Justia Contracts Opinion Summaries

Idaho Development, LLC (Idaho Development) advanced $1,100,000.00 to Teton View Golf Estates, LLC (Teton View), a joint venture made up of Idaho Development as a 33.3% owner and Rothchild Properties, LLC as a 66.7% owner. Teton View granted Idaho Development a promissory note secured by a deed of trust that specified a set monthly payment and stated that the entire amount was to be paid off in ninety days. Idaho Development filed an action to foreclose on the deed of trust after Teton View failed to satisfy the promissory note. DePatco, Inc., another lienholder on the property, filed a motion for summary judgment to recharacterize Idaho Development’s advance as a capital contribution, which was granted. Idaho Development appealed, arguing that there was a genuine issue of fact as to whether the entire $1,100,000 advance was intended to be a capital contribution. Idaho Development also appealed a subsequent summary judgment brought by ZBS, LLC, which relied on the recharacterization determination in holding that ZBS’ lien on the property had priority over Idaho Development’s lien. Upon review of the trial court's recharacterization of Idaho Development's lien, the Supreme Court concluded that there was a genuine issue of fact as to whether the entire $1,100,000 was intended to be a capital contribution, the district court therefore improperly granted summary judgment. The case was remanded for further proceedings.

This action involved a challenge to the decision by a purchaser to terminate a share purchase agreement and related consulting services agreement based on the purchaser's contention that certain conditions precedent to closing those agreements had not been met by the seller. Purchaser brought an action for declaratory judgment and injunctive relief, seeking a determination that it properly terminated the share purchase and consulting services agreements and was entitled to the return of its down payment on the purchase price from escrow. The court found that the agreements between the parties unambiguously provided that the Development Fees were contingent on the commencement of actual development of the projects and that the purchaser was under no obligation to develop the projects. Therefore, the court granted purchaser's motion for partial summary judgment on that issue and held that seller was not entitled to any Development Fees as a result of purchaser's decision to terminate the transaction.

In late April 2006 Samuel Sengul leased a commercial storefront in downtown Juneau to Robert Manus, who was acting on behalf of CMS Franklin, Inc. The building was under construction when Sengul and CMS entered into the lease agreement, but the lease provided that Sengul would deliver the property to CMS in a specified improved condition by the time the lease commenced on June 1. The lease also included a rent abatement provision, which was at issue in this case. The building was not in improved condition until approximately June 8. Manus did not pay any rent, nor did he mention the rent abatement provision when he took possession of the building. Sengul finally demanded rent in late July, but Manus refused to pay, claiming abatement. In September, Manus had still not paid any rent, and Sengul put a lock on CMS's store door and placed signs demanding rent in the store windows. Manus had the lock cut off, but began to move the inventory out of the store, vacating it and returning the keys to Sengul two days after the lockout. Sengul then sued CMS and Manus for unpaid rent. The superior court determined that CMS had waived its right to rent abatement and owed Sengul unpaid rental amounts for the time that Manus had occupied the building. But the court also concluded that Sengul's lockout amounted to constructive eviction and awarded CMS damages as a refund for work performed on the premises that CMS was unable to benefit from after the constructive eviction. Upon review, the Supreme Court agreed with the superior court that Sengul's actions constituted constructive eviction, but the Court disagreed that CMS waived its entitlement to have the rent abated. The case was remanded for the superior court to recalculate the damages owed to CMS.

This litigation arose out of a franchise agreement between West Coast Hotels and Mahmoud Karimi. The successor in interest to West Coast Hotels was Red Lion, both were incorporated in Washington state. Karimi and his hotel management company (collectively, Karimi) operated a Red Lion franchise in Modesto, California. Red Lion subsequently terminated the franchise and sued Karimi for breach of contract and Karimi counterclaimed, asserting state-law claims, including a claim based on the "franchise bill of rights" of the Washington Franchise Investment Protection Act (FIPA), Wash. Rev. Code 19.100.180, 19.86.020. At issue on appeal was whether a non-Washington franchisee could assert a claim against a Washington franchisor under FIPA's bill of rights. The court concluded that an out-of-state franchisee could assert such a claim. Because FIPA's bill of rights applied to the franchise agreement at issue, the court remanded to the district court for further proceedings. The court agreed with the district court's conclusion that Red Lion was not equitably estopped from terminating the franchise agreement. The court remanded for consideration by the district court of the entry of judgment against Karimi's wife.

Plaintiff asserted wide-ranging claims against defendant and its managing member after plaintiff and defendant agreed to combine their investment management operations into a single firm. After coming to believe that defendant was engaged in fraud, plaintiff terminated the arrangement. In a formal termination agreement, plaintiff agreed to pay certain enumerated expenses and the parties granted each other expansive global releases. The court held that, on its face, the broad and unambiguous language of the General Release encompassed all of the claims asserted in the Complaint. Accordingly, defendant's motion to dismiss was granted.

GE Capital Aviation Services, Inc., (now known as GE Capital Aviation Services, LLC), Pemco World Air Services, Inc., and Alabama Aircraft Industries, Inc. have fiercely litigated a commercial-contract dispute since 2004 in which each party alleged breach-of-contract and fraud claims against the other. The parties entered an agreement for the conversion, maintenance and inspection of aircraft leased through GE Capital. GE Capital and Pemco each sought punitive damages in addition to compensatory damages. The litigation culminated in a jury trial that lasted approximately three weeks. The jury returned a verdict in favor of Pemco on all of its claims, awarded Pemco $2,147,129 in compensatory damages and $6,500,000 in punitive damages, and returned a verdict in favor of Pemco on all of GE Capital's counterclaims. GE Capital appealed the jury verdict and the trial court's order denying GE Capital's postjudgment motions. GE Capital did not appeal the judgment in favor of Pemco on its counterclaims. Upon review, the Supreme Court reversed the trial court's order denying GE Capital's motion for a JML as to Pemco's fraud claims and its breach-of-an-implied-contract claim. The Court also reversed the trial court's order denying GE Capital's motion for a new trial. The case was remanded for further proceedings.

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. The district court granted summary judgments 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 of fraudulent conduct caused the loss. In this case, the court found that the record revealed the rescission was not feasible. Yet employing a rescissionary measure of damages, plaintiffs could be able to convince the finder of fact that plaintiffs were entitled to relief. On that basis, the court reversed the district court's grant of summary judgment on plaintiffs' federal and state securities claims and remanded for consideration under rescissionary measure of damages. With respect to the statute of limitations issue, the court remanded for consideration in light of Merck & Co. The court affirmed the district court's judgment on plaintiffs' state law claims of common law fraud, negligent misrepresentation, mutual mistake, failure of a condition precedent, and unjust enrichment. The court vacated the district court's attorneys' fee award and dismissed the appeal of the award as moot.

Smith's Sports Cycles, Inc. appealed the outcome of a nonjury trial that held in favor of American Suzuki Motor Corporation. Smith's claimed that Suzuki wrongfully terminated the parties' franchise agreement. The trial court conducted a 12-day bench trial. After hearing the evidence, the trial court entered a judgment in favor of Suzuki on Smith's breach-of-contract claim, concluding that there was not substantial evidence that Suzuki had breached any provision of the franchise agreement. The trial court also entered a judgment in favor of Suzuki on Smith's claim that Suzuki had violated the Franchise Act. Upon review, the Supreme Court concluded that "the judgment of the trial court terminating the parties' franchise relationship is due to be affirmed."

This appeal required the court to determine what effect, if any, a retiree benefits-related provision included in an asset purchase agreement had on the acquiring company's retiree benefits plans governed under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1000 et seq. The court held that the provision constituted a valid plan amendment. Moreover, the court held that the provision was assumed, not rejected, in bankruptcy. Accordingly, the court reversed and remanded.

This action arose out of a dispute between two companies involved in the development of pharmaceuticals. Plaintiff was a biodefense company engaged in the development and commercialization of medical countermeasures against biological and chemical weapons and defendant was also a biodefense company that concentrated on the discovery and development of oral antiviral and antibacterial drugs to treat, prevent, and complement vaccines for high-threat biowarfare agents. The court rejected plaintiff's claim that defendant breached a binding license agreement, but found that defendant did breach its obligations to negotiate in good faith and that defendant was liable to plaintiff under the doctrine of promissory estoppel. The court rejected defendant's claim that plaintiff breached its obligation to negotiate in good faith. The court denied plaintiff's claims for specific performance of a license agreement with the terms set forth in the time sheet or, alternatively, for a lump sum award of its expectation damages. The court concluded, however, that plaintiff was entitled to share in any profits relied on from the sale of the drug in question, after an adjustment for the upfront payments it likely would have had to make had the parties negotiated in good faith a license agreement in accordance with the terms of the term sheet. In addition, plaintiff was entitled to recover from defendant a portion of the attorneys' fees and expenses plaintiff incurred in pursuing the action.