Justia Contracts Opinion Summaries

BioCorRx, Inc. (BioCorRx) was a publicly traded company primarily engaged in the business of providing addiction treatment services and related medication. It issued several press releases that allegedly made misrepresentations and improperly disclosed confidential information about a treatment it was developing for opioid overdose. VDM Biochemicals, Inc. (VDM) specializes in the synthesis and distribution of chemicals, reagents, and other specialty products for life science research. It owned a patent (the patent) for VDM-001, a compound with potential use as a treatment for opioid overdose. In September 2018, VDM and BioCorRx entered into a Mutual Nondisclosure & Confidentiality Agreement (the NDA), which restricted each party’s disclosure of confidential information as they discussed forming a business relationship. A month later, VDM and BioCorRx signed a Letter of Intent to Enter Definitive Agreement to Acquire Stake in Intellectual Property (the letter of intent). The letter of intent memorialized the parties’ shared desire whereby BioCorRx would partner with VDM to develop and commercialize VDM-001. BioCorRx and VDM never signed a formal contract concerning VDM-001. Their relationship eventually soured. BioCorRx filed a complaint (the complaint) against VDM; VDM cross-complained. In response, BioCorRx filed the anti-SLAPP motion at issue here, seeking to strike all the allegations from the cross-complaint concerning the press releases. The Court of Appeal found these statements fell within the commercial speech exemption of California's Code of Civil Procedure section 425.16 (the anti-SLAPP statute) because they were representations about BioCorRx’s business operations that were made to investors to promote its goods and services through the sale of its securities. Since these statements were not protected by the anti-SLAPP statute, the Court reversed the part of the trial court’s order granting the anti-SLAPP motion as to the press releases. The Court affirmed the unchallenged portion of the order striking unrelated allegations. View "BioCorRx, Inc. v. VDM Biochemicals, Inc." on Justia Law

Kenai Ironclad Corporation (“Kenai” or “Plaintiff”) alleged that CP Marine Services, LLC, breached its contract to repair and convert Kenai’s offshore supply vessel to a salmon fishing tender for use in Alaska. After Kenai expressed dissatisfaction with the work, the relationship deteriorated. Kenai alleged that, after paying its final invoice, it attempted to remove its vessel from CP Marine’s shipyard, but as it did so, CP Marine and codefendant Ten Mile Exchange, LLC (“TME”) (collectively, “Defendants”) rammed, wrongfully seized, detained, and converted Kenai’s vessel for five days before finally releasing it the district court found that CP Marine did not breach its contract with Kenai but did wrongfully seize, detain, and convert the vessel. The district court awarded punitive damages and attorney’s fees for Defendants’ bad faith and reckless behavior in ramming, seizing, and converting the vessel for five days. Defendants appealed.   The Fifth Circuit affirmed the district court’s finding that Defendants wrongfully seized and converted Kenai’s vessel in bad faith and in a manner egregious enough to warrant an award of punitive damages. The court vacated the district court’s award of damages and remanded on the limited basis of clarifying the court’s award. The court found that Kenai presented sufficient evidence and testimony to support the district court’s finding that Defendants’ conduct was in bad faith, in callous disregard for the safety of the people aboard the vessels, and in reckless disregard of Kenai’s rights. Hence, the district court did not clearly err in finding facts sufficient to support an award of punitive damages. View "Kenai Ironclad v. CP Marine Services" on Justia Law

Breadeaux’s Pisa, LLC (“Breadeaux”) initiated this action against its franchisee, Beckman Bros. Ltd. (“Main Street Pizza”), in federal court seeking a preliminary injunction, a permanent injunction, and a declaratory judgment. After litigating its preliminary injunction, mediating, and participating in discovery proceedings, Breadeaux filed a demand for arbitration in which it sought to relitigate its preliminary injunction and avoid the court’s adverse discovery rulings. Breadeaux then moved to stay all proceedings pending completion of arbitration. The district court denied Breadeaux’s motion.   The Eighth Circuit affirmed. The court explained that Section 3’s stay provision is mandatory when “the issue involved in such suit or proceeding is referable to arbitration” under a valid arbitration agreement. 9 U.S.C. Section 3. The court wrote that it is unpersuaded by Breadeaux’s assertion that the only reasonable reading of the arbitration provision in the Agreement is that all claims or disputes, besides Breadeaux’s equitable claims, must be arbitrated. Additionally, Breadeaux elected to enforce the Agreement by judicial process, not through mediation and arbitration. Under these circumstances, Breadeaux’s claims are not referable. View "Breadeaux's Pisa, LLC v. Beckman Bros. Ltd." on Justia Law

The issue this case presented for the Delaware Supreme Court's review stemmed from a failed, multibillion-dollar merger (the “Merger”) of two fuel pipeline giants - The Williams Companies, Inc. (“Williams”) and Energy Transfer LP (“ETE”). The parties spent a decade litigating over various fees to which they argued they were entitled under the Merger Agreement. ETE continued to assert its entitlement to a $1.48 billion breakup fee, despite being the party who terminated the Merger. It also disputed that it had to pay Williams a $410 million reimbursement fee, which it was required to pay if the Merger failed and certain conditions were met. Finally, ETE argued a related $85 million attorney’s fee award was unreasonable. But the Supreme Court found no error with the Court of Chancery’s opinions that held ETE was not entitled to an over-one-billion-dollar fee and find that ETE had to pay Williams the $410 million reimbursement fee and the related $85 million in attorney’s fees. View "Energy Transfer, LP v. The Williams Companies, Inc." on Justia Law

The Supreme Court reversed the judgment of the court of appeals as to the applicability of the economic loss doctrine in this case, holding that the economic loss doctrine applies only in products liability cases and should not be expanded to apply outside the products liability context.In the underlying suit brought by a drywall subcontractor against a general contractor under theories of breach of contract and tort a jury awarded compensatory and punitive damages to the subcontractor. The court of appeals affirmed in part the award of compensatory damages for breach of contract, dismissed the tort claim, and reversed the award for punitive damages, holding that the economic loss doctrine applied outside the products liability context when the contract was negotiated between sophisticated commercial entities. The Supreme Court reversed, holding (1) the economic loss doctrine only applies in products liability cases and should not be extended to other claims; and (2) the economic loss doctrine did not bar the subcontractor's recovery of compensatory and punitive damages based on its tort claim. View "Commercial Painting Co. v. Weitz Co., LLC" on Justia Law

Russell is an orthopedic trauma surgeon who invented numerous products such as bone substitutes and surgical devices. He, along with other inventors were shareholders in CelgenTek, a medical device firm. According to the Inventors, Russell’s creations were game-changers in the field of orthopedics. In 2015, the Inventors entered into an agreement with Zimmer as the exclusive distributor of certain CelgenTek products. CelgenTek was experiencing dire financial problems. Zimmer acquired a 10% ownership of CelgenTek for $2 million and purchased the remaining 90% in 2016. The Inventors retained the right to a small percent of the net yield on the products it developed (earnout products). Zimmer agreed that it would use “Commercially Reasonable Efforts,” as defined in the Agreement, to sell the earnout products. From the date the agreement through 2019, Zimmer paid the Inventors approximately $130,000 in earnout payments. The Inventors sued, alleging that Zimmer failed to use Commercially Reasonable Efforts.The Seventh Circuit affirmed that the Inventors failed to state a claim. Many of Zimmer's 21 complained-of actions and inactions reflect how the Inventors hoped Zimmer would have marketed and sold the earnout products or what the Inventors would have done had they not put Zimmer in charge of sales. Others allege broken promises that Zimmer purportedly made before the signing of the agreement that are not actionable due to the agreement’s integration clause. View "Russell v. Zimmer, Inc." on Justia Law

Shake Out, LLC entered into a contract with Clearwater Construction, LLC (“Clearwater”), to repair the building Shake Out’s restaurant occupied. The relationship between the parties quickly deteriorated, resulting in Shake Out filing a lawsuit against Clearwater. The parties attempted to mediate their dispute but were unsuccessful. After the case had proceeded for some time, Clearwater sought to compel arbitration pursuant to the contract. Shake Out objected, asserting that Clearwater had waived its right to enforce the arbitration clause because it had participated in the litigation for almost ten months before seeking to compel arbitration. The district court concluded Clearwater had not waived its right to seek arbitration and entered an order compelling arbitration and staying the proceedings. Finding no reversible error in that judgment, the Idaho Supreme Court affirmed. View "Shake Out, LLC v. Clearwater Construction, LLC" on Justia Law

Plaintiff NexPoint holds $7.5 million in subordinated notes issued by Acis CLO-2015-6 Ltd. (the “Issuer”), as part of a CLO. The Issuer acquired the CLO collateral and conveyed it to a trust under an indenture between the Issuer and U.S. Bank National Association as Trustee (the “Indenture”). Defendant-appellee Acis Capital Management, L.P. (“Acis”) was engaged as the CLO’s portfolio manager pursuant to a Portfolio Management Agreement between the Issuer and Acis (the “PMA”). NexPoint claims that Acis, Terry, and Brigade (together, the “Advisers”) maximized their own profits at the expense of the CLO in violation of fiduciary duties imposed by Section 206 of the IAA. The district court concluded that NexPoint failed to state a claim under Section 215(b). NexPoint appealed, arguing that the District Court erred in limiting Section 215(b)’s application to contracts that require illegal performance, as opposed to lawful contracts performed in an unlawful manner.   The Second Circuit affirmed. The court held that under Section 215(b), a contract’s performance involves the violation of the IAA only if performing a contractual duty requires conduct prohibited by the IAA. No such unlawful conduct is required by the contracts NexPoint seeks to rescind. The court further explained that the text and structure of the IAA, interpreted with the benefit of TAMA, Oxford, and other precedent, make clear that a contract’s performance “involves” the violation of the IAA only if performing a contractual duty requires a party to engage in conduct prohibited by the IAA. NexPoint does not seek rescission of any contract requiring a party to engage in conduct prohibited by the IAA. View "NexPoint Diversified Real Est. Tr. v. Acis Cap. Mgmt., L.P." on Justia Law

This action concerns loans issued by Plaintiff, EMA Financial, LLC, to a group of companies that were controlled by Defendants. The loan agreements contained so-called “floating-price conversion option” provisions, which gave EMA the right to exercise an option to receive company stock in lieu of cash repayment on the loans. When EMA initially sought partial repayment of the loans through the stock repayment option in 2017, the companies delivered the shares to EMA at the agreed-upon discount rate. EMA sought to exercise the conversion option again. This time, the companies failed to deliver the stock. EMA then brought suit, claiming breach of contract and breach of guaranty as to the loan agreements, and fraudulent conveyance and fraudulent inducement. Defendants asserted as an affirmative defense that the loan agreements were void because the conversion option provisions rendered the agreements criminally usurious under New York law. The district court dismissed this defense and entered judgment in favor of EMA for some of its claims and in favor of Defendants for other. Two Defendants appealed, arguing that the district court’s dismissal of the usury defense at summary judgment should be vacated in light of an intervening change in New York law.   The Second Circuit vacated. The court reasoned that it is also clear that Adar Bays II materially altered the Defendants’ rights by providing them with a newly viable avenue by which they could seek to void the Notes and avoid liability for breaching them. Therefore, even assuming the other necessary conditions for collateral estoppel are met, the Defendants are not precluded from raising a usury defense notwithstanding the Corporate Defendants’ default. View "EMA Financial, LLC v. Chancis" on Justia Law

The petitioners here—two motorcycle dealerships who sought to enforce restrictive covenants against a former employee under Florida law— asked the Georgia Supreme Court to reconsider the application of a public-policy exception, citing recent changes in Georgia law that required a more flexible and permissive approach to enforcing restrictive covenants. When contracting parties choose the law of a jurisdiction other than Georgia to govern their contractual relations, Georgia courts generally honored that choice unless applying the foreign law would violate Georgia's public policy. Having taken a fresh look, the Supreme Court concluded that Georgia law remained "the touchstone for determining whether a given restrictive covenant is enforceable in our courts, even where the contract says another state’s law applies." After a careful review of Georgia decisional law and statutory history in this space, the Court found the Georgia legislature has codified this view, including with the recent enactment of the Georgia Restrictive Covenants Act. In this case, the trial court accepted the parties’ choice of Florida law to govern the employment contracts at issue without first determining whether the restrictive covenants in the contracts complied with the GRCA. The Court of Appeals reversed, and in doing so, correctly identified application of the GRCA as the first step in the analysis of whether the public-policy exception overrides the parties’ choice of foreign law. But because the Supreme Court set out a clear framework for that analysis in this opinion, it left it for the trial court to apply that framework in the first instance. The Court therefore vacated the decisions below for further review by the trial court. View "Motorsports of Conyers, LLC, et al. v. Burbach" on Justia Law