Justia Contracts Opinion Summaries

After a dispute over the purchase of a motor coach, Plaintiff brought suit against Defendants, a used car salesman, a used car dealership, and a bank, asserting claims of, inter alia, breach of contract, fraud, and negligent misrepresentation. Plaintiff subsequently filed a motion to compel discovery, which the district court granted. Defendants did not meet their discovery deadlines, and Defendants' counsel failed to attend several status conferences. The district court then entered a default judgment for Plaintiff as a discovery sanction and later and awarded Plaintiff $74,154 in damages. The Supreme Court affirmed in part and reversed in part, holding that the district court (1) did not abuse its discretion when it entered a default judgment for Plaintiff as a discovery sanction under Mont. R. Civ. P. 37(b); (2) did not abuse its discretion when it refused to set aside the sanction orders; (3) did not err as a matter of law in calculating damages; but (4) failed to property calculate and award prejudgment interest. Remanded.

Respondent Hook Point, LLC (Hook Point) was granted a preliminary injunction preventing Appellant Branch Banking and Trust Company (BB&T) from drawing on, and Defendant First Reliance Bank (First Reliance) from honoring, a $1.5 million letter of credit. BB&T appealed. In late 2007, Hook Point sought a loan from BB&T for the purpose of developing a subdivision on property Hook Point owned on Lake Murray called Panama Pointe. BB&T issued a commitment letter to Hook Point in September 2007 indicating that it would loan the company $5.1 million and establish a $2 million line of credit to enable Hook Point to develop the subdivision. Security for the loan included a first mortgage on the Panama Pointe property, personal guarantees of Hook Point’s four principals, and a $1.5 million standby letter of credit issued by First Reliance in favor of BB&T. On December 23, Hook Point filed suit alleging several causes of action against BB&T, including for fraudulent misrepresentation by which BB&T induced Hook Point to enter into a loan agreement. Hook Point admitted to being $70,000 in arrears on interest but argued that the terms of the agreement did not permit BB&T to draw the full amount of the letter of credit (LC) if that exceeded the amount of interest due. It also sought an ex parte temporary restraining order to prevent First Reliance from honoring a draft on the LC by BB&T, which the court granted. After a hearing, the court also granted a preliminary injunction against drafts on or honor of the LC beyond amounts of accrued interest, requiring extension of the LC for one year, and requiring Hook Point to post a $50,000 bond with the court. The Supreme Court reversed the circuit court's grant of the injunction: "[t]he standard under which a fraud in the transaction claim must be measured when deciding whether to enjoin honor of a letter of credit requires that the beneficiary have no colorable claim or basis in fact for asserting its rights under the letter of credit. In this case BB&T has, in [the Court's] view, not only a colorable claim but an undeniable basis in fact for asserting its rights under the letter of credit. Therefore, the circuit court erred when it granted the preliminary injunction."

Fred and Nancy Eagerton appealed a summary judgment granted in favor of Vision Bank in the bank's action seeking to enforce the Eagertons' obligations under certain guaranty contracts. "Dotson 10s, LLC" was organized to operate a tennis club in Fairhope. Dotson 10s executed a note and security agreement with Vision Bank, and the bank obtained in exchange, unlimited personal guarantees from John and Elizabeth Dotson, and limited guarantees from the Eagertons. The Dotsons executed a second loan to which the Eagertons were not a party. The Dotsons defaulted on both loans, and the bank sued the Dotsons as the primary obligors, and the Eagertons as personal guarantors. Dotson 10s then filed for bankruptcy protection. Part of the reorganization plan provided in part that the two loans would be combined and paid in full. Dotson 10s subsequently defaulted on the bankruptcy plan. The properties were foreclosed and sold, with the proceeds applied to the consolidated loan. The circuit court then entered a partial summary judgment in favor of the bank against Dotson 10s, but denied the motion as to the Eagertons. The bank argued that the Eagertons were still responsible under their guaranty contracts for the deficiency remaining on the consolidated loan. The Eagertons argued that the creation of the consolidated loan without their knowledge or consent, operated to discharge them from any further obligations under their guaranty contracts. Upon review, the Supreme Court agreed, and reversed the circuit court's judgment in favor of the bank, and remanded the case for further proceedings.

Plaintiff appealed the district court's judgment granting Chase's motion to dismiss her putative class action claim brought pursuant to the Maryland Credit Grantor Closed End Credit Provisions (CLEC), Md. Code Ann., Com. Law 12-1001 et seq. The district court concluded that federal regulations preempted relevant portions of the CLEC and that the retail sales installment contract signed by plaintiff and Chase's predecessor in interest did not mandate that Chase comply with the CLEC. The court held that the district court erred in concluding that the CLEC was preempted by the National Bank Act (NBA), 12 U.S.C. 1 et seq., or the Office of the Comptroller of the Currency (OCC) regulations. The court also held that the district court erred in dismissing plaintiff's breach of contract claim and remanded for further proceedings.

Plaintiff filed a putative class action against M&T Bank, alleging that it improperly charged its checking account customers overdraft fees. The district court denied M&T Bank's renewed motion to compel arbitration, finding that plaintiff's claims were not within the scope of the parties' arbitration agreement. The court held that, under the delegation provision, the decision of whether plaintiff's claims were within the scope of the arbitration agreement was a decision for an arbitrator, and the district court erred in making the decision itself. Further, the court believed that it was prudent for the district court to reconsider its unconscionability determination in light of AT&T Mobility LLC v. Conception, so the court did not reach whether the arbitration agreement was unconscionable. Accordingly, the court vacated and remanded.

This was the second of two related lawsuits filed by Torrington Livestock Cattle Company (TLCC) against Daren and Jennifer Berg. In the first suit, Daren was found liable for breach of contract, conversion, and fraud. The court entered judgment in the favor of TLCC in the amount of $517,635, but the judgment remained unsatisfied. While the first suit was pending, the Bergs signed a promissory note with the First Bank of Torrington. As collateral, the bank acquired security interests in a variety of the Bergs' property, including livestock and ranching equipment. Later, the bank assigned the promissory note to TLCC. After the Bergs did not make the first payment, TLCC commenced the instant action, alleging breach of contract for promissory note and to enforce security agreement. The district court determined that no material issues of fact existed and TLCC was entitled to summary judgment. The Supreme Court summarily affirmed the judgment of the trial court based upon the deficient brief offered by the Bergs and their failure to follow the rules of appellate procedure.

Metropolitan National Bank (MNB) loaned Grand Valley Ridge several million dollars for the completion of a subdivision. After Grand Valley failed to make its interest payments, MNB filed a petition for foreclosure. Grand Valley and Thomas Terminella, a member of Grand Valley (collectively, Appellants), filed an amended counterclaim alleging various causes of action. During the trial, the circuit court granted Appellants' motion to take a voluntary nonsuit of their claims of negligence and tortious interference with contract. The circuit court held in favor of MNB. The court subsequently granted MNB's petition for foreclosure and awarded a judgment against Appellants. Thereafter, Appellants filed a complaint alleging their original nonsuited counterclaims and adding additional claims. MNB moved to dismiss Appellants' complaint and filed a motion for sanctions. The circuit court granted both motions. The Supreme Court affirmed, holding, inter alia, (1) because Appellants brought claims clearly barred by the statute of limitations, the circuit court did not abuse its discretion in awarding sanctions; and (2) the circuit court properly granted summary judgment for MNB on Grand Valley's nonsuited issues based on the applicable statute of limitations.

In this suit for an alleged breach of a deposit agreement, the court reviewed the court of appeals' judgment in favor of an estate administrator, as well as the estate administrator's cross-petition concerning attorney's fees. When a party failed to preserve error in the trial court or waived an argument on appeal, an appellate court could not consider the unpreserved or waived issue. Because many of the arguments raised by the parties invoked issues of error preservation or waiver, the court declined to grant either party the relief it sought.

Dr. Carroll Meador filed a complaint against Mississippi Baptist Health Systems, Inc. (MBHS), Trustmark National Bank (Trustmark), and Doe Defendants 1 through 10, for breach of fiduciary duties, interference with fiduciary duties, interference with contract rights, interference with prospective business advantage, intentional infliction of emotional distress, deceit, fraud, and retaliatory discharge. The complaint stemmed from the doctor's employment with MBHS and a large line of credit he obtained from Trustmark. A dispute between the parties ended with the bank suing the doctor for defaulting on the loan, and the doctor declaring bankruptcy. Several defendants sought to remove the case to the federal district court. The district court granted remand of the case, finding the federal bankruptcy proceedings in the case had been concluded and only state claims remained. Then Defendants Trustmark, MBHS and several codefendants filed a motion for summary judgment and motion to dismiss. The doctor appealed the ultimate outcome of the trial court's decision in favor of Defendants. Upon review, the Supreme Court found that the trial court abused its discretion in refusing to strike portions of the doctor's affidavit, and in denying Trustmark and MBHS' motions for summary judgment. The Court reversed the trial court's decision and remanded the case for further proceedings.

In 2007, Scottie and Dawn Pederson (the Pedersons) and Rocky Mountain Bank (the Bank) entered into a construction loan agreement pursuant to which the Bank agreed to lend the Pedersons several thousand dollars. In 2008, the Pedersons and the Bank agreed to finance the construction loan through three short term loans. In 2009, the Pedersons tried to refinance their loans but were unable to do so. Due to alleged failures on the part of the Bank, the Pedersons brought suit against the Bank in 2011, asserting claims for, inter alia, negligence, constructive fraud, and negligent misrepresentation. After it was served with the complaint, the Bank filed a Mont. R. Civ. P. 12(b)(6) motion to dismiss, asserting the statutes of limitations had run on all of the Pedersons' claims. The district court granted the Bank's motion and dismissed the Pedersons' claims. The Supreme Court affirmed, holding (1) the applicable statutes of limitations began to run in 2008 because the Pedersons' claims had accrued and they had discovered the facts constituting the claims; and (2) by filing their complaint more than three years later, the Pedersons failed to commence their action within any of the applicable statutes of limitations.