Justia Contracts Opinion Summaries

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

DWS Properties (DWS) owned rental property. The sole member of DWS was Dustin Shore. After a pipe burst at the property causing substantial damage, Shore executed contracts with Performance Adjusting Public Insurance Adjusters (Performance) and Multi-State Restoration (Multi-State), in which Performance agreed to provide public adjusting service relative to the loss, and Multi-State agreed to perform emergency clean-up work at the property. Performance and Multi-State (Plaintiffs) were never paid for the services they provided, and after Shore filed for personal bankruptcy, Shore's debts to Plaintiffs were discharged. Plaintiffs subsequently filed suit against DWS, seeking damages for book account, breach of contract, quasi-contract, and unjust enrichment. DWS filed a motion to dismiss, which the hearing justice converted into a motion for summary judgment and granted, reasoning that Shore had signed the contracts in an individual capacity without making any reference to DWS. The Supreme Court vacated the judgment of the superior court and remanded, holding (1) summary judgment was inappropriate on Plaintiffs' contract claims; and (2) the fact that DWS was not explicitly named on the contracts did not entitle it to judgment as a matter of law on Plaintiffs' equitable claims. View "Multi-State Restoration, Inc. v. DWS Props., LLC" on Justia Law

OCV supplies equipment and licenses software for in-room hotel entertainment and sought a judgment of $641,959.54 against Roti, the owner of companies (Markwell, now defunct) that owned hotels to which OCV provided services. The district judge granted summary judgment, piercing the corporate veil, but rejecting a fraud claim. The Seventh Circuit reversed. While the Markwell companies were under-funded, OCV failed to treat the companies as separate businesses and proceed accordingly in the bankruptcy proceedings of one of the companies and made no effort to determine the solvency of the companies. View "On Command Video Corp. v. Roti" on Justia Law

This case concerned a dispute between a Netherlands holding company and an Italian businessman. The businessman made a loan to the holding company for a joint venture. The joint venture eventually went into bankruptcy and defaulted on its loan obligations, including the loan from the businessman. The businessman filed this action alleging, among other things, that the holding company induced him to make the loan by representing that it would support and continue to back the joint venture. The holding company denied making those representations or having any obligations to the businessman. The holding company moved for summary judgment on multiple grounds. The Court of Chancery (1) found the businessman's claims were not barred for lack of standing; (2) denied summary judgment on the ground of laches; (3) denied summary judgment on the holding company's English statute of frauds defense; (4) granted summary judgment in the holding company's favor on the businessman's Italian law claim for breach of implied or oral contract and his Dutch law claim; and (5) granted the holding company's motion for summary judgment regarding the businessman's claim for unjust enrichment. View "Vichi v. Koninklijke Philips Elecs., N.V." on Justia Law

Pielet Brothers Scrap Iron and Metal, was founded Arthur Pielet and his brothers shortly after World War II. Arthur sold his interest to his sons in 1986 through an agreement providing for a lifetime payment to him of a “consulting” fee, and, on his death, for a lifetime fee payment to his wife, Dorothy. The agreement was binding on successors and assigns. In 1994, the then- successor company, P.B.S., dissolved, but payments to Arthur continued until 1998, when its successor, MM, had financial difficulties. It filed for bankruptcy in 1999. Litigation began. The trial court awarded Dorothy almost $2 million. In the appellate court, P.B.S. argued the traditional rule that a cause of action that accrued (1998) after dissolution (1994) cannot be brought against a dissolved corporation. The appellate court rejected the argument, holding that Dorothy’s claim could survive, but remanded for determination of whether the companies could be relieved of liability for the fee under a theory of novation. The Supreme Court reversed in part, holding that the claim of breach of contract against P.B.S. could not survive the corporate dissolution. The issue of novation is relevant as to two other successor corporations and required remand. View "Pielet v. Pielet" on Justia Law

When AFC filed for bankruptcy in 2009, the FDIC was appointed receiver for AFC’s subsidiary, AmTrust and sought payment from AFC under 11 U.S.C. 365(o), which requires that a party seeking Chapter-11 bankruptcy fulfill “any commitment . . . to maintain the capital of an insured depository institution.” The FDIC argued that AFC made such a commitment by agreeing to entry of a cease-and-desist order requiring AFC’s board to “ensure that [the Bank] complies” with the Bank’s own obligation to “have and maintain” capital ratios of 7 percent (Tier 1) and 12 percent (total). The district court found that the order was not a capital-maintenance commitment under section 365(o). The Sixth Circuit affirmed. The cease-and-desist order is ambiguous and could reasonably be read as establishing either an oversight role or a capital-maintenance commitment and the bulk of the extrinsic evidence favored the “oversight” reading. View "Fed. Deposit Ins. Corp. v. Amtrust Fin. Corp." on Justia Law

GTI went bankrupt after it purchased OAI, a subsidiary of Onkyo for $13 million in cash and $12 million in three-year promissory notes. Onkyo filed a proof of claim for $12 million. GTI responded by suing Onkyo under the theory that the OAI purchase was a fraudulent, voidable transaction. The bankruptcy court agreed, finding that OAI was worth $6.9 million at the time of the transaction, not $25 million. The court voided GTI’s obligation to pay the remainder of the purchase price and ordered Onkyo to repay GTI $6.1 million. The district court and Sixth Circuit affirmed. The bankruptcy court’s determination that the indirect benefits were insubstantial was valid without the necessity of providing calculations; its adoption of GTI’s expert’s value based on the comparable transactions method was not clearly erroneous. Once the bankruptcy court determined that the sale of OAI had been a fraudulent transfer and Onkyo was a good-faith transferee, awarding GTI relief was a simple matter of subtraction. View "Onkyo Europe Elec., GMBH v. Global Technovations Inc." on Justia Law

This case involved unanswered questions of Georgia law that are central to this appeal. Because these questions are determinative of the case and there are no controlling precedents from the Supreme Court of Georgia, the court respectfully certified the following questions for resolution: (1) Whether a security deed that lacks the signature of an unofficial witness should be considered "duly filed, recorded, and indexed" as required by O.C.G.A. 44-13-33, such that a subsequent hypothetical bona fide purchaser would have constructive notice when the deed incorporates the covenants, terms, and provisions of a rider that contains the attestations required by O.C.G.A. 44-13-33 and said rider was filed, recorded, and indexed with the security deed; and (2) If the answer to question one was in the negative, whether such a situation would nonetheless put a subsequent hypothetical bona fide purchaser on inquiry notice. View "Gordon v. Wells Fargo Bank, N.A." on Justia Law

EAR, a seller of manufacturing equipment, defrauded creditors by financing non-existent or grossly overvalued equipment and pledging equipment multiple times to different creditors. After the fraud was discovered, EAR filed for bankruptcy. As Chief Restructuring Officer, Brandt abandoned and auctioned some assets. Five equipment leases granted a secured interest in EAR’s equipment; by amendment, EAR agreed to pay down the leases ($4.6 million) and give Republic a blanket security interest in all its assets. Republic would forebear on its claims against EAR. The amendment had a typographical error, giving Republic a security interest in Republic’s own assets. Republic filed UCC financing statements claiming a blanket lien on EAR’s assets. After the auction, Republic claimed the largest share of the proceeds. The matter is being separately litigated. First Premier, EAR’s largest creditor, is concerned that Republic, is working with Brandt to enlarge Republic’s secured interests. After the auction, EAR filed an action against its auditors for accounting malpractice, then sought to avoid the $4.6 million transfer to Republic. The bankruptcy court approved a settlement to end the EAR-Republic adversary action, continue the other suit, divvy proceeds from those suits, and retroactively modify the Republic lien to correct the typo. First Premier objected. The district court affirmed. The Seventh Circuit affirmed. First Premier was not prejudiced by the settlement. View "First Premier Capital, LLC v. Republic Bank of Chicago" on Justia Law

The bankruptcy Trustee of MBS Management Services, Inc. (MBS), a management company for dozens of apartment complexes, appealed judgments rejecting his claim that payments made by the debtor to MXEnergy Electric, Inc (MX) to reimburse MX for supplying electricity to the complexes were avoidable preferences. The bankruptcy court and district court found that the payments were made on a "forward contract" expressly exempt from the Bankruptcy Code's preference provision. The Fifth Circuit Court of Appeals affirmed, holding that because the agreement was a forward contract within the meaning of 11 U.S.C. 546(e), and because expert testimony from the President and CEO of MX was admissible, the bankruptcy and district court's correctly rejected the Trustee's avoidance action. View "Lightfoot v. MXenergy Elec., Inc. " on Justia Law