Justia Contracts Opinion Summaries

In 1999 the Sellers conveyed businesses to CT Acquisition Corp. The price was to be paid over time. The Sellers insisted on a surety bond (put up by Frontier Insurance) and personal guarantees by the principals of CT Acquisition. The Guarantors also promised to indemnify Frontier and promised to post collateral on Frontier’s demand. CT Acquisition did not pay, the Guarantors failed to keep their promise, and the Sellers turned to Frontier, which did not pay because it was in financial distress. Frontier demanded that the Guarantors post collateral. The district court read the agreement to require collateral only after Frontier’s obligation to the Sellers had been satisfied, or at least quantified. The suit was dismissed as unripe. Meanwhile the Sellers had sued Frontier and obtained judgment of $1.5 million. Frontier then filed another suit against the Guarantors. The district court concluded that, Frontier’s obligation having been quantified, the Guarantors must post collateral and, following remand, ordered the Guarantors to deposit with the Clerk $1,559,256.78, The Seventh Circuit affirmed, rejecting the Guarantors’ argument that they need not post collateral until Frontier has paid the Sellers. View "Frontier Ins. Co. v. Hitchcock" on Justia Law

Construction Company contracted with Subcontractor for construction of elements of an HVAC system. As partial collateral for a revolving line of credit, Subcontractor assigned to Bank its right to receive payment under the contract with Construction Company. Construction Company instead made twelve payments to Subcontractor. Subcontractor subsequently ceased business operations, leaving an outstanding debt to Bank on its line of credit. Bank filed an action against Construction Company for breach of contract and violation of the UCC. A jury found (1) Construction Company liable on both counts for ten of the twelve checks that it had delivered to Subcontractor, and (2) Bank was estopped from recovering with respect to the final two checks. The judge entered judgment on the statutory claim in the amount of $3,015,000, the full face value of the ten checks. The Supreme Court affirmed in part and reversed in part, holding that the trial judge (1) properly entered judgment on Bank's statutory claim in the amount of the wrongfully midirected payments; but (2) erred in denying the bank's motion for partial judgment notwithstanding the verdict with respect to the final two checks, as there was insufficient evidence to support Construction Company's defense of estoppel. View "Reading Coop. Bank v. Constr. Co." on Justia Law

Jack Bays, Inc. did site work on the construction of a new church (New Life). Jack Bays contracted with several subcontractors, eleven of which were parties to this action. New Life obtained additional funds for the project through three lenders. The Lenders were listed on the deed of trust for the new financing. After New Life stopped making to Jack Bays due to lack of funding, Jack Bays recorded its memorandum of mechanics' lien against New Life and terminated the construction contract. All Contractors timely filed complaints against the Lenders. The circuit court ordered that the property be sold at public auction with the proceeds to be applied in satisfaction of the mechanics' liens in the following order of priority: Subcontractors, Jack Bays, and Lenders. The Lenders appealed. The Supreme Court affirmed in part and reversed in part, holding that the circuit court (1) did not err in finding that Jack Bays' lien was valid; (2) was not plainly wrong in determining that the Contractors' liens had priority over the Lenders' deed of trust; but (3) erred in approving the sale of the entire parcel of land to satisfy the Contractors' liens, where no evidence was introduced to support this decision. Remanded. View "Glasser & Glasser, PLC v. Jack Bays, Inc." on Justia Law

Plaintiffs, Massachusetts residents, bought a three-dwelling in Massachusetts, financing the entire purchase price with two mortgage loans from Plaza Home Mortgage (Plaza). After the collapse of the housing market, Plaintiffs sued Plaza, alleging state common law and statutory violations in making the loans. The district court dismissed for failure to state a claim. The First Circuit Court of Appeals affirmed, holding (1) the district court correctly dismissed Plaintiffs' claim based on Plaza's alleged violation of the Massachusetts covenant of good faith and fair dealing; and (2) Plaintiffs' claim based on a violation of the Massachusetts consumer protection was correctly dismissed as time-barred. View "Latson v. Plaza Home Mortgage, Inc." on Justia Law

Dittmer appealed the district court's dismissal under Federal Rule of Civil Procedure 12(b) of their two lawsuits against a failed bank, the FDIC as the bank's receiver, and the successor representative to the Estate of John Peters. Barkley is a Missouri general partnership with two equal partners, John Peters and Joe Dittmer. In the first of two eventual lawsuits arising out of a 2006 loan transaction to Barkley, Dittmer, representing Joe Dittmer's half interest in Barkley, sued Premier Bank, seeking declaratory judgment that the loan should be declared void as to Dittmer and sought to enjoin the bank from selling encumbered property. The suit was filed in Missouri state court, and the primary basis for Dittmer's complaint was that Peters did not have authority from his partner, Joe Dittmer, to mortgage Barkley property for this transaction. The second suit included the same claims as the first case but included various Dittmer successors as plaintiffs, and both the FDIC and the personal representative were added as defendants. The court found that under 12 U.S.C. 1821(j), the district court correctly dismissed Dittmer's claims for injunctive and declaratory relief; given the language of the Missouri Uniform Partnership Act, Mo. Rev. Stat. 358.090(1), the amended partnership agreement, and the power of attorney documents, the district court correctly dismissed the claim in the second suit against the FDIC; and the court agreed with the district court that the doctrine of res judicata required dismissal of the second suit. Accordingly, the court affirmed the judgment. View "Dittmer Properties v. FDIC, et al" on Justia Law

This case stemmed from the fallout from the failure of the Fountainebleau development in Las Vegas, Nevada and involved the contract dispute between the Term Lenders, the Revolving Lenders, and the Borrowers. The district court dismissed the Term Lenders' claims against the Revolving Lenders, finding that the Term Lenders lacked standing to sue. The district court also denied the Borrowers' motion for summary judgment against the Revolving Lenders, rejecting the Borrowers' argument that the Revolving Lenders had breached the contract as a matter of law and alternatively finding there were material issues of fact about whether the Revolving Lenders breached the contract. The court held that the Term Lenders lacked standing to enforce section 2.1(c) of the Credit Agreement promise and affirmed the district court's dismissal of the breach of contract claims. The court could not conclude as a matter of law that the Revolving Lenders broke their promise to fund the Borrowers under section 2 of the Credit Agreement and affirmed the district court's denial of the Borrowers' request for turnover of the loan proceeds and specific performance. View "Avenue CLO Fund, Ltd., et al v. Bank of America, NA, et al" on Justia Law

Plaintiffs sued for a declaratory judgment that the lien on their homestead was void and that the mortgage holder was required to forfeit all principal and interest. Plaintiffs also sought damages for defamation. The court concluded that plaintiffs' claims were time-barred under Tex. Const. Art. XVI 50(a)(6); because there was no evidence or allegation of defendants' attempting to conceal information, and because the facts that gave rise to any claims were obvious and not hidden, the doctrine of fraudulent concealment did not apply in this instance to estop the lenders' assertion of the limitations defense; because the loan was valid, and plaintiffs were delinquent, the statements at issue were true and no defamation occurred; the court rejected plaintiffs' claim that the statute of limitations barred only remedies; and the district court did not abuse its discretion in striking the amended complaints. Accordingly, the court affirmed the judgment. View "Priester, Jr., et al v. JP Morgan Chase Bank, N.A., et al" on Justia Law

BancorpSouth (the bank) sued HLC and McKee (collectively, Hazelwood), alleging breach of contract against HLC, breach of guaranty against McKee, and asserting a security interest in some of HLC's property. Hazelwood raised lack of subject matter jurisdiction, improper venue and choice of forum, and a state law contract defense. MPT intervened, claiming priority over real property tax refunds owed to HLC and attached by the bank. The court held that the district court properly exercised jurisdiction under 28 U.S.C. 1332(a)(1); the forum selection clauses at issue were permissive and did not prohibit the bank from bringing the suit in the United States District Court for the Eastern District of Missouri; the district court did not err in granting summary judgment to the bank on its breach of contract claim against HLC, or the breach of guaranty claim against McKee; Hazelwood failed factually to contest the bank's damages assessment before the district court, and was not entitled to relief on appeal; and the court declined MPT's invitation to disregard state law and craft an "equitable" solution designed to protect a party who failed to take reasonable steps to protect itself and assumed a known risk. Accordingly, the court affirmed the judgment. View "BancorpSouth Bank v. Hazelwood Logistics Center, et al" on Justia Law

Borrowers obtained secured loans from InBank. Their promissory notes established that InBank would calculate annual interest rates by adding a predetermined amount, usually one percent, to a variable index rate set by InBank at “its sole discretion,” which could change up to once per day. InBank stated that it would set the rate “at or around the U.S. prime rate.” Borrowers compared loan statements and found that the rate was neither consistent across customers nor close to the prime rate. After borrowers filed suit, the Illinois Department of Financial and Professional Regulation took control of InBank and appointed the Federal Deposit Insurance Corporation as receiver. MB Financial purchased InBank accounts. The borrowers filed an amended class action against MB, claiming violations of the Interest Act, 815 ILCS 205/1, and the Consumer Fraud and Deceptive Practices Act, 815 ILCS 505/1. The court granted a motion to substitute the FDIC as defendant, then dismissed. The Seventh Circuit held that dismissal was proper for failure to exhaust remedies under the Financial Institutions Reform, Recovery, and Enforcement Act, 12 U.S.C. 1821(d)(3)-(d)(13). The claims relate to InBank’s alleged acts and omissions, not MB’s, and there is no support for an assumption of liability argument.View "Farnik v. Fed. Deposit Ins. Corp" on Justia Law

Prime Realty, Inc. (Prime) acted as general partner for two limited partnerships (collectively, the Partnerships). Without the Partnerships' limited partners' knowledge, Prime took out two loans from a bank (the Bank) and, by deed of trust, secured the loans with Partnerships' property. The Bank ultimately sold the collateral and applied the proceeds to the loans. The Partnerships sued the Bank for conversion, alleging that the loans were for a nonpartnership purposes and, as such, Prime lacked authority to offer the Partnerships' property as collateral without the limited partners' consent under the Partnership agreements. The district court concluded that the Bank had converted the Partnerships' property and awarded the Partnerships damages and prejudgment interest. The Supreme Court affirmed, holding (1) the Partnerships' complaint was timely; (2) the Bank converted the Partnerships' property; (3) the district court improperly awarded damages in the full amount of the proceeds applied to the loans because a portion of the first loan served a Partnership purpose; and (4) prejudgment interest was proper only in the amount the Bank applied to the second loan. View "Brook Valley Ltd. P'ship v. Mut. of Omaha Bank" on Justia Law