

A nursing home patient (Decedent) signed an agreement providing for arbitration of disputes arising out of treatment and care at the nursing home. Decedent subsequently died, allegedly through the nursing home's negligence. Through Decedent's personal representative, Decedent's survivors (Plaintiffs) subsequently brought a cause of action for deprivation of rights under the applicable nursing home statute and, alternatively, a wrongful death action. At issue on appeal was whether an arbitration agreement signed by the decedent requires his estate and heirs to arbitrate their wrongful death claims. The court of appeal concluded that the estate and heirs were bound by the arbitration agreement but certified a question to the Supreme Court. The Court approved of the court of appeal's decision and answered that the execution of a nursing home arbitration agreement by a patient with capacity to contract binds the patient's estate and statutory heirs in a subsequent wrongful death action arising from an alleged tort within the scope of the valid arbitration agreement. View "Laizure v. Avante at Leesburg, Inc." on Justia Law

The issue before the Supreme Court in this case involved the enforceability of a binding arbitration clause included within a debt adjustment contract. The trial court denied the defendant's motion to compel arbitration, ruling that the motion was untimely and that the binding arbitration clause was unconscionable. Upon review of the trial court record and the clause at issue, the Supreme Court affirmed the trial court's holding that the clause was unconscionable, which then required the Court to decide whether this conclusion as to the validity of the binding arbitration clause is preempted by the Federal Arbitration Act (FAA). Finding no preemption, the Court affirmed. View "Gandee v. LDL Freedom Enters., Inc." on Justia Law

Petitioners and Respondents entered into a contract for the purchase of real property owned by Petitioners, twenty-five percent of which constituted wetlands. Respondents filed an action against Petitioners for fraudulent misrepresentation, alleging that in the advertisement for the sale of the property, Petitioners knowingly and falsely misrepresented that the property had no wetlands. Petitioners moved to dismiss, asserting that the fraud claim arose out of, and was related to, the contract, and therefore, the claim fell within the arbitration provision of the contract. The trial court granted the motion to dismiss. The court of appeal reversed, holding that the action based on fraud was not a dispute subject to arbitration under the contract. The Supreme Court quashed the decision below and concluded that the fraud action had a contractual nexus with, and a significant relationship to, the contract between Petitioners and Respondents and was, as a general principle, within the scope of the contract's broad arbitration provision. Remanded. View "Jackson v. Shakespeare Found., Inc." on Justia Law

Richmont Holdings purchased the assets of Superior Recharge Systems. The terms of the sales were set out in a purchase agreement that included a provision for binding arbitration of any dispute relating to the agreement. In connection with the sale, Richmont Holdings agreed to hire John Blake for a period of two years. The employment agreement did not include an arbitration provision. Six months later, Blake's employment was terminated. Blake sued Richmont. Richmont answered and later moved to compel arbitration. The trial court denied the motion, concluding that Richmont waived its arbitration rights because it had substantially invoked the judicial process. The court of appeals affirmed but on different grounds, holding that the parties did not have a valid agreement to arbitrate because the dispute arose exclusively out of the employment agreement. The Supreme Court reversed, holding that the court of appeals' failure to recognize the arbitration agreement at issue in this case was contrary to the Court's precedent, which mandates enforcement of such an agreement absent proof of a defense. Remanded to consider the waiver of defense raised below. View "Richmont Holdings, Inc v. Superior Recharge Sys., LLC" on Justia Law

Carilion initiated an arbitration proceeding against UBS and Citi under the Financial Industry Regulatory Authority, Inc. (FINRA) Rule 12200, which required FINRA members to arbitrate disputes with a customer at the customer's request. UBS and Citi commenced this action to enjoin the arbitration proceedings, contending that Carilion was not a "customer" as that term was used in FINRA Rule 12200 and that, in any event, Carilion waived any right to arbitrate by agreeing to the forum selection clause contained in written agreements with UBS and Citi. The court concluded that Carilion, by purchasing UBS and Citi's services, was indeed a "customer" entitled to arbitration under FINRA Rule 12200 and that the forum selection clause did not have the effect of superseding or waiving Carilion's right to arbitrate. Accordingly, the court affirmed the district court's denial of UBS and Citi's motion for injunctive relief. View "UBS Financial Services, Inc. v. Carilion Clinic" on Justia Law