Justia Contracts Opinion Summaries

Gaia and State Street were bound by a mezzanine loan agreement with Lehman Brothers to help finance the construction of a residential building in Manhattan. At issue on appeal was whether equitable estoppel, principles of good faith and fair dealing, or general principles of equity prevented State Street from keeping the Accrued Interest. The court concluded that Gaia could not rely on equitable estoppel to recover the Accrued Interest because Gaia did not demonstrate an omission or misrepresentation by State Street on which Gaia reasonably relied to its substantial detriment; State Street was entitled to act in its own self-interest and require payment of the Accrued Interest, even if such action lessened Gaia's anticipated profits, because State Street acted consistently with the contract and did not violate a presumed obligation or Gaia's reasonable expectations; State Street's actions were not taken in bad faith; State Street did not unlawfully demand payment of the Accrued Interest and it was not liable for the Doral damages; and the Professional Fee provision applied in this action and State Street was entitled to Professional Fees incurred as a result of this litigation. Accordingly, the court reversed and remanded. View "Gaia House Mezz LLC v. State St. Bank & Trust Co." on Justia Law

In 2007, a shareholder of Calais Company, Inc., Deborah Kyzer Ivy, filed a complaint against Calais seeking involuntary corporate dissolution. In May 2009, Ivy and Calais reached a settlement agreement in which Calais agreed to purchase Ivy's shares at "fair value" as determined by a three-member panel of appraisers. The appraisers disagreed over the fair value of the company. Calais sought to enforce the Agreement in superior court, arguing the two majority appraisers had failed to comply with the appraisal procedure mandated by the Agreement and the Agreement's definition of "fair value." The superior court ultimately declined to rule on the issue, concluding that interpreting the term "fair value" was beyond its scope of authority under the terms of the Agreement. Consequently, the court ordered Calais to purchase Ivy's shares based on the majority appraisers' valuation. Calais appealed. Upon review of the matter, the Supreme Court reversed the superior court's final order and remanded for the court to remand to the appraisers with explicit instructions to calculate the "fair value" as defined by AS 10.06.630(a), as required by the Agreement. View "Calais Company, Inc. v. Kyzer Ivy" on Justia Law

Riverfront, LLC, petitioned the Supreme Court for a writ of mandamus to direct the Etowah Circuit Court to vacate its order denying Riverfront's motion to enforce a forum-selection clause in a lease agreement between it and Fish Market Restaurants, Inc., and George Sarris (collectively, "Fish Market") and to direct the circuit court either to dismiss the action filed against it by Fish Market or to transfer the action to the Tuscaloosa Circuit Court. Upon review of the clauses at issue and the Etowah court record, the Supreme Court concluded that Riverfront established it had a clear legal right to the enforcement of the forum-selection clause in the lease because Fish Market failed to establish that enforcement of the clause would be unfair or unreasonable. The circuit court exceeded the scope of its discretion in denying Riverfront's motion to dismiss or, in the alternative, to transfer the case to the Tuscaloosa Circuit Court. Therefore, the Supreme Court directed the Etowah court to either dismiss this case without prejudice, or to transfer to the Tuscaloosa Circuit Court, the forum agreed to in the lease. View "Fish Market Restaurants, Inc. v. Riverfront, LLC" on Justia Law

Carlyle Investment Management L.L.C. (CIM) and TC Group, L.L.C. (collectively, Plaintiffs) filed suit against defendant-appellant National Industries Group (NIG). Plaintiffs sought a declaratory judgment to enforce the terms of a forum selection clause contained in a Subscription Agreement between Carlyle Capital Corporation, Ltd. (CCC) and NIG. Specifically, they sought an injunction against NIG from proceeding with litigation that it filed against CCC in Kuwait in December, 2009. The Court of Chancery entered a Default Judgment against NIG. As part of the Default Judgment, the Court of Chancery issued an anti-suit injunction. NIG filed a Motion to Vacate the Default Judgment and to Dismiss the Complaint approximately one year later. The Court of Chancery denied the motion. NIG raised several related issues on appeal to the Supreme Court: (1) that the Court of Chancery erred in refusing to vacate the Default Judgment because the Default Judgment was void due to lack of subject matter and personal jurisdiction; (2) that the Court of Chancery's limited subject matter jurisdiction did not encompass actions for which a remedy at law is available or from which no irreparable harm could result; and (3) that the Court of Chancery erred in refusing to vacate the Default Judgment because, in so doing, the court effectively denied NIG the opportunity to litigate its claims against Carlyle. Upon review, the Supreme Court concluded that all of NIG's claims of error were all without merit, and affirmed the Court of Chancery's judgment. View "National Industries Group v. Carlyle Investment Management, L.L.C." on Justia Law

Appellant, in his capacity as vice-president of Izett Manufacturing, Inc., executed a guaranty in connection with a loan agreement entered into by the company. The loan agreement entitled Izett Manufacturing to borrow up to $50,000 and was secured by a promissory note. The note and the guaranty both were dated 1999, and Appellant personally guarantied the payment of all liabilities under the note. The guaranty included a confession of judgment clause and stated that it was "executed under seal," with the designation "(SEAL)" as part of the signature line. By 2001, the company had borrowed $50,000 under the agreement. At that time, Appellee Osprey Portfolio, LLC purchased the loan and was assigned the note and guaranty. In late 2005, Osprey sent a letter to Izett Manufacturing, declaring the loan to be in default and demanding payment in full. Izett failed to remit payment. More than four years later, Osprey filed a Complaint in Confession of Judgment against Appellant as the guarantor of the loan. The court entered judgment the same day. Thereafter, Appellant filed a Petition to Strike and/or Open Judgment, claiming, in relevant part, that Osprey's action was precluded by Section 5525(a)(8) of the Judicial Code, which establishes a four-year limitation period for "[a]n action upon a contract, obligation or liability founded upon a writing . . .under seal . . ." The Supreme Court allowed this appeal to determine the limitation period that applies to an action on a guaranty executed under seal. Upon review, the Court held that the loan guaranty executed under seal by Appellant was an "instrument in writing under seal" subject to a 20-year limitation period set forth in Section 5529(b)(1) of the Judicial Code. Therefore, the Superior Court was affirmed. View "Osprey Portfolio, LLC v. Izett" on Justia Law

The issue before the Supreme Court in this case centered on a general partner's obligations under a limited partnership agreement. The plaintiffs alleged that the general partner obtained excessive consideration for its incentive distribution rights when an unaffiliated third party purchased the partnership. Notably, the plaintiffs did not allege that the general partner breached the implied covenant of good faith and fair dealing. Upon review of the matter, the Supreme Court concluded that the limited partnership agreement's conflict of interest provision created a contractual safe harbor, not an affirmative obligation. Therefore, the general partner needed only to exercise its discretion in good faith, as the parties intended that term to be construed, to satisfy its duties under the agreement. The general partner obtained an appropriate fairness opinion, which, under the agreement, created a conclusive presumption that the general partner made its decision in good faith. Therefore we the Supreme Court affirmed the Court of Chancery's dismissal of the complaint. View "Norton v. K-Sea Transportation Partners, L.P., et al." on Justia Law

Plaintiff–Appellee PharmAthene, Inc., and Defendant–Appellant SIGA Technologies, Inc., are both Delaware corporations engaged in biodefense research and development. SIGA appealed the Vice Chancellor's finding that it breached a contractual obligation to negotiate in good faith and was liable under the doctrine of promissory estoppel. The Supreme Court reaffirmed that where parties agree to negotiate in good faith in accordance with a term sheet, that obligation to negotiate in good faith is enforceable. Where a trial judge makes a factual finding that the parties would have reached an agreement but for the defendant's bad faith negotiation, the Court held that a trial judge may award expectation damages. In regard to the facts of this case, the Court reversed the Vice Chancellor's promissory estoppel holding because a promise expressed in a fully enforceable contract cannot give rise to a promissory estoppel claim. The Court also reversed the Vice Chancellor's equitable damages award based on his factual conclusion that the parties would have reached an agreement. The case was remanded for further proceedings in light of the Court's decision in this opinion. View "Siga Technologies, Inc. v. Pharmathene, Inc." on Justia Law

HomeAway filed suit in the District Court of Travis County, Texas, against Eye Street and others, asserting, inter alia, state law claims for breach of contract and misappropriation of trade secrets. Eye Street did not attempt to remove HomeAway's Texas suit to federal district court but, instead, filed its own action against HomeAway and others in federal district court. After HomeAway moved to dismiss Eye Street's action for improper venue or, alternatively, to transfer venue to the U.S. District Court for the Western District of Texas, the district court stayed the action pending the resolution of HomeAway's Texas lawsuit. On appeal, Eye Street challenged the propriety of the stay. The court concluded that the district court did not abuse its discretion in staying Eye Street's action. Given the strong case for a stay under the United Capitol Insurance Co. v. Kapiloff factors and Eye Street's deliberate choice to forego removal, the district court's decision would be an appropriate exercise of discretion under either Brillhart v. Excess Insurance Co. of America/Wilton v. Seven Falls Co. or Colorado River Water Conservation District v. United States. Accordingly, the court affirmed the judgment. View "VRCompliance LLC v. HomeAway, Inc." on Justia Law

Republican Valley Biofuels (RVBF) issued a confidential private placement memorandum seeking investors in a biodiesel production facility. DMK Biodiesel (DMK) and Lanoha RVBF (Lanoha) invested $600,000 and $400,000 respectively in RVBF, which was being promoted by four individuals (Promoters). Renewable Fuels Technology (Renewable Fuels) was the manager of RVBF. DMK and Lanoha entered into and executed separate subscription agreements with RVBF. DMK and Lanoha later filed a complaint against Renewable Fuels and Promoters, alleging that Defendants fraudulently induced them to invest funds in RVBF. Defendants filed a motion to dismiss and a motion to take judicial notice, requesting the district court to take judicial notice of the confidential private placement memorandum for RVBF and the subscription agreements executed between RVBF and DMK and Lanoha. The district court granted the motions. The Supreme Court reversed, holding that because the private placement memorandum and the subscription agreements were properly considered matters outside the pleading, an evidentiary hearing was required. Remanded. View "DMK Biodiesel, LLC v. McCoy" on Justia Law

Fred and Nancy Eagerton petitioned the Supreme Court for a writ of mandamus to direct the Circuit Court to enter a judgment as a matter of law in their favor and against SE Property Holdings, LLC, consistent with the Court's mandate in "Eagerton v. Vision Bank," (99 So. 3d 299 (Ala. 2012)). SE Property Holdings, LLC, is the successor by merger to Vision Bank. The underlying suit arose from a loan that the Eagertons personally guaranteed, secured by a mortgage on property within the Rock Creek Tennis Club in Fairhope. The bank declared the original and second loans in default and accelerated balances due under both. The bank sued the primary obligor, and the Eagertons as person guarantors on one of the original loans. The primary obligor declared Chapter 11 bankruptcy. The reorganization plan consolidated the two loans. The obligor eventually defaulted on the terms of the reorganization plan. The bankruptcy was dismissed, the property foreclosed, and the money obtained in the foreclosure sale was applied to the consolidated loan. The Eagertons argued that the Chapter 11 reorganization of the debts of primary obligor (the consolidation of the original loan with the second loan), created a new indebtedness not encompassed by their guaranty contracts. The Eagertons therefore argued that the creation of this new indebtedness, without their knowledge or consent, operated to discharge them from any further obligations under their guaranty contracts. The bank, on the other hand, argued, among other things, that the consolidated loan was a replacement note contemplated by the guaranty contracts and that the Eagertons had waived the material-modification defense. The Supreme Court in "Eagerton v. Vision Bank" concluded that the Eagertons' guaranty contracts were unambiguous; that based on the language in the guaranty contracts the Eagertons did not intend to guarantee any indebtedness other than that indebtedness arising out of the original loan and any extensions, renewals, or replacements thereof; and that, once the Eagertons' original loan was modified pursuant to the Chapter 11 reorganization of Dotson 10s, the Eagertons were at that point discharged from any further obligations under their guaranty contracts. Because the circuit court did not follow the mandate in the Court's prior decision in "Vision Bank," the Supreme Court granted the Eagertons' petition and issued the writ. View "SE Property Holdings, LLC v. Eagerton" on Justia Law