Justia Contracts Opinion Summaries

Defendant Roberta Shore retained attorney third-party Defendant Nicholas Bokides to represent her in her divorce from William Shore. Pursuant to the divorce decree, William took all interest in the couple's business, Bear River Equipment, Inc., a farm equipment dealership. Roberta had instructed Bokides to provide notice to McCormick International USA, Inc, a Bear River creditor, that she would no longer personally guarantee its advances. Bokides never provided the notice, and McCormick sued Roberta to enforce the guarantee. Roberta brought a third party complaint against Bokides for malpractice. Bokides did not deny the malpractice claim, but alleged that Roberta failed to mitigate her damages because she did not seek to enforce the divorce decree’s mandate that William hold her harmless from all Bear River debts. Bokides appealed the trial court's judgment in Roberta's favor. Roberta cross-appealed the district court's determination that her damages were limited to advances made after entry of the divorce decree. Upon review of the matter, the Supreme Court affirmed: "substantial and competent evidence in the record supports the district court's finding that Roberta reasonably concluded that William was judgment proof and that it would therefore be futile to enforce the divorce decree against him. An implicit corollary of that finding is the finding that McCormick could not successfully seek compensation from William. Thus substantial, competent evidence supports the district court’s determination of the extent of Roberta's damages."

Gary Fordham, David Thompson, and Venture Sales, LLC appealed a chancery court order that dissolved Venture Sales pursuant to Mississippi Code Section 79-29-802 (Rev. 2009). Walter Ray Perkins owned 27.7 acres of land. Sometime in the late 90s, he was approached by Fordham and Thompson about a potential business venture involving his land. Perkins, Fordham, and Thompson eventually agreed that Fordham and Thompson would acquire the 438 acres of land that adjoined Perkins's land; the parties would combine their respective land, along with some cash, and form a venture to develop the land. Following the contributions, the operating agreement of Venture Sales was revised to reflect the arrangement. The parties signed the new operating agreement in 2000. In February 2010, Perkins filed an application for judicial dissolution of Venture Sales. Following a trial, the chancellor found that, based on the property's history, the company's inability to get funding for development, and the uncertainty regarding the economic climate in the area, it was not reasonably practicable to carry on the business of Venture Sales. The chancellor therefore ordered the company dissolved. Upon review, the Supreme Court determined that the chancellor's decision to order the dissolution of Venture Sales was not an abuse of discretion: substantial evidence existed supporting the chancellor's determination that it was not reasonably practicable for Venture Sales to carry on business in conformity with its operating agreement.

Defendant-Respondent High Mark Development, LLC owned a commercial building located in the City of Ammon. In 2006, it had leased a portion of the building to The Children's Center, Inc., for a period of ten years. In 2007, High Mark listed the real property for sale through its realtor. Plaintiff-Appellant Thomas O'Shea, a resident of California, learned of the property through a realtor friend in Boise. Appellant and his wife were trustees of the "Thomas and Anne O'Shea Trust u/d/t Dated November 2, 1998," which they had formed to protect their assets and provide for their children. They decided to purchase the real property. The Trust entered into a real estate contract agreeing to purchase the property from Defendant High Mark for $3.7 million. The sale closed late 2007. The Children's Center made no payments to Plaintiffs after they acquired the property. Shortly thereafter, the Children's Center vacated the property, and went out of business. Plaintiffs filed suit against High Mark and two of its principals, Gordon, Benjamin and Jared Arave arguing Defendants had induced them to acquire the property by providing false information that the Children's Center was current in its payments of rent and/or concealing or failing to disclose that the Center had failed to pay all rent due under the lease. Plaintiffs alleged claims for breach of contract and fraud by misrepresentation and nondisclosure against all of the Defendants, but the issues were narrowed after cross motions for summary judgment. The case was tried to a jury on the issues of: High Mark's breach of contract; High Mark's alleged fraud by misrepresentation and nondisclosure; Gordon Arave's alleged fraud by misrepresentation and nondisclosure; and Benjamin Arave's alleged fraud by nondisclosure. The jury returned verdicts in favor of all of those Defendants. The Plaintiffs filed a motion for a judgment notwithstanding the verdict on the issue of liability or, in the alternative, for a new trial, which the district court denied. The Plaintiffs then timely appealed. Upon review, the Supreme Court concluded that the jury could reasonably have determined that the Plaintiffs failed to prove that they were damaged by the breach and that they failed to prove that the breach of contract caused any damages. In addition, the jury could have found that the breach did not cause any damages because the Plaintiffs did not have the right to terminate the contract for the misrepresentation in an estoppel certificate. Therefore, the district court did not err in denying the motion for a judgment notwithstanding the verdict on the breach of contract claim.

This case concerned the applicability of a standard "no-action clause" in a trust indenture governing a company's notes. The clause at issue stated that a noteholder could not "pursue any remedy with respect to this Indenture or the Securities" unless the noteholder fell within one of two exceptions. At issue was whether noteholders who did not fall within a stated exception to the clause could nonetheless bring fraudulent transfer claims against the issuer of the securities and its directors and officers. Although the district court found the no-action clause inapplicable to the claims, the court disagreed and held that the language of the no-action clause controlled, barring noteholders from bringing suit.

This case involved a challenge to certain issuances of preferred units and convertible debt by a start-up medical products company. The founder, former CEO, and current common member of the company challenged the issuances, claiming they were self-interested transactions designed to benefit the company's directors and venture capital sponsors by unfairly diluting its common members. Defendants moved for summary judgment on all counts. The court found that plaintiff failed to adduce sufficient evidence to support a reasonable inference that defendants' actions in approving the challenged issuances were grossly negligent or reckless. Therefore, the court granted summary judgment to defendants on plaintiff's duty of care claims. As for the duty of loyalty claims, the court found that defendants failed to establish that the transactions were not self-interested or that they warranted protection under the safe harbor provisions of the company's operating agreement. Therefore, the court denied summary judgment on these claims. Finally, because the court found the operating agreement ambiguous on the issue of whether defendants were permitted to authorize additional common units or new series of units without approval by a majority of the common members, the court denied summary judgment on plaintiff's breach of contract claim under Count VI.

This was a class action brought on behalf of the common unit holders of a publicly-traded Delaware limited partnership. In March 2011, the partnership agreed to be acquired by an unaffiliated third party at a premium to its common units' trading price. The merger agreement, which governed the transaction, also provided for a separate payment to the general partner to acquire certain partnership interests it held exclusively. The court concluded that defendants' approval of the merger agreement could not constitute a breach of any contractual or fiduciary duty, regardless of whether the conflict committee's approval was effective. The court also found that the disclosures authorized by defendants were not materially misleading. Therefore, plaintiffs could not succeed on their claims under any reasonable conceivable set of circumstances and defendants' motion to dismiss was granted.

Summit Group Properties, LLC (Summit) sued Orthopedic & Sports Physical Therapy Associates (OSPTA) and its partners for breach of lease and damages. OSPTA filed a counterclaim in which it alleged fraud in the inducement and damages. The jury returned a verdict in favor of Summit against OSPTA in the amount of $187,000. The jury found for Summit on OSPTA's counterclaim. OSPTA appealed, arguing that the trial court erred in granting a jury instruction offered by Summit because it misstated the law by instructing the jury that a limited liability company could not be liable for any fraudulent activity unless the fraud was approved by the members of the LLC. The Supreme Court agreed with OSPTA that the instruction was misleading because it was not a complete statement of the law and held that the trial court erred in giving the instruction. Remanded.

This case arose out of a dispute between two attorneys, John Cattano and Carolina Bragg, the only shareholders of Cattano Law Firm. Bragg filed an amended complaint including claims for a writ of mandamus for the copying and inspection of corporate records, breach of fiduciary duty, conversion, breach of contract, and judicial dissolution. A jury returned a verdict finding (1) Bragg owned 27.35 percent of the firm; (2) in Bragg's favor on her claim of derivative conversion, awarding the firm damages; and (3) in favor of Bragg on the breach of contract and judicial dissolution claims, awarding Bragg damages individually. The circuit court then awarded what it determined to be reasonable fees to Bragg. The Supreme Court affirmed, concluding that there was no error in the judgment of the circuit court.

Appellants, three licensed clinic psychologists, were former partners of Great Falls Clinic, LLP, a general limited liability partnership comprised of medical professionals. The Clinic partners, including Appellants, signed a partnership agreement stating that a partner who separates from the partnership in compliance with the agreement's terms will receive a partnership interest subject to reduction for competing after withdrawal or retirement. Appellants subsequently separated from the Clinic and filed a declaratory judgment action when the Clinic refused to pay them their full partnership interest payments. At issue was whether the agreement's restriction, which applied to those engaged in the "practice of medicine," included partners who practiced psychology after separating from the Clinic. The district court granted summary judgment for the Clinic. The Supreme Court affirmed, holding that the district court did not err by (1) holding that the Appellants engage in the "practice of medicine" as used in the partnership agreement; and (2) concluding that the parties' intention regarding the term "practice of medicine" in the language of the agreement was to include the psychologists.

The Supreme Court reviewed a district court order that upheld a county court's decision that a six-year stattue of limitations did not bar Respondent Account Brokers of Larimer County, Inc.'s claim against Pettiioner Daniel Hassler. Petitioner financed the purchase of a vehicle by entering into a security agreement with Account Broker's predecessor-in-interest in which the vehicle served as collateral. Petitioner defaulted on the loan, and the predecessor repossessed the vehicle and later sold it at auction. The precedessor applied the proceeds of the auction to the balance of the loan. The proceeds were insufficient to cover the balance; thus Petitioner was still held responsible for the deficiency. The debt was eventually transferred to Account Brokers who sued Petitioner to recover the deficiency less than six years after the vehicle was sold. The county and district courts ruled in favor of Account Brokers, determining that the statute of limitations did not bar Account Brokers' claim. Upon review, the Supreme Court reversed, holding that the controlling issue was not the date that the debt was made liquidated or determinable but the date the debt accrued. "[U]nder Colorado law and the express terms of the parties' agreement, the present debt became due when it was accelerated following [the predecessor's] repossession of the vehicle and demand for full payment on the debt, which occurred more than six years before the initiation of the present suit. Accordingly, the action [was] barred by the statute of limitations."