Justia Contracts Opinion Summaries

In 2006, Michael and Connie Jo Zimmerman obtained two separate commercial loans from Eagle National Bank, the predecessor in interest to Customers Bank. The Zimmermans later defaulted on these loans and entered into a forbearance agreement. In addition to the Forbearance Agreement, the Zimmermans each executed a Disclosure for the Confession of Judgment acknowledging that a Confession of Judgment provision in the Forbearance Agreement had been called to their attention, that they understood that the provision permitted Customers Bank to enter judgment against them without notice or opportunity for a hearing, and that the waiver of the right to notice and a hearing was knowing, intelligent, and voluntary. The Forbearance Agreement also provided that all notices, requests, demands, and other communications were to be sent to the Zimmermans at an address in Dover, Delaware with a copy sent to their attorney. Based on the Warrant of Attorney to Confess Judgment in the Forbearance Agreement, Customers Bank filed a complaint seeking the entry of a judgment by confession against the Zimmermans. The Zimmermans opposed the entry of a judgment by confession and a hearing was held where the Zimmermans argued, among other things, that at the time the Forbearance Agreement was executed they were residents of Florida and that Customers Bank had not complied with the requirements for entry of judgment by confession against a non-resident under Rule 58.1. The Zimmermans also argued that they did not knowingly, intelligently, and voluntarily waive their right to notice and a hearing before judgment could be entered against them. After deliberation, the superior court found the Zimmermans’ waiver of their right to notice and a hearing had been knowing, intelligent, and voluntary, and entered judgment by confession against the Zimmermans. The Zimmermans appealed. Finding no reversible error, the Supreme Court affirmed. View "Crothall, et al. v. Zimmerman, et al." on Justia Law

Martin Linscott, Rolf Shasteen and Tony Brock formed the law firm Shasteen, Linscott & Brock (SLB). Linscott drafted a proposed shareholder agreement contemplating that if a shareholder left the firm, he would receive one-third of all fees from existing in-process cases. After Linscott left the firm, Linscott brought suit individually and derivatively on behalf of SLB against Shasteen and Brock seeking to recover one-third of attorney fees recovered from the SLB cases that existed at the time he withdrew as a shareholder. The district court ultimately concluded (1) the agreement was unenforceable under the statute of frauds; (2) the “unfinished business rule” had no application to this case; and (3) therefore, Linscott was not owed any attorney fees. The Supreme Court reversed, holding that the district court erred in (1) determining that the absence of any definition of the term “net fees” prevented the formation of an implied in fact contract; and (2) determining that the statute of frauds rendered any implied contract void. Remanded. View "Linscott v. Shasteen" on Justia Law

The issue this case presented to the Supreme Court stemmed from litigation involving the dissolution of an anesthesiology practice. Plaintiffs Angel Cancel, M.D., Pravin Jain, M.D., Grace Duque-Dizon, M.D., and Monajna Sanjeev, M.D. were shareholders in the now-defunct Central Georgia Anesthesia Services, P.C. (CGAS), which was at one time the exclusive anesthesiology provider at a Macon hospital owned and operated by The Medical Center of Central Georgia, Inc. According to Plaintiffs' complaint, beginning in 2001, Plaintiffs Cancel and Jain discovered what they believed were billing irregularities within the practice, which they brought to the attention of their fellow shareholders and officials at The Medical Center over a period of time between 2001 and 2003. In 2003, The Medical Center announced its intention to restructure its anesthesiology department, after which CGAS shareholders voted to terminate CGAS' contract with The Medical Center. The Medical Center subsequently began recruitment of physicians for its restructured department and eventually selected several former CGAS physicians to join it. None of the four Plaintiffs were selected, and their affiliation with The Medical Center ended. The Medical Center had entered into an exclusive services contract with The Nexus Medical Group, LLC, which was comprised of the former CGAS physicians, and some non-CGAS physicians, who had been selected by The Medical Center for its restructured anesthesiology department. Alleging that the restructuring at The Medical Center and formation of Nexus were effectuated as part of a scheme to expel Plaintiffs from their practice in retaliation for bringing to light the billing issues, Plaintiffs filed suit seeking damages for breach of fiduciary duty, fraud, and other claims. Several years of discovery, and various motions for summary judgment were filed and hearings were held. In 2011, the trial court issued an order granting summary judgment to Defendants on all of Plaintiff Cancel's claims. Cancel appealed this order. Prior to the filing of Cancel's notice of appeal, the trial court issued a second order, denying Nexus' motion for summary judgment as to the remaining Plaintiffs. After the filing of the notice of appeal, the trial court issued the last of its summary judgment orders, denying the motions filed by the CGAS Defendants and The Medical Center Defendants as to the remaining Plaintiffs. Nexus and the CGAS Defendants filed a notice of cross-appeal, challenging the orders denying them summary judgment. A few days later, the Medical Center Defendants filed their own notice of cross-appeal. The Court of Appeals consolidated the appeal and cross-appeals and issued a single opinion in which it affirmed the grant of summary judgment against Cancel; reversed the denial of summary judgment against Nexus; and dismissed the cross-appeals of the CGAS Defendants and the Medical Center Defendants. Dismissal of the cross-appeals was premised on the Court of Appeals' conclusion that it had no jurisdiction to consider them because they sought to challenge orders issued after the filing of Cancel's notice of appeal. Upon review, the Supreme Court concluded that the appellate court had jurisdiction, and erred in holding otherwise. Accordingly, the case was reversed and remanded for further proceedings. View "Sewell v. Cancel" on Justia Law

Defendant Richard Howell appealed a judgment in favor of plaintiff Kneebinding, Inc. on his counterclaims alleging breach of contract, tortious interference with contract, defamation, trademark violation, and misappropriation of trade secrets in this commercial contract and employment dispute. Howell contended on appeal that the trial court erred in concluding that: (1) a contractual release barred the counterclaims arising prior to the date of the release; and (2) the release was supported by sufficient consideration. In 2006, Howell formed Kneebinding, Inc. to develop a ski binding based on a new release mechanism that he had invented. John Springer-Miller provided major financing and received a controlling interest in the corporation. Pursuant to a series of agreements, Springer-Miller became the chairman of the board of directors and Howell was employed as president and chief executive officer. An employment agreement executed by the parties in November 2007 provided that Howell would be an at-will employee with an annual base and, in the event his employment was terminated "other than for Cause," Howell would receive severance payable in equal installments over a period of one year. Less than a year later, the company’s board of directors voted to terminate Howell’s employment without cause. Negotiations between the company and Howell over the terms of his departure resulted in a letter from Springer-Miller on behalf of the company to Howell confirming the terms of the severance arrangement. Pertinent to the appeal was an exhaustive list of claims which Howell agreed to release, "including, but not limited to," employment discrimination under federal and state law and tort and contract claims of every sort, subject to several exceptions, including Howell’s rights under the parties’ Voting Agreement and Investors’ Rights Agreement. In 2009, Kneebinding filed a lawsuit against Howell alleging that he had violated certain non-disparagement and non-compete provisions of their agreements, committed trademark violations and defamation, tortiously interfered with contracts between Kneebinding and its customers and distributors, and misappropriated trade secrets. Howell answered and counterclaimed, alleging counts for breach of contract, defamation, invasion of privacy, misappropriation, unfair competition, tortious interference with business relations, patent violations, and intentional infliction of emotional distress. Kneebinding moved for summary judgment on Howell’s counterclaims, asserting that they were barred by the release set forth in the letter agreement. The trial court granted the motion with respect to all of the counterclaims that arose prior to the execution of the release on and denied the motion as to those claims that arose after the release. Howell asserted that, in granting summary judgment on the counterclaims, the trial court erred in finding a valid release because he never signed the separate release of claims set forth in Attachment B to the letter agreement. Finding no reversible error, the Supreme Court affirmed the trial court. View "Kneebinding, Inc. v. Howell" on Justia Law

The contracts at issue in this case related to Z3 Technology's design and manufacturing of circuit board modules for use in Digital Ally, Inc.'s products. The first contract, called for Z3 to design, manufacture, and deliver to Digital 1,000 modules incorporating Texas Instruments' DM355 computer chip. The second contract involved a larger quantity of modules that would use Texas Instruments' next-generation DM365 chip. Both contracts were signed by Robert Haler, who was then Digital's Executive Vice President of Engineering and Production. The contracts were described as "Production License Agreement[s]," and they expressly provided that the modules would be licensed, not sold, to Digital. The contracts both stated they would "be governed by and interpreted in accordance with the laws of the State of Nebraska, without reference to conflict of laws principles." Upon review of the contracts at issue in this case, the Tenth Circuit reversed and remanded for the district court to award prejudgment interest to Z3 on a damages award and unpaid design fees. All other portions of the district court's judgment were affirmed. View "Digital Ally, et al v. Z3 Technology, et al" on Justia Law

Miller-Davis Company was an "at risk" contractor for the Sherman Lake YMCA's natatorium project. Miller-Davis hired defendant Ahrens Construction, Inc., as a subcontractor to install similar roof systems on three rooms, including the natatorium. After nearly a decade of litigation and alternative dispute resolution proceedings, the indemnification contract underlying the troubled natatorium roof in this case was brought before the Supreme Court. The Court previously held that the six-year period of limitations of MCL 600.5807(8) applied to the parties’ indemnification contract. Upon further review, the Court held that the indemnity clauses in the parties’ subcontract applied here, because the plain language of the indemnification clauses extended to Ahrens’s failure to undertake corrective work as obligated by the subcontract. Furthermore, because the Sherman Lake YMCA made a "claim" upon Miller-Davis which triggered Ahrens’s liability under the indemnity clauses, Ahrens’ failure to indemnify caused the damages Miller-Davis sustained in undertaking the corrective work itself. Finally, the Court held that Miller-Davis’ claim was not barred by the six-year statute of limitations found in MCL 600.5807(8). Rather, Miller-Davis’ breach of contract claim for Ahrens’s failure to indemnify is distinct from its breach of contract claim based on Ahrens’s failure to install the roof according to specifications, and Miller-Davis’s indemnity action necessarily accrued at a later point. The Court reversed that portion of the Court of Appeals’ opinion discussing Miller-Davis’s indemnity claim, and remanded this case to the Circuit Court for entry of judgment in Miller-Davis’s favor and to determine whether Miller-Davis is entitled to attorney’s fees under the relevant indemnification clauses. View "Miller-Davis Co. v. Ahrens Construction, Inc." on Justia Law

Southeast Construction, L.L.C. ("SEC") appealed a Circuit Court order enforcing, a previous judgment entered by that court based on an arbitration award in favor of WAR Construction, Inc ("WAR"). Upon review of the facts of this case, the Supreme Court affirmed in part, reversed in part, and remanded for further proceedings. The Court concluded the circuit court erred in finding in a January 9 order that "all liens and claims against SEC ... from WAR's subcontractors/suppliers that filed a lien on the project ... ha[d] been released and/or adequate security ha[d] been provided." Furthermore, the Court concluded the circuit court erred in finding that WAR had "attempt[ed] to comply with what the Supreme Court ordered the circuit court to implement as of May 13, 2011," and that WAR was entitled to have the interest owed under the arbitrators' award and the May 9 judgment calculated from that date. View "Southeast Construction, L.L.C. v. WAR Construction, Inc. " on Justia Law

This case arose from a contract between Roanoke Healthcare Authority (doing business as Randolph Medical Center) and Batson-Cook Company, a general contractor, to renovate the medical center, located in Roanoke. Batson-Cook received written notice from Roanoke Healthcare that work on the renovation project had been suspended. Batson-Cook notified one of its subcontractors, Hardy, of the suspension and stated that "[t]he contract has been suspended by [Roanoke Healthcare] through no fault of Batson-Cook ... or its subcontractors. [Roanoke Healthcare] is currently out of funding and has subsequently closed the facility while seeking a buyer." Liberty Mutual, the project's insurer, alleged in its answer that Roanoke Healthcare failed to pay Batson-Cook $241,940.51 for work performed pursuant to the contract. Batson-Cook sent Hardy a change order the change order deducted from the subcontract the $147,000 in equipment and materials another subcontractor Hardy hired, Johnson Controls, Inc. (JCI), had furnished for the renovation project and for which it has not received payment. JCI notified Liberty Mutual, Roanoke Healthcare, Batson-Cook, and Hardy by certified letters of its claim on a payment bond. The letters identified Batson-Cook as the general contractor and Hardy as the debtor. Liberty Mutual denied the claim. JCI sued Liberty Mutual, alleging JCI was entitled to payment on the payment bond Liberty Mutual had issued to Batson-Cook. Upon review, the Supreme Court concluded JCI was a proper claimant on the payment bond. Therefore, the circuit court erred in entering a summary judgment in favor of Liberty Mutual and denying JCI's summary judgment motion. View "Johnson Controls, Inc. v. Liberty Mutual Insurance Company " on Justia Law

ATP Tour, Inc. (ATP) operates a global professional men’s tennis tour. Its members include professional men’s tennis players and entities that own and operate professional men’s tennis tournaments. Two of those entities are Deutscher Tennis Bund (DTB) and Qatar Tennis Federation. ATP is governed by a seven-member board of directors, of which three are elected by the tournament owners, three are elected by the player members, and the seventh directorship is held by ATP’s chairman and president. In 2007, ATP’s board voted to change the Tour schedule and format. Under the board’s “Brave New World” plan, the Hamburg tournament, which the Federations owned and operated, was downgraded from the highest tier of tournaments to the second highest tier, and was moved from the spring season to the summer season. Displeased by these changes, the Federations sued ATP and six of its board members in the United States District Court for the District of Delaware, alleging both federal antitrust claims and Delaware fiduciary duty claims. After a ten-day jury trial, the District Court granted ATP’s and the director defendants’ motion for judgment as a matter of law on all of the fiduciary duty claims, and also on the antitrust claims brought against the director defendants. The jury then found in favor of ATP on the remaining antitrust claims. Four questions of Delaware law were certified to the Supreme Court from the U.S. District Court for the District of Delaware when the Federations appealed. The questions centered on the validity of a fee-shifting provision in a Delaware non-stock corporation’s bylaws. The provision, which the directors adopted pursuant to their charter-delegated power to unilaterally amend the bylaws, shifts attorneys’ fees and costs to unsuccessful plaintiffs in intra-corporate litigation. The federal court found that the bylaw provision’s validity was an open question under Delaware law and asked under what circumstances such a provision was valid and enforceable. Although the Delaware Supreme Court could not directly address the bylaw at issue, it held that fee-shifting provisions in a non-stock corporation’s bylaws could be valid and enforceable under Delaware law. In addition, bylaws normally apply to all members of a non-stock corporation regardless of whether the bylaw was adopted before or after the member in question became a member. View "ATP Tour, Inc., et al. v. Deutscher Tennis Bund, et al." on Justia Law

Tharaldson Ethanol Plant I, LLC and Tharaldson Financial Group, Inc. appealed a judgment and amended judgment ordering Tharaldson Financial to pay VEI Global, Inc., $1,150,000 plus interest, and an order granting certification under N.D.R.Civ.P. 54(b). VEI provided design and construction management services for an ethanol plant owned and operated by Tharaldson Ethanol. In 2009, Tharaldson Ethanol and VEI reached a settlement on disputed fees, agreeing Tharaldson Ethanol would pay VEI $1,350,000 for all work VEI performed through February 28, 2009. The agreement also provided Tharaldson Financial would enter into a $1,350,000 promissory note payable to VEI, and a copy of the note was attached and incorporated into the agreement. Tharaldson Ethanol and Tharaldson Financial sued VEI, claiming VEI negligently designed and constructed the ethanol plant. The complaint sought damages for breach of warranty, breach of contract, and negligence claims; and sought a declaratory judgment that Tharaldson Ethanol and Tharaldson Financial did not owe VEI anything under the settlement agreement or promissory note because of damages VEI caused by its breaches of contract and warranty and other wrongful acts. VEI answered and counterclaimed, including a breach of contract claim against Tharaldson Financial for failing to make payments on the promissory note. The district court ultimately granted VEI's motion for partial summary judgment, finding there were no genuine issues of material fact and VEI was entitled to judgment as a matter of law, and ordered VEI was entitled to judgment against Tharaldson Financial in the amount of $1,150,000, with interest. The Supreme Court dismissed Tharaldson Ethanol and Tharaldson Financial's appeal, holding that "[c]ertification under N.D.R.Civ.P. 54(b) must be reserved for 'the unusual case in which the costs and risks of multiplying the number of proceedings and of overcrowding the appellate docket are outbalanced by pressing needs of the litigants for an early and separate judgment as to some claims or parties.'" The Court concluded this case did not present "out-of-the-ordinary circumstances" or the "infrequent harsh case" warranting its immediate review. Consequently, the Court did not reach the merits of Tharaldson Ethanol and Tharaldson Financial's appeal. View "Tharaldson Ethanol Plant I, LLC v. VEI Global, Inc." on Justia Law