Justia Contracts Opinion Summaries

In this case between Norfolk Southern Railway Company and Zayo Group, LLC, the United States Court of Appeals for the Fourth Circuit affirmed the district court's judgment on the pleadings. The dispute arose from a lease agreement between the parties, in which Zayo leased a utility duct from Norfolk Southern. When the time came to renew the lease, the parties could not agree on the renewal rent and referred the dispute to three appraisers, as specified in the lease. The appraisers decided the rent by a two-to-one vote, but Zayo refused to pay the rent, arguing that the decision was not unanimous. Norfolk Southern sued for breach of the lease, and the district court entered judgment for Norfolk Southern, ordering Zayo to pay the rental amount determined by the appraisers. Zayo appealed, contending that the appraisers could determine the rent only by unanimous vote. The Fourth Circuit held that the lease's language was unambiguous and did not impose a unanimity requirement on the appraisers. Therefore, it found that Zayo breached the lease by refusing to pay the full amount determined by the appraisers. The court affirmed the district court's judgment, requiring Zayo to pay the rental amount determined by the appraisers. View "Norfolk Southern Railway Company v. Zayo Group, LLC" on Justia Law

In the United States Court of Appeals for the Eleventh Circuit, a group of Florida restaurants brought a lawsuit against Sysco Jacksonville, Inc., a food distribution company. The restaurants, which include A1A Burrito Works, Inc., A1A Burrito Works Taco Shop 2, Inc., and Juniper Beach Enterprises, Inc., alleged that Sysco violated the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) and breached their contracts when Sysco regularly delivered underweight boxes of poultry. The district court dismissed the restaurants' claims, ruling that the Poultry Products Inspection Act (PPIA) preempted their state law claims because their claims sought to impose on Sysco labeling requirements that are "in addition to, or different than" the requirements prescribed by federal law.The Eleventh Circuit affirmed in part, reversed in part, and remanded the case for further proceedings. The court agreed with the district court that the restaurants failed to show that their FDUTPA claim was not preempted by the PPIA. However, the court disagreed with the district court's dismissal of the restaurants' breach of contract claim. The court found that this claim, which argued that the restaurants did not receive the amount of poultry they paid for in accordance with their contracts with Sysco, was not preempted because it merely sought to enforce the parties' private agreements regarding the cost and weight of poultry packages and did not amount to a state imposing a labeling requirement inconsistent with federal regulations. View "A1A Burrito Works, Inc., et al v. Sysco Jacksonville, Inc." on Justia Law

In the case brought before the Court of Chancery of the State of Delaware, Texas Pacific Land Corporation (the "Company") sued Horizon Kinetics LLC, Horizon Kinetics Asset Management LLC, SoftVest Advisors, LLC, and SoftVest, L.P. (collectively, the "Investor Group") over a dispute related to a stockholder vote. The Company alleged that the Investor Group breached a contractual obligation under a stockholders agreement to vote their shares in accordance with the board of directors' recommendation. The recommendation was for a charter amendment to increase the Company’s authorized shares. The Investor Group voted against the amendment, arguing they were not bound to follow the board’s recommendation due to exceptions in the agreement. They also claimed the doctrine of unclean hands barred the Company from enforcing the voting commitment, arguing the Company had disclosed inaccurate information when soliciting stockholder approval. The court found the Investor Group breached the voting commitment and their shares should be deemed to have voted in favor of the amendment. Consequently, the amendment was declared to have been approved. The court dismissed the Investor Group's unclean hands argument, citing their own misconduct in violating the agreement. View "Texas Pacific Land Corporation v. Horizon Kinetics LLC, et al." on Justia Law

In this case, Eli Global, LLC, and Greg Lindberg appealed a summary judgment entered against them by the Mobile Circuit Court in Alabama. The dispute involved Eli Global's alleged failure to fulfill its obligations on a promissory note and Lindberg's alleged failure to fulfill his obligations on a guaranty of that promissory note. The promissory note and guaranty were part of an agreement to purchase a healthcare company. Eli Global and Lindberg also challenged the circuit court's award of attorney fees and expenses to the plaintiffs.The Supreme Court of Alabama affirmed the lower court's judgment finding Eli Global and Lindberg liable based on the promissory note and the guaranty, and its award of the principal amount plus interest due based on that liability. The court found that the promissory note was not a negotiable instrument under New York law, and even if it was, the plaintiffs were not required to prove who possessed the promissory note because Eli Global and Lindberg waived that argument in the lower court. In addition, the court found that one of the plaintiffs did not release his claims against Lindberg that were based on the guaranty.However, the court remanded the case back to the lower court to provide a more detailed explanation for the award of attorney fees and expenses. The court found that the lower court's order did not provide sufficient explanation on how it determined the award of attorney fees and expenses. The lower court was instructed to return its explanation to the Supreme Court within 42 days. View "Eli Global, LLC v. Cieutat" on Justia Law

Plaintiff Team Industrial Services, Inc. (Team) suffered a $222 million judgment against it in a wrongful-death lawsuit arising out of a steam-turbine failure in June 2018 at a Westar Energy, Inc. (Westar) power plant. Team sought liability coverage from Westar, Zurich American Insurance Company (Zurich), and two other insurance companies, arguing that it was, or should have been, provided protection by Westar’s Owner-Controlled Insurance Program (OCIP) through insurance policies issued by Zurich and the two other insurers. Team’s claims derived from the fact that its liability for the failure at the Westar power plant arose from work that had previously been performed by Furmanite America, Inc. (Furmanite), which had coverage under Westar’s OCIP. The district court granted summary judgment to Defendants, and Team appealed. Not persuaded by Team's arguments for reversal, the Tenth Circuit affirmed the district court. View "Team Industrial Services v. Zurich American Insurance Company, et al." on Justia Law

Ann Hon and Herman Yee worked together in Hon’s company, but they sued each other when their relationship ended. Their litigation turned up a lien on one of their homes—a lien in favor of a long-suspended corporation called Panrox International (USA), Inc. A third-party attorney heard about the lien, revived Panrox, and entered the litigation between Hon and Yee, claiming Hon and Yee owed Panrox $141,000 from a 1995 debt. Hon and Yee said their debt to Panrox was resolved in 1999. In 2022, the trial court ruled for Hon and Yee. Panrox appealed.   The Second Appellate District affirmed. The court explained that Panrox’s first claim of error is that the trial court erroneously shifted the burden of proof to Panrox by ordering it to file a motion demonstrating the validity of its Los Angeles deed of trust. Panrox forfeited this objection by failing to raise it in the trial court. Had Panrox made this objection, the trial court could have addressed the issue and, if need be, rectified the problem on the spot. It is detrimental for parties to store up secret objections they deploy only if they lose and, after much cost and delay, appeal. Similarly, Panrox, in a footnote, complained the trial court never afforded it the opportunity “to present a summary judgment motion or some other procedural vehicle that would have properly shifted the burden of proof to Respondents Hon and Yee after Panrox made its initial showing.” The court explained that Panrox forfeited this argument by failing to present it to the trial court. View "Yee v. Panrox Internat. (USA), Inc." on Justia Law

The Court of Chancery denied Sunder Pros LLC's application for a preliminary injunction against Tyler Jackson because Sunder could not establish a reasonable likelihood of success on the merits and further denied Sunder's application for a preliminary injunction against the remaining defendants for lack of an underlying breach of contract.Jackson, the former head of Sunder's sales who lived in Texas, joined Solar Pros, LLC and resigned from Sunder. Sunder, whose headquarters were in Utah but was a Delaware LLC, brought this suit arguing that Jackson was bound by restrictive covenants (the covenants). The Court of Chancery denied relief, holding (1) the covenants, which were facially unreasonable in their own right, were part of an agreement that could not be enforced against Jackson because the agreement originated in an egregious breach of fiduciary duty; and (2) as to the remaining Defendants, there was no underlying breach of contract, and Defendants did not engage in conduct that could support a claim for tortiously interfering with the covenants as required by Utah law. View "Sunder Energy, LLC v. Jackson" on Justia Law

Gary Sepanossian, dba G.S. Construction (Sepanossian), individually and as class representative, filed a class action against National Ready Mix Concrete Co., Inc. (Ready Mix), alleging Ready Mix charged its customers an “energy” fee and an “environmental” fee “wholly untethered to any actual cost for ‘energy’ or ‘environmental’ issues” that Ready Mix instead “recognize[s] as profit.” The complaint alleges causes of action for (1) violation of California’s Unfair Competition Law (UCL) under the fraudulent and unfair business practices prongs; (2) breach of contract; and (3) “unjust enrichment.” After Ready Mix answered the complaint, Sepanossian filed a motion for class certification. The trial court granted class certification but expressed doubts about Sepanossian’s legal claims and invited the parties to present a motion for judgment on the pleadings to address the merits before class notice. The parties agreed to do so, and Ready Mix subsequently filed a motion for judgment on the pleadings, which the trial court granted on the UCL and unjust enrichment causes of action.   The Second Appellate District reversed because Sepanossian alleged facts sufficient to state a cause of action under the UCL but affirmed dismissal of the unjust enrichment cause of action. The court explained that here, Ready Mix customers cannot buy concrete from it while avoiding being charged energy and environmental fees. On a motion for judgment on the pleadings, the court wrote that it must accept as true Sepanossian’s allegation the fees were unavoidable for customers who wished to purchase concrete from Ready Mix. View "Sepanossian v. Nat. Ready Mix Co." on Justia Law

Plaintiff filed a putative shareholder class action complaint in New York State Supreme Court, alleging Maryland state law claims on behalf of himself and all similarly situated preferred stockholders of Cedar Realty Trust, Inc. (“Cedar”), a New York-based corporation incorporated in Maryland, following its August 2022 merger with Wheeler Real Estate Investment Trusts, Inc. (“Wheeler”) (collectively, “Defendants”). The complaint alleged Cedar and its leadership breached fiduciary duties owed to, and a contract with, shareholders such as Plaintiff and that Wheeler both aided and abetted the breach and tortiously interfered with the relevant contract. The Defendants collectively removed the case, invoking federal jurisdiction under the Class Action Fairness Act (CAFA), but the district court remanded the case to state court after Krasner argued that an exception to CAFA jurisdiction applied to his claims.   The Second Circuit dismissed Defendants’ appeal and concluded that the “securities-related” exception applies. The court explained that here, the securities created a relationship between Cedar and Plaintiff that gave rise to fiduciary duties on the part of Cedar and the potential for additional claims against those parties who aid and abet Cedar’s breach of those duties. Thus, the aiding and abetting claim—and by the same logic, the tortious interference with contract claim—“seek enforcement of a right that arises from an appropriate instrument.” As such, the securities-related exception applies, and the district court properly remanded the case to state court. View "Krasner v. Cedar Realty Trust, Inc." on Justia Law

Monarch Casino & Resort, Inc. appealed a district court’s grant of Affiliated FM Insurance Company’s (“AFM”) motion for partial judgment on the pleadings, which denied Monarch coverage under AFM’s all-risk policy provision, business-interruption provision, and eight other additional-coverage provisions. Monarch also moved the Tenth Circuit Court of Appeals to certify a question of state law or issue a stay. Monarch presented AFM with claims incurred through business interruption losses from COVID-19 and government orders directing Monarch to close its casinos. AFM denied certain coverage on the ground that COVID-19 did not cause physical loss of or damage to property. Monarch sued for breach of contract, bad faith breach of insurance contract, and violations of state law. The Tenth Circuit denied Monarch’s motions to certify a question of state law and issue a stay. And it affirmed the district court’s judgment: (1) AFM’s policy had a Contamination Exclusion provision that excludes all-risk coverage and business-interruption coverage from the COVID-19 virus; and (2) Monarch could not obtain coverage for physical loss or damage caused by COVID-19 under AFM’s all-risk provision, business-interruption provision, or eight additional-coverage provisions because the virus could not cause physical loss or damage and no other policy provisions distinguished this case. Accordingly, Monarch could not obtain the coverage that the district court denied. View "Monarch Casino & Resort v. Affiliated FM Insurance Company" on Justia Law