Justia Contracts Opinion Summaries

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

Defendant-Appellant Lloyds of London Syndicate 2003 ("Lloyds") appealed the district court's denial of its summary judgment motion and subsequent grant of summary judgment in favor of Plaintiff-Appellee Brecek & Young Advisors, Inc. ("BYA") in an action arising out of a professional liability insurance contract. The district court concluded Lloyds failed to pay sufficient indemnity to BYA for claims brought against BYA in an arbitration before the National Association of Securities Dealers. The underlying suit alleged BYA agents mismanaged and unlawfully "churned" the investment accounts of its clients. The court concluded the claims brought in the arbitration did not relate back to earlier claims brought outside the policy period and, therefore, rejected Lloyds' argument coverage was precluded altogether. Additionally, the court rejected BYA's argument that Lloyds was equitably estopped from denying coverage due to its course of conduct in receiving and defending the claims. Upon review, the Tenth Circuit concluded that the district court erred in its interpretation of the law of the case, and therefore abused its discretion in making its judgments in this case. Accordingly, the district court's decisions were reversed and the case remanded for further proceedings. View "Brecek & Young Advisors, Inc. v. Lloyds of London Syndicate 2003" on Justia Law

The board of directors of Primedia, Inc. adopted a resolution approving a merger agreement among Primedia, TPG Capital, and TPG's wholly owned acquisition subsidiaries. Primedia's majority stockholder, KKR, approved the merger agreement. At the time the transaction closed, Linda Kahn and a co-plaintiff were litigating a derivative action on Primedia's behalf, alleging that KKR traded on inside information when it purchased shares of Primedia's preferred stock and seeking disgorgement of KKR's profits under Brophy v. Cities Service Co. In this class action, Kahn and her co-plaintiff alleged that the terms of the merger were unfair because the Primedia directors failed to obtain any value for the Brophy claim. Specifically, they argued that the merger conferred a special benefit on KKR because KKR knew it was highly unlikely that any acquirer would pursue the Brophy claim. Plaintiffs also challenged a provision in the merger agreement limiting the Primedia board's ability to change its recommendation that stockholders vote in favor of the merger. The Court of Chancery (1) dismissed Defendants' motion to dismiss as to the fairness claim because Plaintiffs had standing to pursue the claim and pled a reasonably conceivable theory; and (2) otherwise granted the motion. View "In re Primedia, Inc. S'holders Litig." on Justia Law

Heartland is an investment firm that formerly held an ownership interest in Metaldyne, an automotive supplier. Leuliette is a co-founder of Heartland and was the CEO and Chairman of the Board of Metaldyne. Tredwell is also a Heartland co-founder and a Metaldyne Board member. In 2006, Heartland agreed to sell its interest in Metaldyne to Ripplewood. Metaldyne submitted an SEC “Schedule 14A and 14C Information” report that detailed the terms of the acquisition, but failed to mention that Metaldyne would owe plaintiffs, former executives, approximately $13 million as a result of the sale, under a change-of-control provision in Metaldyne’s “Supplemental Executive Retirement Plan,” in which Plaintiffs participated. The SERP is subject to Employee Retirement Income Security Act of 1974. Ripplewood threatened to back out of the deal when it found out about the obligation. In response, Leuliette and Tredwell persuaded Metaldyne’s Board to declare the SERP invalid without notifying Plaintiffs. The Ripplewood deal closed less than a month later. Leuliette personally collected more than $10 million as a result. Plaintiffs claimed tortious interference with contractual relations. The district court dismissed. The Sixth Circuit reversed, holding that the state law claims were not “completely preempted” under section 1132(a)(1)(B) of ERISA. View "Gardner v. Heartland Indus. Partners, LP" on Justia Law

In a reformation action concerning cash flow distributions in three real estate joint venture agreements, the Supreme Court held that the Vice Chancellor properly reformed the agreements on the basis of unilateral mistake and knowing silence by the other party. "Negligence in discovering an alleged mistake does not bar a reformation claim unless the negligence is so significant that it amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing. Ratifying a contract does not create an equitable bar to reformation unless the ratifying party had actual knowledge of the mistake giving rise to the reformation claim." In this matter, the Court reversed the Vice Chancellor's fee award because a contractual fee-shifting provision incorporating the words "incurred" and "reimburse" did not apply where counsel for the party seeking fees represented the party free of charge to avoid a malpractice claim. View "Scion Breckenridge Managing Member, LLC, et al. v. ASB Allegiance Real Estate Fund, et al." on Justia Law

The bankruptcy trustee of Northlake, a Georgia corporation, filed suit against defendant, a shareholder of Northlake, alleging that a 2006 Transfer was fraudulent. The facts raised in the complaint and its exhibits, taken as true, were sufficient to conclude that Northlake's benefits under the Shareholders Agreement were reasonably equivalent exchange for the 2006 Transfer. Because the complaint contained no allegations indicating why these benefits did not constitute a reasonably equivalent exchange for the 2006 Transfer, the court had no ground to conclude that they did not. Accordingly, the court affirmed the judgment of the district court. View "Crumpton v. Stephen" on Justia Law

This case arose from efforts of Verizon New England to collect a judgment awarded in 2009 by the U.S. district court against Global NAPs (GNAPs). Verizon served a restraining notice on GNAPs and companies with which it did business, one of which was Transcom Enhanced Services. Verizon subsequently commenced this special proceeding seeking a turnover of property and debts of the judgment debtor held by Transcom. Supreme Court denied turnover and dismissed the petition with prejudice, concluding that Transcom did not owe any debt to GNAPs and it did not hold property in which GNAPs had any interest. At issue on appeal was whether the at-will, prepayment service agreement between the parties, which lacked any obligation to continue services or a commitment to engage in future dealings, constituted a property interest or debt subject to a N.Y. C.P.L.R. 5222(b) restraining notice. The Appellate Division affirmed. The Court of Appeals affirmed, holding that, based on the nature of the agreement, the restraining notice was unenforceable. View "Verizon New England, Inc. v Transcom Enhanced Servs., Inc." on Justia Law

The plaintiffs sued for damages arising out of their sales of stock in Wayport, Inc. After the defendants' motion to dismiss in part was granted, the litigation proceeded to trial against the remaining defendants on claims for breach of fiduciary duty, aiding and abetting a breach of fiduciary duty, common law fraud, and equitable fraud. The court of chancery (1) entered judgment in favor of plaintiff Brett Stewart and against defendant Trellis Partners Opportunity Fund in the amount of $470,000; and (2) otherwise entered judgment against the plaintiffs and in favor of the defendants. View "In re Wayport, Inc." on Justia Law

Several hospitals (Hospitals) sued Aetna, Inc. and Aetna Health, Inc. (collectively Aetna) for allegedly violating the Prompt Pay Statute. Aetna provided a Medicare plan (Plan) through an HMO called NYLCare. It delegated the administration of its Plan to North American Medical Management of Texas (NAMM), a third-party administrator. IPA Management Services (Management Services) provided medical services to Plan enrollees. Management Services entered into contracts with the Hospitals to secure hospital services for the Plan employees. Aetna was not a party to these contracts. The Hospitals submitted hospital bills to NAMM for payment. After NAMM and Management Services became insolvent, Aetna de-delegated NAMM and assumed responsibility for processing and paying claims. However, Aetna instructed the Hospitals to continue submitting their bills to NAMM. The Hospitals argued that Aetna was liable for NAMM's failure to timely pay claims and was responsible for $13 million in outstanding bills. The trial court granted summary judgment for Aetna. The court of appeals affirmed, concluding that because the Hospitals entered into contracts with Management Services and not with Aetna directly, the Hospitals had no viable prompt-pay claim. The Supreme Court affirmed, holding that the lack of privity between the Hospitals and Aetna precluded the Hospitals' suit. View "Christus Health Gulf Coast v. Aetna, Inc." on Justia Law