Justia Contracts Opinion Summaries

After Jet Midwest International Co., Ltd. made a $6.5 million loan to Jet Midwest Group, LLC (JMG) for the purchase of a Boeing 737-700, JMG defaulted on repayment. Jet Midwest sued for breach of contract, and when it could not collect on its judgment due to JMG’s lack of funds, Jet Midwest brought claims under the Missouri Fraudulent Transfer Act against several individuals and entities (the Ohadi/Woolley defendants), alleging the improper transfer of assets to avoid payment. Following a bench trial, Jet Midwest prevailed on its claims, and the district court awarded money damages, interest, and set a schedule for further motions on attorney’s fees and costs.Previously, the United States District Court for the Western District of Missouri awarded Jet Midwest over $6.5 million in attorney’s fees and costs. The United States Court of Appeals for the Eighth Circuit vacated this award, finding the district court had not properly performed a lodestar calculation for attorney’s fees and had not analyzed which costs were recoverable under federal law. On remand, Jet Midwest reduced its fee request but sought a multiplier; the district court ultimately awarded $5.8 million in attorney’s fees, granted prejudgment interest at 14 percent, and included expert witness fees and other litigation costs. Both sides appealed aspects of this award.The United States Court of Appeals for the Eighth Circuit held that the district court properly calculated and awarded $5.8 million in attorney’s fees but erred in awarding expert witness fees as part of attorney’s fees, as Jet Midwest failed to provide sufficient evidence that such fees were recoverable under the relevant standards. The Eighth Circuit also held that the district court erred in applying a 14 percent prejudgment interest rate and ordered that Missouri’s statutory rate of nine percent should apply. Additionally, the court clarified that, after August 6, 2020, the federal postjudgment interest rate under 28 U.S.C. § 1961(a) governs. The case was affirmed in part, reversed in part, and remanded for further proceedings consistent with these rulings. View "Jet Midwest International Co., Ltd v. Ohadi" on Justia Law

Kendell Seafood Imports, Inc. and Mark Foods, LLC are both fish importers. Kendell alleged that Mark Foods tortiously interfered with its agreement with Chilean Sea Bass, Inc. (CSB), a fish distributor. According to Kendell, it had arranged with CSB to purchase the distributor’s entire catch for several years, including 2021, and that CSB agreed to roll over an outstanding 2020 balance into the 2021 price. Kendell further claimed that Mark Foods was aware of this agreement and attempted to solicit business from CSB during the same period, thereby interfering with Kendell’s relationship and causing it harm.After Kendell initially sued Mark Foods for tortious interference in the United States District Court for the District of Rhode Island, Mark Foods moved to dismiss the complaint. In response, Kendell filed an amended complaint with similar facts but with additional details about the agreement with CSB. The district court treated the amended complaint as operative and, after considering substantive arguments from both parties, granted Mark Foods’ motion to dismiss with prejudice. The district court found that Kendell’s allegations did not plausibly support three essential elements of tortious interference: the defendant’s knowledge of the contract, intentional interference, and resulting damages.The United States Court of Appeals for the First Circuit reviewed the case on appeal. It held that the district court properly applied the pending motion to dismiss to the amended complaint, as the amendments did not affect the relevant arguments. Applying Rhode Island law, the First Circuit concluded that Kendell had not sufficiently pleaded that Mark Foods knew about the specific agreement with CSB. Because this element was not plausibly alleged, the court affirmed the district court’s order dismissing the case with prejudice. View "Kendell Seafood Imports, Inc. v. Mark Foods, LLC" on Justia Law

Minority shareholders of an Argentine oil and gas company, previously privatized in 1993, became involved in litigation after the Argentine government expropriated a majority stake in the company in 2012. The government’s acquisition of shares was conducted without making a public tender offer to minority shareholders, a process that was explicitly required by the company’s bylaws to protect such shareholders in the event of a takeover. The plaintiffs, consisting of Spanish entities and a New York hedge fund, had acquired significant stakes in the company, and after the expropriation, they claimed that they suffered substantial financial losses due to the government’s failure to comply with the tender offer requirement.The plaintiffs sued in the United States District Court for the Southern District of New York, asserting breach of contract and promissory estoppel claims under Argentine law against both the Argentine Republic and the company. After extensive litigation, the district court found in favor of the plaintiffs on their breach of contract claims against the Argentine Republic, awarding over $16 billion in damages, but granted summary judgment to the company, finding it had no obligation to enforce the tender offer provision. The court also dismissed the promissory estoppel claims.On appeal, the United States Court of Appeals for the Second Circuit held that the plaintiffs' breach of contract damages claims against the Argentine Republic and the company were not cognizable under Argentine law, reasoning that the bylaws did not create enforceable bilateral obligations between shareholders and that Argentine public law governing expropriation precluded such claims. The court affirmed the dismissal of the promissory estoppel claims and judgment in favor of the company, but reversed the judgment against the Argentine Republic, remanding for further proceedings consistent with its opinion. View "Petersen Energía v. Argentine Republic" on Justia Law

The plaintiffs, who were long-time friends of the defendants, invested significant sums in a biopharmaceutical company controlled by the defendants. The defendants did not disclose that the company was in serious financial distress, under a substantial obligation to a lender, and prohibited from incurring additional debt. The investment was structured through promissory notes, which included false warranties regarding the company’s financial status and claimed the formation of a new entity that never materialized. Instead of funding a new venture, the defendants used the investment to pay off existing company debt. Less than two years later, the company declared bankruptcy, making the notes essentially worthless.The plaintiffs brought claims under federal and Massachusetts securities laws, the Massachusetts consumer protection statute, and for common law fraud and negligent misrepresentation in the United States District Court for the District of Massachusetts. The defendants moved to dismiss the action, relying on a forum selection clause in the promissory notes requiring litigation in Delaware courts. The district court granted the motion and dismissed the case without prejudice, concluding that the clause applied to the plaintiffs’ claims.On appeal, the United States Court of Appeals for the First Circuit reviewed the dismissal de novo. The plaintiffs argued that their claims did not “arise out of” the notes and that the forum selection clause was unenforceable as contrary to Massachusetts public policy. The First Circuit rejected both arguments, holding that the claims arose from the notes and that the plaintiffs did not meet the heavy burden required to invalidate the clause on public policy grounds. The First Circuit affirmed the district court’s dismissal without prejudice, leaving the plaintiffs free to pursue their claims in the contractually designated Delaware courts. View "Manzo v. Wohlstadter" on Justia Law

Gregory Parzych served as president of ZipBy USA, LLC, a parking technology company, after previously founding and selling a similar company, TCS. While employed by ZipBy, Parzych entered into several agreements restricting conflicts of interest and disclosure of confidential information. In 2020, Parzych learned that TCS might be for sale. He advised ZipBy’s owner against pursuing the acquisition, then secretly attempted to purchase TCS for himself via a shell company, using financial information he had obtained as a ZipBy executive. ZipBy discovered his actions, terminated his employment, and, along with affiliates, sued Parzych for breach of fiduciary duty, breach of contract, misappropriation of trade secrets, trademark infringement, and false designation.After a jury trial in the United States District Court for the District of Massachusetts, the jury found for ZipBy on all claims, awarding compensatory and exemplary damages. The district court later granted judgment as a matter of law for Parzych on the trade secret claims, striking the exemplary damages but upholding the other verdicts and damages. The court also entered a permanent injunction barring Parzych from acquiring TCS and awarded ZipBy a portion of its attorneys’ fees. Parzych appealed, contesting evidentiary rulings, denial of a trial continuance, and the fee award, while ZipBy cross-appealed the judgment on the trade secret claims.The United States Court of Appeals for the First Circuit affirmed the district court’s judgment. It held that the district court did not abuse its discretion in admitting ZipBy’s expert lost-profits testimony, excluding late-disclosed evidence, or denying a trial continuance due to counsel’s COVID-19 infection. The appellate court agreed with the district court’s judgment as a matter of law against ZipBy’s trade secret claims, finding insufficient evidence that Parzych’s actions constituted trade secret misappropriation. Finally, the fee award was affirmed as a reasonable enforcement of the IP Agreement’s fee-shifting provision. View "ZipBy USA LLC v. Parzych" on Justia Law

A former high-level employee left her position at a company after receiving incentive equity agreements that included non-compete, non-solicitation, and confidentiality provisions. She subsequently joined a competitor. The company alleged that she breached those provisions by working for the competitor and that, in the short time since her move, at least five important clients had also moved to the competitor, an unusual loss rate for the business. The employee’s role at her former employer was not confined to a single region, and she was involved in high-level strategic decisions affecting company operations nationwide. The restrictive covenants at issue included an 18-month, nationwide non-compete and were supported by incentive units that would vest over time or upon sale of the company.After the company filed suit, the Court of Chancery of the State of Delaware denied a temporary restraining order but expedited proceedings. The defendants moved to dismiss. The company amended its complaint with more detailed allegations. The Court of Chancery granted the motion to dismiss, holding that the non-compete was unenforceable due to its breadth and the minimal value of the consideration provided, and that the allegations of breach of the non-solicitation and confidentiality provisions were conclusory. It also dismissed related tortious interference claims.On appeal, the Supreme Court of the State of Delaware reviewed the dismissal de novo. The Supreme Court held that the Court of Chancery improperly drew inferences against the employer at the pleading stage and failed to credit factual allegations supporting the claims. The Supreme Court found it was reasonably conceivable that the non-compete, non-solicitation, and confidentiality provisions could be enforceable, and that the complaint sufficiently alleged breaches. The Supreme Court reversed and remanded for further proceedings, limiting its holding to the adequacy of the pleadings and expressing no view on ultimate enforceability. View "Payscale Inc. v. Norman" on Justia Law

A company providing internet and phone services on the Delmarva Peninsula began experiencing significant network interference, which it attributed to a larger telecommunications provider. The company alleged that the interference resulted from the provider operating outside its assigned frequency band, transmitting at excessive power levels, and deploying 5G technology in a manner that impeded its established 4G service. Additionally, the company claimed that the larger provider undermined its business relationships with university partners from whom it leased necessary radio frequencies, by interfering with those relationships and attempting to acquire the relevant FCC licenses.After informal attempts to resolve the interference, the company filed a complaint with the Federal Communications Commission (FCC), requesting relief including monetary compensation for necessary network upgrades. The FCC dismissed the complaint, and the company’s request for reconsideration remained pending. Subsequently, the company filed a lawsuit in the United States District Court for the District of Maryland, asserting claims under the Communications Act and Maryland state law. The district court dismissed all claims, concluding that the federal claim was either unavailable or barred, the state-law claims were preempted, and the remaining state-law tort claim failed under the applicable legal standard.On appeal, the United States Court of Appeals for the Fourth Circuit affirmed the district court’s dismissal. The court held that the plaintiff’s claim under the Communications Act was barred by the Act’s election-of-remedies provision, as the company had already sought relief from the FCC on the same underlying issues. The court further held that the Communications Act expressly preempted the state-law network interference claims. Finally, the court found that the company had forfeited its only appellate argument regarding the dismissal of its business tort claim, as it had failed to preserve that argument in the district court. Thus, the judgment was affirmed. View "Bloosurf, LLC v. T-Mobile USA, Inc." on Justia Law

Corelle, a company that sold Instapot multifunction cookers, entered into a 2016 master supply agreement (MSA) with Midea, the manufacturer. Under this arrangement, individual purchase orders (POs) were used for each transaction, detailing specific terms such as price and quantity. Each PO typically included Corelle’s own terms, including indemnity provisions. In 2023, Corelle filed for Chapter 11 bankruptcy and, as part of its reorganization plan, sold its appliances business and assigned the MSA to the buyer. However, Corelle sought to retain its indemnification rights for products purchased under completed POs made before the assignment.The United States Bankruptcy Court for the Southern District of Texas denied Midea’s objection to this arrangement, finding that the POs were severable contracts distinct from the MSA. This meant the indemnification rights related to completed POs remained with Corelle. Midea appealed, contending that the MSA and all related POs formed a single, indivisible contract that should have been assigned in its entirety. The United States District Court for the Southern District of Texas affirmed the bankruptcy court’s decision, emphasizing that the structure of the MSA and the parties’ course of dealing supported the divisibility of the POs from the MSA.On further appeal, the United States Court of Appeals for the Fifth Circuit reviewed the standards applied by the lower courts, the interpretation of the contracts, and the application of 11 U.S.C. § 365(f). The appellate court held that the bankruptcy court did not err in finding the POs were divisible from the MSA, that Corelle’s retention of indemnification rights did not violate bankruptcy law, and that the lower courts applied the correct standards of review. Accordingly, the Fifth Circuit affirmed the district court’s judgment. View "GuangDong Midea v. Unsecured Creditors" on Justia Law

A dispute arose between an investment banker and the firm where he was employed regarding his status and compensation. Initially, the banker joined the firm under an employment offer letter that set out specific compensation terms. Over time, both sides attempted to negotiate changes to this arrangement, exchanging draft agreements and addenda. They met to discuss these terms but left with differing understandings. The banker believed an oral partnership agreement had been reached, while the firm contended only his compensation as an employee was modified. When the banker later made a demand for access to certain records, the firm denied his request, asserting he was not a partner.The case was first addressed by the Court of Chancery of the State of Delaware, which found after trial that no oral partnership agreement had been formed, meaning the banker was not a partner entitled to records access under Delaware law. The court also noted that questions about the banker’s compensation as an employee would be determined in a separate, subsequent action. Following this, the banker filed counterclaims in the ongoing plenary action seeking relief based on his employment letter, but the Court of Chancery dismissed most of these counterclaims. It held that they were barred by collateral estoppel because they relied on facts the court had found against the banker in the earlier proceeding.On appeal, the Supreme Court of the State of Delaware reviewed whether collateral estoppel properly barred the banker’s counterclaims about his compensation. The Supreme Court concluded that the earlier factual findings about the banker’s compensation were not essential to the judgment that he was not a partner. The Supreme Court reversed the Court of Chancery’s dismissal of the banker’s counterclaims relating to his compensation as an employee and remanded the case for further proceedings. View "Handler v. Centerview Partners Holdings LP" on Justia Law

A venture capitalist and two scientists, who had previously collaborated on successful biotechnology companies, engaged in discussions and took steps toward forming a new enterprise to develop and commercialize carbon-hydrogen bond activation technology. As these discussions progressed, disagreements arose regarding the scale of initial funding needed. The scientists believed more substantial investment was required than the amount offered by the venture capitalist. Ultimately, the scientists pursued alternative sources of funding, and the parties’ collaboration did not materialize into a finalized business.After this breakdown, the venture capitalist and his company filed a lawsuit in the Superior Court of San Diego County against the two scientists, alleging breach of oral and implied joint venture agreements, breach of fiduciary duty, promissory estoppel, and quantum meruit. The scientists moved for summary judgment. The Superior Court granted summary judgment in favor of the scientists on all claims. The court found that any oral or implied joint venture agreement was barred by the statute of frauds, there was no enforceable agreement, and the plaintiffs had not expected compensation directly from the defendants.On appeal, the California Court of Appeal, Fourth Appellate District, Division One, reviewed the case de novo. The appellate court affirmed the trial court’s judgment, holding that the statute of frauds applies to oral or implied joint venture agreements that, by their terms, cannot be performed within one year. The court found no genuine dispute that developing the technology would necessarily take more than one year, rendering the alleged joint venture unenforceable. The breach of fiduciary duty claim failed because it depended on a valid joint venture. The promissory estoppel and quantum meruit claims failed due to the absence of clear and unambiguous promises and because compensation was expected from the venture, not the defendants directly. The judgment was affirmed. View "Clarke v. Yu" on Justia Law