Justia Contracts Opinion Summaries

This appeal concerned the maintenance of a suit for rescission under section 10(b) of the Securities and Exchange Act of 1934, 15 U.S.C. 78a et seq., by plaintiffs Kenneth Weiss and his wholly-owned corporation. The district court granted summary judgment to defendants on all claims and awarded defendants attorneys' fees. The court held that a plaintiff suing under section 10(b) seeking rescission must demonstrate economic loss and that the misrepresentation or fraud conduct caused the loss. The court found that the record revealed that rescission was not feasible in the instant case. Yet employing a rescissionary measure of damages, Weiss would be able to convince the finder of fact that he was entitled to relief. On that basis, the court reversed the district court's grant of summary judgment of Weiss's federal and state securities claims and remanded for consideration under a rescissionary measure of damages. With respect to the statue of limitations issue, the court remanded for consideration in light of Merck & Co., Inc. v. Reynolds. The court affirmed the district court's judgment on Weiss's state law claims of common law fraud, negligent misrepresentation, mutual mistake, and unjust enrichment. The court vacated the district court's attorneys' fee award and dismissed the appeal of this award as moot.

This appeal was from the grant of summary judgment in a diversity case in which plaintiff was a limited partner in a partnership that received a loan from defendant. The dispute stemmed from a limited guaranty agreement between the Bank and plaintiffs, who became a guarantor of the loan received by the partnership. At issue was whether the guaranty agreement only required payment from the guarantor once the balance of the outstanding loan was $500,000 or less. The district court ruled that the payment was immediately due regardless of whether the balance of the loan had been reduced to $500,000. Because the court found the language of the guaranty agreement ambiguous, the court held that the district court erred by accepting the Bank's interpretation and granting summary judgment. Therefore, the court vacated the summary judgment and remanded to the district court. Further, the court affirmed the district court's denial of the motion for leave to file a supplemental claim. Finally, the court vacated the order awarding attorney's fees.

James Schlinger owned and operated Curtis Excavation and WW Construction. Schlinger, acting as president of WW Construction, entered into an oral agreement to lease his business and all associated equipment and land to Christopher McGhee and Jack Robinson. McGhee and Robinson formed Curtis-Westwood Construction as the entity to lease and operate the business. After eight months, Schlinger determined McGhee and Robinson were not properly managing the business and terminated the oral lease agreement. The parties disputed the financial implications of the termination. After a bench trial, the district court determined that Schlinger breached his oral agreement with Appellees, McGhee, Robinson, and Curtis-Westood Construction, and that Schlinger owed Plaintiffs $206,875. The Supreme Court (1) reversed the district court's judgment on Appellees' breach of contract claim and rejected Appellants' argument that they should be awarded breach of contract damages, holding that the district court committed clear error in awarding damages as there was insufficient evidence in the record to justify an award of damages to either party; and (2) affirmed the district court's denial of Schlinger's claims for recovery under the theory of unjust enrichment, holding that Schlinger's claims were unsupported by the evidence.

Great-West asserted claims against defendants in an eight count complaint and the court granted defendant's motion to dismiss in part. At issue are the remaining counts of the complaint which revolve around Section 12.2(c) of the LP Agreement. The court held that Great-West's motion for partial summary judgment was denied, except as to Count I, which was granted. Great-West was entitled to a declaration that the Expense Assumption could not increase until TH Lee had negotiated in good faith. Defendants' motion for summary judgment was denied as to Counts II and VII, and granted as to Counts IV, V, and VI. Great-West's claims for mistake and fraud failed as a matter of law.

Plaintiffs, Northern Virginia Real Estate and its principal broker, Lauren Kivlighan, filed an eight-count second amended complaint against McEnearney Associates, its real estate agent Karen Martins, and David and Donna Gavin (collectively, Defendants), alleging conspiracy to harm in business, interference with contract expectancy, and defamation. The trial court eventually entered an order granting Plaintiffs' motion to nonsuit all counts and dismissing the case as to all counts and all parties. Defendants subsequently filed motions for sanctions against Plaintiffs and Plaintiffs' counsel, Forrest Walpole, seeking attorneys' fees and costs and arguing that Plaintiffs violated Va. Code Ann. 8.01-271.1 by filing the suit without any basis in fact, without support in law, and with improper purposes. The trial court granted the motions. The Supreme Court affirmed, holding (1) the trial court did not err when it imposed sanctions jointly and severally against Plaintiffs and Walpole; and (2) the trial court applied an objective standard of reasonableness in concluding that the facts of this case could not support a reasonable belief that the Plaintiffs' claims along with the damages sought were well grounded in fact or law as required by section 8.01-271.1.

Thomas & Thomas Court Reporters sued Douglas Switzer, an attorney, and his law firm, Hathaway & Switzer (Hathaway Switzer), for failure to pay for court reporting services. The district court entered judgment for Thomas & Thomas. At issue on appeal was whether Hathaway Switzer was liable to Thomas & Thomas for its fees or whether Hathaway Switzer's clients were. The Supreme Court (1) affirmed the district court's judgment to the extent that it held Hathaway Switzer rather than Hathaway Switzer's clients liable, as Hathaway Switzer had not disclaimed liability for those fees; and (2) reversed the court's judgment to the extent that it held Switzer personally liable. Remanded with directions to dismiss Thomas & Thomas' claim against Switzer as an individual.

In 2005, plaintiff began consulting for defendant and signed an agreement prohibiting disclosure of proprietary information to third parties, and a non- competition covenant effective during his employment and for two years thereafter. In July, 2006, he left the company. In January 2007, he began consulting for another company. Defendant sued under the agreement. The company filed for bankruptcy. A purchaser moved to substitute itself as plaintiff, but the state court dismissed without prejudice for failure to prosecute. After the court reinstated the case, plaintiff filed in federal court, alleging that the state court suit constituted abuse of process under Massachusetts law and seeking to enjoin the proceedings. He alleged that the amount in controversy was "at least $1,000,000," based on "emotional distress" and harm to his reputation, emotional tranquility, and privacy. The district court dismissed. The First Circuit affirmed. Plaintiff failed to allege damages with substantial particularity to establish jurisdiction. He provided no substantiation for or valuation of any of the alleged economic, emotional or physical damages and could not meet the "good faith" requirement with respect to his assertions.

Defendant, a Russian citizen, attended graduate school and owns real property, vehicles, and bank accounts in Ohio. He spends some time in Ohio each year, ranging from 40 days in 2007 to a total of 17 days in 2008–2009. He visits under a tourist visa and does not have an Ohio driver's license. After going to Russia to take part in a business venture with defendant, plaintiff filed suit in Ohio. The contract had no connection to the state. The trial court dismissed for lack of personal jurisdiction, noting that defendant was not served with process in a manner that automatically confers personal jurisdiction. The Sixth Circuit affirmed, finding that notions of fair play and substantial justice weigh against jurisdiction in Ohio. The court quoted a Russian proverb, “If you’re afraid of wolves, don’t go into the forest” that could be read, “If you’re afraid of the Russian legal system, don't do business in Russia.”

Appellants Kent Whiteman and Whitehorse Properties, LLC, (Whiteman), brought a second appeal of this case before the Supreme Court. In the original trial, Respondent Damian Farrell sued Whiteman for uncompensated architect services rendered for Whiteman's condominium project from 2003 to 2004. Whiteman counterclaimed arguing that Farrell was not entitled to compensation due to his failure to obtain a license to practice architecture in Idaho. Farrell is a resident of Michigan and was licensed as an architect in the states of Michigan, Texas, and New York when he began working with Whiteman. Farrell did not receive his architect's license in Idaho until 2004. The district court found that an implied in fact contract existed between the parties and awarded Farrell damages in quantum meruit for services rendered, expenses incurred, and attorney's fees and costs. Whiteman appealed and the Supreme Court vacated the district court's damage award and its award of attorney's fees, finding that any damages awarded to Farrell prior to being licensed in Idaho should be based on unjust enrichment, not quantum meruit. On remand, the district court heard new evidence and awarded Farrell damages for reimbursement of out of pocket expenses incurred prior to licensing under unjust enrichment, damages for architectural services rendered after Farrell obtained his license based on quantum meruit, and attorney's fees and costs. Upon re-review, the Supreme Court upheld the district court's award of damaged under unjust enrichment and quantum meruit, and upheld the award of attorney's fees and costs.

Now defucnt Galt Industries, its former president, his wife, and a former employees sued Aegis Strategic Investment Corporation and its sole shareholder Mark Heisz, alleging Aegis failed to fulfill certain terms of an asset-purchase agreement. Following a jury trial, the trial court entered a judgment awarding Galt $824,000 in damages, and held Aegis jointly and severally liable for those damages. Aegis appealed. Finding that the evidence presented at trial did not support the trial court's decision, the Supreme Court reversed the decision and remanded the case for further proceedings.