Justia Contracts Opinion Summaries

Drillers filed a mineral lien on Debtor's well after Drillers performed work on the well and were never paid. The bankruptcy court dismissed Drillers' constructive trust and equitable lien claims and granted summary judgment to Debtors on Drillers' mineral contractor's and subcontractor's lien claims. The district court affirmed. The court affirmed the dismissal of Drillers' constructive trust and equitable lien claims. However, the court reversed and remanded the grant of summary judgment on Drillers' mineral subcontractors' lien claims because Drillers submitted sufficient evidence to survive summary judgment. The court held that it is possible under Texas law for an owner to also be a contractor, and for a laborer to secure liens against both the contracting and non-contracting owners. Viewed in the light most favorable to Drillers, the facts demonstrate that Drillers were subcontractors with regard to Debtors.View "Endeavor Energy Resources, L.P, et al. v. Heritage Consolidated, L.L.C., et al." on Justia Law

Jack Irwin owed a warehouse that Shade rented to store personal property. West Gate Bank held notes payable from Shade that were secured by Shade’s personal property. Shade later defaulted on the notes. Irwin and West Gate subsequently agreed to move Shade’s personal property pursuant to an “Abandonment” document. When Shade filed for bankruptcy, the bankruptcy court approved distribution of the proceeds in Shade’s personal property to West Gate, concluding that the Abandonment document was not an assignment or release of West Gate’s perfected security interest. Thereafter, Irwin filed this action against West Bank in district court alleging that West Gate breached its obligations under the Abandonment document by failing to pay the proceeds to Irwin. The district curt entered judgment in favor of West Gate. The Supreme Court affirmed, holding (1) the district court’s determination regarding the preclusive effect of the bankruptcy court’s ruling with respect to an assignment or release of West Gate’s security interest in Shade’s property was not relevant to this appeal; and (2) the district court did not err in concluding that the Abandonment document was not an enforceable contract or a warranty. View "Irwin v. West Gate Bank" on Justia Law

Facing asbestos-related personal injury lawsuits filed in the 1980s, a group of producers of asbestos and asbestos-containing products formed the Center for Claims Resolution to administer such claims on behalf of its Members. About 20 Members negotiated and signed the Producer Agreement, which established and set forth the mechanics of the Center and the obligations of the Members. After G-I failed to pay its contractually-calculated share of personal injury settlements and Center expenses, U.S. Gypsum and Quigley were obligated to pay additional sums to cover G-I’s payment obligations. G-I filed for bankruptcy and the Center, U.S. Gypsum, and Quigley each filed a proof of claim, seeking to recover for G-I’s nonpayment under the Producer Agreement. The Center settled its claim with G-I. The Bankruptcy Court granted summary judgment in G-I’s favor. The district court affirmed. The Third Circuit vacated, holding that the Producer Agreement permits the Former Members to pursue a breach of contract action against G-I for its failure to pay contractually-obligated sums due to the Center, in light of their payment of G-I’s share. View "In re: G-I Holdings, Inc." on Justia Law

Hess sought to enforce debtor's guaranty on a contract between Hess and Premier. Debtor was a member in Premier and served as guarantor of the agreement. The agreement stated that Hess would provide certain management services related to the operation of the Fluker Pit. The bankruptcy court held that Premier breached the contract in bad faith, but the court limited the damages award to $375,000. Hess appealed to the district court, which overruled the bankruptcy court and awarded Hess the full value of the contract - $1.5 million. Debtor appealed. The court concluded that a Louisiana court would find that the bad faith damage clause did not enhance the damages owed Hess beyond the time the Fluker Pit closed. Instead, giving full effect to the bad faith damages provision, the court found that Hess was only able to establish as a "direct consequence" of the breach damages up until the November 12th date. Awarding Hess damages beyond that point would not serve the provision's purpose of conferring damages consequentially linked to bad faith breach, but instead would punitively award damages unconnected with the facts surrounding the breach. Further, Louisiana's rule on mitigation makes clear that a non-breaching party must take "reasonable efforts to mitigate the damage caused by the obligor's failure to perform." This demonstrates that damages are not set in stone, and strengthened the court's conclusion that post-breach events may effect the amount of damages award. Accordingly, the court reversed and remanded. View "Hess Mgmt. Firm, L.L.C., et al. v. Bankston, et al." on Justia Law

Alforookh manages and operates restaurants under franchise agreements with IHOP. He created companies to hold the franchises, including A&F. Alforookh and A&F are in Chapter 11 bankruptcy proceedings. Their primary assets are 17 IHOP franchise agreements and corresponding building and equipment leases. Generally, Chapter 11 debtors may assume or reject executory contracts any time before confirmation of a plan, 11 U.S.C. 365(d)(2). Unexpired leases of nonresidential real property, however, must be assumed within 120 days, subject to a 90-day extension. A&F did not assume the building leases within 120 days or seek an extension, so IHOP claims that those leases were rejected and that the franchise agreements and equipment leases expired. A&F argued that because the building leases are just one part of the larger franchise arrangement, section 365(d)(2)’s more generous time limit applies to the whole arrangement, including the building leases. The bankruptcy judge deemed the building leases rejected and the franchise agreements and equipment leases expired. A&F’s request for a stay pending appeal was rejected by the bankruptcy and district courts. The Seventh Circuit granted an emergency motion and issued a stay order freezing the status quo during the pendency of the appeal and subsequently held that a continued stay was warranted. View "A&F Enters., Inc. II v. IHOP Franchising, LLC" on Justia Law

Following the bankruptcy of BioBased Technologies, LLC, certain members of BioBased (Appellants) brought an action against other members, the members’ lawyers, and the managers of the corporation for fraud, breach of duty to disclose company information, conversion of membership interest, civil conspiracy, and breach of contract. The circuit court granted summary judgment on some claims, dismissed some claims, and found that the remainder of the claims were barred by collateral estoppel and res judicata. The Supreme Court reversed, holding (1) the circuit court erred in granting summary judgment on Appellants’ claims for fraud, breach of duty to disclose company information, and conversion of membership interest claims based on Appellants’ lack of standing, as Appellants had standing to assert their claims; (2) the circuit court erred in granting summary judgment on Appellants’ fraud claim against certain defendants on the basis that Appellants “failed to meet proof with proof” to show that the defendants made false representations of fact; (3) the circuit court erred in dismissing claims for lack of subject-matter jurisdiction; and (4) the circuit court erred in concluding that the bankruptcy proceeding had res judicata or collateral estoppel effect on Appellants’ state-law claims. Remanded. View "Muccio v. Hunt" on Justia Law

This dispute arose out of a complicated bankruptcy proceeding. On appeal, Lender challenged the district court's judgment which, in relevant part, disallowed Lender's claim for a contractual prepayment consideration. Applying Colorado law, a lender was not entitled to a prepayment penalty when the lender chooses to accelerate the note. Absent a clear contractual provision to the contrary or evidence of the borrower's bad faith in defaulting to avoid a penalty, a lender's decision to accelerate acts as a waiver of a prepayment penalty. In this instance, the plain language of the contract plainly provided that no Prepayment Consideration was owed unless there was an actual prepayment, whether voluntary or involuntary. Accordingly, the acceleration of the Note due to GCMM's default by nonpayment under Article 4 did not trigger the obligation to pay the Prepayment Consideration under Article 6. View "Bank of New York Mellon v. GC Merchandise Mart, L.L.C., et al." on Justia Law

Acting as receiver, the FDIC conveyed substantially all of WaMU's assets and liabilities to JPMorgan Chase, including certain long-term real-estate leases. At issue was whether the owners of the leased tracts could enforce the leases against Chase by virtue of the FDIC's conveyance. The court held that, in the interest of maintaining uniformity in the construction and enforcement of federal contracts, the landlords did not qualify as third-party beneficiaries. The court concluded, however, that the landlords have "standing" to prove the content of the Agreement and that the Agreement, properly construed, was a complete "assignment" sufficient to create privity of estate under Texas law. Accordingly, the court affirmed the judgment of the district court. View "Excel Willowbrook, L.L.C., et al. v. JPMorgan Chase Bank, N.A., et al." on Justia Law

Horsfall worked as a real estate agent for First Weber, 2001-2002, and was the listing agent on First Weber’s contract with Call, who was trying to sell property. The contract gave First Weber exclusive rights collect commissions for sale of the property during the listing period and an exclusive right to collect commissions from sales to defined “protected buyers” for one year after the listing expired. The Acostas made an offer on the property and became “protected buyers.” Call’s contract with First Weber ended in August and at the same time, Horsfall left First Weber to establish his own brokerage, Picket Fence. In October, the Acostas contacted Horsfall. Without involving First Weber, Horsfall resuscitated the transaction with Call. The Acostas and Call executed a sales contract for the Call property. Picket Fence received a $6,000 commission, inconsistent with Horsfall’s status as First Weber’s agent under the earlier contract and in violation of Wisconsin real estate practice rules. Six years later, First Weber sued Horsfall in state court, asserting r breach of contract, tortious interference, and unjust enrichment. The state court entered a judgment against Horsfall for $10,978.91. Horsfall filed for Chapter 7 bankruptcy, listing First Weber as a creditor. First Weber responded that its judgment was non‐dischargeable under 11 U.S.C. 523(a)(6), as involving “willful and malicious injury.” The bankruptcy court, district court, and Seventh Circuit found the debt dischargeable. View "First Weber Grp., Inc. v. Horsfall" on Justia Law

The multinational telecommunications firm Nortel declared bankruptcy in 2009 and various debtors comprising the Nortel brand auctioned their business lines and intellectual property, raising $7.5 billion. The debtors subsequently disputed whether they had agreed to allocate the auction funds through arbitration. The Bankruptcy Court held that they had not agreed to arbitrate their disputes about allocation. The Third Circuit affirmed: the contract at issue does not reflect the debtors’ intent to arbitrate disputes about the auction funds. The court declined to consider the Joint Administrators’ related challenge to the Bankruptcy Court’s decision to allocate the contested funds, noting that the Bankruptcy Court has not yet held the hearing to allocate the funds, so that review would be premature. View "In Re: Nortel Networks, Inc." on Justia Law