Justia Contracts Opinion Summaries

The appellant in this case was a member of two limited liability companies, holding approximately a 33% interest. After disputes arose concerning the operation of the LLCs, the appellant initiated litigation seeking dissolution and other relief. Subsequently, he was expelled as a member. The LLCs’ operating agreement required immediate compensation for expelled members’ interests, but the appellant was not paid. While the case was ongoing, the district court enjoined the LLCs from harming the appellant’s interests and appointed a special master to value those interests. Despite the injunction, the appellant’s membership interests were assigned and sold to a third party without his knowledge. The appellant amended his complaint to assert conversion and defamation claims.A jury in the District Court of Park County found for the appellant, awarding $1,784,640 for conversion and $75,000 for defamation per se. Defendants moved post-judgment under Wyoming Rules of Civil Procedure 50(b), 59, and 60, arguing the conversion damages should not exceed the special master’s valuation and that defamation damages lacked evidentiary support. The district court initially denied the Rule 50(b) motion, affirming the jury’s findings. Later, under Rule 60(b), the court reduced conversion damages to $293,017 (the special master’s value) and defamation damages to $500, citing the appellant’s rightful expulsion and lack of proof of reputational harm or economic loss.The Supreme Court of Wyoming reviewed the district court’s reductions. It held that the appellant retained a property interest in the LLCs after expulsion until compensated, and the jury’s conversion award was proper based on fair market value at the time of conversion. For defamation per se, the Court clarified that Wyoming law allows presumed damages above nominal amounts, and sufficient evidence supported the jury’s $75,000 award. The Supreme Court reversed the district court’s reductions and reinstated the original jury awards. View "Mccall v. Best of the West Productions, LLC" on Justia Law

A global manufacturer of automotive clutches entered into a contract with a components manufacturer to supply levers for use in the clutches. The levers were to be manufactured strictly according to the specifications provided, with no design responsibility on the supplier. Between 2017 and 2018, several of the supplied levers broke, causing clutch failures in the field. The buyer communicated with the supplier about these issues through emails, reports, and meetings, and the parties disputed whether these communications constituted notice of breach. The buyer eventually filed suit for breach of contract and breach of express and implied warranties.The United States District Court for the Northern District of Ohio denied the supplier’s motions for judgment on the pleadings and summary judgment, holding that there were sufficient allegations and factual disputes regarding whether the buyer had given adequate notice of breach as required under Ohio law. The case proceeded to trial, where the jury found in favor of the buyer on all claims and awarded significant damages. The supplier appealed, arguing that the Ohio statute requiring pre-suit notice of breach barred the buyer’s claims, and that errors in witness testimony and jury instructions warranted a new trial.The United States Court of Appeals for the Sixth Circuit affirmed the district court’s rulings. The appellate court held that under Ohio Revised Code § 1302.65(C)(1), interpreted through Ohio Supreme Court precedent, notice of breach does not require explicit language alleging breach, but rather communication sufficient to alert the seller that there is a problem. The court found the evidence supported the jury’s verdict, the jury instructions properly reflected Ohio law, and there was no reversible error in the admission of witness testimony. The judgment in favor of the buyer was affirmed. View "Eaton Corp. v. Angstrom Auto. Group, LLC" on Justia Law

This case arises from a contract dispute related to a broader multidistrict antitrust litigation involving alleged price-fixing in the sale of broiler chickens. The parties, a meat producer and a commercial purchaser, engaged in settlement negotiations to resolve the purchaser’s antitrust claims across three cases (Broilers, Beef, and Pork) for a total of $50 million. The negotiations included email exchanges where the purchaser appeared to accept a settlement offer, but several terms—including compliance with a judgment sharing agreement, assignment data, a “most favored nation” clause, and allocation among cases—remained unresolved. The purchaser had obtained litigation funding, which required consent from the funder for any settlement.The United States District Court for the Northern District of Illinois initially denied the producer’s motion for summary judgment in 2023 but later granted the producer’s motion to enforce the settlement agreement. The court found that the parties had agreed to the essential material terms: the $50 million payment and release of claims. It relied on draft settlement agreements, despite their lack of signatures, to memorialize agreement on additional terms. The court rejected arguments regarding laches and jurisdiction and subsequently granted summary judgment to the producer, concluding its obligations had been fulfilled by payment.The United States Court of Appeals for the Seventh Circuit reviewed the district court’s summary judgment de novo. It held that no binding settlement agreement existed as of the purchaser’s “We accept” email because several material terms remained open and unresolved at that time. The court found that, under Illinois law, mutual assent to all material terms is required for a binding contract, and the parties had continued to negotiate those material terms for months after the email exchange. The Seventh Circuit reversed the district court’s judgment and remanded the case for further proceedings. View "Carina Ventures LLC v. Pilgrim's Pride Corporation" on Justia Law

Several shareholders of Paya Holdings, Inc.—who were originally sponsors of a special purpose acquisition company that merged with Paya—held “Earnout Shares” subject to contractual transfer restrictions. Under the Sponsor Support Agreement (“SSA”), these shares could not be transferred until October 2025 unless a “Change in Control” occurred and the price per share exceeded $15.00. If the price was below $15.00, the Earnout Shares would be automatically forfeited prior to consummation of the change. In January 2023, Nuvei Corporation agreed to purchase all Paya shares for $9.75 per share in a tender offer. The offer required that tendered shares be freely transferable. The appellants attempted to tender their Earnout Shares, but Nuvei rejected them, citing the SSA’s restrictions.The shareholders sued Nuvei in the U.S. District Court for the District of Delaware, alleging that Nuvei violated the SEC’s Best Price Rule, which requires the highest consideration paid to any shareholder in a tender offer to be paid to all shareholders of that class. The District Court dismissed the suit for failure to state a claim, reasoning that no consideration was actually paid to the appellants because their shares were not validly tendered due to the transfer restrictions.On appeal, the U.S. Court of Appeals for the Third Circuit affirmed the District Court’s dismissal. The Third Circuit held that the Best Price Rule does not require a tender offeror to purchase shares that are subject to self-imposed transfer restrictions. The Rule mandates equal payment only for shares “taken up and paid for” pursuant to a tender offer, and it is silent regarding whether offerors must accept all tendered shares. Therefore, Nuvei was not required to purchase the appellants’ restricted shares, and dismissal of their claim was proper. View "Abramowski v. Nuvei Corp" on Justia Law

Plaintiffs, who provided subadvisory investment services and loaned $1.5 million to FolioMetrix (personally guaranteed by two individuals), later engaged with defendants involved in a proposed merger of investment firms. Plaintiffs alleged that during merger negotiations, defendant Putnam promised to relieve the original borrowers of their obligations and personally assume the debt. Subsequent communications referenced intentions to transfer the loan liability to the new entity, but when plaintiffs sought a formal promissory note, defendants refused. Ultimately, defendants did not repay any portion of the loan.Plaintiffs filed suit in the Superior Court of the City and County of San Francisco in March 2019, alleging breach of contract, fraud, negligent misrepresentation, and breach of the covenant of good faith and fair dealing. At trial, the central dispute was whether defendants had agreed to assume the loan obligations under the promissory note. Plaintiffs argued that the agreement was formed through emails and conduct, while defendants denied any assumption of liability. The jury found in favor of defendants, determining no contract was formed and no promise was made to repay the loans. Following trial, the court awarded defendants attorney fees under Civil Code section 1717, based on a fee provision in the original promissory note, after reducing the requested amount.On appeal, the California Court of Appeal, First Appellate District, Division Five, addressed several issues. It ruled that the automatic bankruptcy stay did not preclude resolution of the appeal because the debtor (NAI) was the plaintiff rather than a defendant. The court rejected plaintiffs’ claims of error regarding jury instructions on contract formation, finding insufficient argument and no prejudice. It affirmed the attorney fee award, concluding the action was “on the contract” containing the fee provision, and held the fee amount was within the trial court’s discretion. The judgment and fee order were affirmed. View "Navellier v. Putnam" on Justia Law

A Nebraska limited liability company owned by Michael Perkins hired RMR Building Group, LLC, managed and solely owned by Robert M. Ryan II, as a general contractor to redevelop a shopping center. Their contract used a cost-plus billing arrangement, where Perkins paid RMR in advance for specific construction costs, including a substantial sum for HVAC equipment and RMR’s fee. RMR deposited the funds into its general operating account but did not pay for the HVAC equipment; instead, it used the money to cover other business obligations. Perkins terminated the contract after RMR failed to provide proof of payment for the equipment and then sued RMR and Ryan for breach of contract, unjust enrichment, conversion, and fraudulent misrepresentation, also seeking to pierce the corporate veil and hold Ryan personally liable.The District Court for Douglas County found that RMR breached the contract and was liable under theories of money had and received and unjust enrichment, but not for conversion or fraudulent misrepresentation. The court declined to disregard RMR’s corporate entity, finding no sufficient evidence that Ryan diverted funds for personal use or that RMR was a mere facade for Ryan’s dealings. Perkins appealed these findings.The Nebraska Court of Appeals reversed in part, concluding that the corporate veil should be pierced and Ryan held jointly and severally liable for the misappropriated funds, relying on factors from United States Nat. Bank of Omaha v. Rupe. On further review, the Nebraska Supreme Court reversed the Court of Appeals, holding that the evidence did not establish by a preponderance that RMR’s entity should be disregarded, nor did it support fraud or conversion claims against Ryan. The Supreme Court remanded with direction to affirm the district court’s judgment. View "Perkins v. RMR Building Group" on Justia Law

A minor league baseball team in Oregon lost its longstanding affiliation with a Major League Baseball (MLB) club after MLB restructured its relationship with minor league teams in 2020. The team’s owner alleges that a minority owner of an MLB franchise, who also served on the board and a negotiation committee of the national minor league association, acted to reduce the number of minor league clubs for personal gain, which resulted in the team’s exclusion from the new affiliation structure. The owner claims that the association’s rules left it dependent on the board and committee members to protect its interests.The United States District Court for the District of New Jersey dismissed the owner’s complaint, finding that it failed to plausibly allege the existence of a fiduciary relationship between the board member and the team. The owner appealed, arguing that fiduciary duties arose under Florida’s non-profit statute, by contract, or by implication due to the structure of the association and the interactions between the parties.The United States Court of Appeals for the Third Circuit reviewed the District Court’s dismissal de novo. The Third Circuit held that Florida’s non-profit statute does not create a fiduciary duty from a director to the members of the non-profit, only to the corporation itself. The court also found no express or implied fiduciary duty arising from contractual provisions or the surrounding circumstances. The court distinguished direct and derivative actions and concluded that the complaint did not allege facts to support a direct or implied fiduciary relationship. Accordingly, the Third Circuit affirmed the District Court’s dismissal of the complaint for failure to state a claim. View "Sports Enterprises Inc v. Goldklang" on Justia Law

The case centers on a dispute between a former employee and his employer regarding an alleged agreement to transfer company stock. The plaintiff, who had worked for the employer for many years and was promoted several times, claimed that he was promised a portion of stock if he remained employed through a specific date. This promise was allegedly memorialized in a 2018 letter from one of the company’s owners. After the plaintiff fulfilled his employment commitment but did not receive the stock, he sued the company and several individuals for promissory estoppel, fraud, and breach of contract.Previously, the District Court of the Fourth Judicial District, Ada County, reviewed the case. The court granted summary judgment to two individual defendants, dismissing them from the suit. The plaintiff’s claims against the remaining defendants proceeded to a bench trial. After trial, the district court found in favor of the company and its owner on all counts, concluding there was no enforceable contract due to the absence of an essential term—price—and insufficient evidence of fraud. The court also awarded attorney fees to both the company and the owner.The Supreme Court of the State of Idaho affirmed the district court’s dismissal of the breach of contract and fraud claims, agreeing that the 2018 letter did not create an enforceable contract and that there was no clear and convincing evidence of fraud. The Supreme Court also affirmed the award of attorney fees to the owner but vacated the fee award to the company, finding the company’s initial fee request procedurally deficient. The case was remanded for entry of an amended judgment consistent with these findings. Attorney fees and costs on appeal were awarded to the owner, but not to the company. View "York v. Kemper Northwest, Inc." on Justia Law

A publicly traded investment banking corporation entered into a stockholders agreement with an entity controlled by its founder in 2014, contemporaneous with its initial public offering. The agreement granted the founder’s entity extensive governance rights, including restrictions on board actions and control over board and committee composition, provided certain ownership and other conditions remained met. These arrangements and the founder’s control were disclosed in the company’s IPO prospectus and subsequent public filings. Nearly nine years later, a Class A stockholder filed suit seeking a declaratory judgment that key provisions of the stockholders agreement were facially invalid under Section 141(a) of the Delaware General Corporation Law, which vests management authority in the board of directors unless otherwise provided in the certificate of incorporation.The Court of Chancery of the State of Delaware denied the company’s time-bar and laches defenses, holding that if the challenged provisions violated Section 141(a), they were void rather than voidable, and therefore not subject to equitable defenses like laches. The court further reasoned that the alleged statutory violation was ongoing, so the claim was not untimely even though it was brought many years after the agreement was executed. The court proceeded to find that several provisions of the stockholders agreement facially violated Section 141(a), declared them void and unenforceable, and later awarded attorney fees to the plaintiff.On appeal, the Supreme Court of the State of Delaware reversed. It held that to the extent the challenged provisions conflicted with Section 141(a), they were voidable—not void—and thus subject to equitable defenses, including laches. The Supreme Court concluded that the plaintiff’s claim accrued when the agreement was executed in 2014, that the delay in bringing suit was unreasonable, and that the claim was barred by laches. The Supreme Court vacated the declaratory judgment and fee award, declining to reach the merits of the facial validity of the agreement’s provisions. View "Moelis & Company v. West Palm Beach Firefighters' Pension Fund" on Justia Law

An individual who founded a Michigan biomedical research company sold a majority stake in 2019 to four defendants but retained a minority interest, later becoming dissatisfied with the company’s management and moving out of state. The new owners aimed to expand the company but withheld information from the plaintiff about their efforts to secure financing, including discussions with Avista Capital Partners, a venture capital firm that ultimately made a large investment. The plaintiff sold his shares in December 2020 for a price based on an annual valuation, prior to Avista’s capital infusion that significantly increased the company’s value. The plaintiff later sued, alleging violations of federal and state securities laws, breach of fiduciary duty under Michigan law, and various fraud and contract claims based on the defendants’ failure to disclose material facts about the company’s pursuit of equity financing and Avista’s interest.The case was first heard in the United States District Court for the Western District of Michigan. That court denied the defendants’ motion to dismiss but, following discovery, granted summary judgment in favor of the defendants on all counts. The court concluded that the omissions were not material under federal securities law and, applying Delaware law and a federal standard, also found no materiality for the breach of fiduciary duty claim under Michigan law.On appeal, the United States Court of Appeals for the Sixth Circuit affirmed the district court’s summary judgment as to the federal securities law claims, the Michigan Uniform Securities Act claim, and the contract-based claims, holding that the omissions were not material under the applicable federal standards. However, the Sixth Circuit reversed the summary judgment for the Michigan common-law fiduciary duty and fraud claims, finding the district court had applied an incorrect legal standard and that genuine disputes of material fact remained. The case was remanded for further proceedings on the fiduciary duty and fraud counts. View "Boyd v. Northern Biomedical Research Inc." on Justia Law