Justia Contracts Opinion Summaries

The Supreme Court reversed the trial court's denial of Defendant's motion to compel arbitration, holding that remand was required for reconsideration in light of this Court's holdings in TotalEnergies E&P USA, Inc. v. MP Gulf of Mexico, LLC, 667 S.W.3d 694 (Tex. 2023).Lone Star Cleburne Autoplex filed this suit asserting that Alliance Auto Auctions of Dallas conspired with two of Lone Star's employees in order to embezzle money from Lone Star. Alliance moved to compel arbitration based on arbitration clauses contained in authorization agreements between Lone Star and a company Alliance used to verify and authorize car dealerships to buy and sell in the company's auctions. In opposing the motion Lone Star asserted that its claims fell outside the scope of the arbitration agreement. The trial court denied Alliance's motion to compel. The court of appeals affirmed. The Supreme Court reversed, holding that because the court of appeals decided this case without addressing arguments rejected in TotalEnergies, remand was required. View "Alliance Auto Auction of Dallas, Inc. v. Lone Star Cleburne Autoplex, Inc." on Justia Law

The Supreme Court affirmed in part and reversed in part the decision of the appellate court reversing the judgment of the circuit court granting Defendants' motion to dismiss this case for failure to state a claim upon which relief may be granted, holding that the appellate court erred in finding that Plaintiff's complaint alleged sufficient facts to state a cause of each for counts two and three.Plaintiff, a minority stockholder in a family-owned corporation, brought this action alleging one count of stockholder oppression seeking equitable relief short of dissolution (count one) and compensatory damages for claims of breach of fiduciary duty (count two) and unjust enrichment (count three). The circuit court granted Defendants' motion to dismiss, thereby denying Plaintiff's request for leave to amend the complaint. The appellate court reversed the judgment in its entirety. The Supreme Court affirmed as to count one and reversed as to the remaining counts, holding that Plaintiff's proposed amended complaint set forth sufficient facts to state a claim for stockholder oppression but did not allege sufficient facts to support Plaintiff's direct causes of action for breach of fiduciary duty and unjust enrichment. View "Eastland Food Corp. v. Mekhaya" on Justia Law

The First Circuit affirmed the decision of the district court entering summary judgment in favor of Allstate Insurance Company and dismissing the counterclaims brought by two of Allstate's former agents - James Fougere and Sarah Brody-Isbill - and A Better Insurance Agency, Inc. (ABIA) (collectively, Appellants), holding that there was no error.At issue in the underlying case were spreadsheets that Allstate alleged contained trade secrets misappropriated by Brody-Isbill and Fougere, thus breaching their contracts with Allstate. Allstate filed suit alleging claims for, among other things, breach of contract and trade secrets, violations of the Defend Trade Secrets Act, 28 U.S.C. 1836. Appellants counterclaimed, alleging claims for, inter alia, wrongful interference with contractual relations and violations of Mass. Gen. Laws ch. 93A. The district court granted summary judgment for Allstate and dismissed Appellants' counterclaims. The First Circuit affirmed, holding that the district court (1) did not err in dismissing Appellants' counterclaims; and (2) did not abuse its discretion in granting summary judgment to Allstate on liability for its trade secret and contract claims against Appellants. View "Allstate Insurance Co. v. Fougere" on Justia Law

Land O’Lakes and Commercial Bag entered into a “Packaging Materials Supply Agreement.” Under the Agreement, Land O’Lakes agreed to “make best reasonable efforts” to buy fifteen to twenty percent of its annual polypropylene bag volume from Commercial Bag. Due to concerns with the new manufacturer, however, Land O’Lakes decided to purchase a portion of its polypropylene bags from a domestic manufacturer instead. Land O’Lakes informed Commercial Bag of this decision, and said that it would “result in a discontinuation of the business relationship between Land O’Lakes and Commercial” for polypropylene bags. Land O’Lakes gave Commercial Bag 90 days’ notice that it was terminating the Agreement. Commercial Bag sued, alleging that Land O’Lakes breached the contract by terminating the Agreement without cause, reducing its purchases of polypropylene bags from Commercial Bag, and refusing to pay Commercial Bag’s invoice for plates and artwork. The district court granted summary judgment for Land O’Lakes.   The Eighth Circuit affirmed. The court explained that it agreed with the district court that the term “Agreement” in Amendment #2 is not ambiguous. Land O’Lakes was permitted under the contract to terminate the agreement without cause. Amendment #1 added the “without cause” termination provision to Section 2 of the Agreement, and Amendment #2 did not remove that provision. So the “Agreement” to which Amendment #2 referred was necessarily the original agreement as amended by Amendment #1. The court concluded that because Commercial Bag produced no evidence that it actually incurred costs for plates and dies, the district court correctly granted judgment for Land O’Lakes on this claim. View "Commercial Bag Company v. Land O'Lakes, Inc." on Justia Law

Plaintiff brought a series of claims in New York state court arising out of a syndicated loan transaction facilitated by Defendants, a group of financial institutions. Plaintiff’s appeal presents two issues. The first issue presented is whether the United States District Court for the Southern District of New York had subject matter jurisdiction over this action pursuant to the Edge Act, 12 U.S.C. Section 632. The second issue presented is whether the District Court erroneously dismissed Plaintiff’s state-law securities claims on the ground that he failed to plausibly suggest that notes issued as part of the syndicated loan transaction are securities under Reves v. Ernst & Young, 494 U.S. 56 (1990).   The Second Circuit affirmed. The court held that the district court had jurisdiction under the Edge Act because Defendant JP Morgan Chase Bank, N.A. engaged in international or foreign banking as part of the transaction giving rise to this suit. The court also held that the district court did not erroneously dismiss Plaintiff’s state-law securities claims because Plaintiff failed to plausibly suggest that the notes are securities under Reves. View "Kirschner v. JP Morgan Chase Bank, N.A." on Justia Law

Geringer Capital, Inc., Roger Geringer and Tricycle Entertainment, LLC (collectively Geringer parties) moved to preclude Jeffrey Konvitz, Blue Rider Finance, Inc.’s counsel of record, from testifying at trial in support of Blue Rider’s claim that the Geringer parties fraudulently induced Blue Rider to enter into a settlement agreement that did not accurately reflect the terms negotiated by the parties. The Geringer parties subsequently clarified that their motion should be considered, in the alternative, a motion to disqualify Konvitz. The court granted the motion and disqualified Konvitz, finding the integrity of the judicial process would be impaired if Konvitz served in dual roles. On appeal Blue Rider contends the court should have denied the motion due to the Geringer parties’ excessive delay in raising the issue.   The Second Appellate District reversed. The court concluded that Konvitz’s representation of Blue Rider at trial while also testifying on its behalf would “detract from the proper administration of justice,” the trial court quoted this general description of the basis for the advocate-witness rule, as well as comments explaining the parallel rule in the ABA Model Rules of Professional Conduct (ABA Model Rule 3.7) and in the ABA’s former Model Code of Professional Responsibility, all pointing to the conclusion that the roles of advocate and witness are inconsistent. The court then added its own observation that these dual roles create the risk of error and confusion, and “the trier of fact will constantly keep wondering whether the advocate-witness is acting under the appropriate role such that it will distract from the arguments and evidence presented.” View "Geringer v. Blue Rider Finance" on Justia Law

Ceska zbrojovka Defence SE (“CZ Czech”) was a firearms manufacturer based in the Czech Republic. To do business in the United States, it had several subsidiaries, including CZ USA, CZ Czech’s Kansas-based subsidiary. Vista Outdoor, Inc. was a Minnesota company that designed, manufactured, and marketed outdoor recreation and shooting products. In November 2018, Vista and CZ Czech entered into an expense reimbursement agreement covering CZ Czech’s potential acquisition of a Vista firearm brand. Under the contract, Vista was obligated to reimburse CZ Czech for certain reasonable expenses in connection with its evaluation and negotiation of the proposed transaction. Even though the sale was not consummated, Vista refused CZ Czech’s subsequent reimbursement demands. CZ USA, not CZ Czech, filed a federal diversity action in the District of Kansas against Vista for breach of contract. The "twist" was that there was no contract between CZ USA and Vista, nor was CZ USA a beneficiary of the contract. CZ Czech, soon realizing the mistake, attempted to amend the complaint under Rule 15 of the Federal Rules of Civil Procedure and substitute itself as the party-plaintiff. The district court declined, finding that the original complaint controlled and that CZ USA, as a non-party to the contract, lacked standing to sue, meaning the court lacked subject-matter jurisdiction over the dispute. To this, the Tenth Circuit concurred and affirmed: the district court lacked subject-matter jurisdiction and correctly dismissed the lawsuit. View "Ceska Zbrojovka Defence SE ("CZ") v. Vista Outdoor" on Justia Law

Two companies filed a lawsuit in federal court against two of their former employees, who had served in executive positions. The former executives responded by suing the companies in Florida state court. They later moved for summary judgment in the federal action. While that motion was pending, the companies moved for a voluntary dismissal without prejudice of their federal action, which the executives opposed. The district court granted the companies’ motion for voluntary dismissal, and it denied the executives’ request for attorney’s fees and costs incurred in defending the federal lawsuit to that point. On remand, the district court again granted the voluntary dismissal. The executives moved to alter or amend that judgment and be awarded fees and costs immediately, which the court denied. The executives appealed.   The Eleventh Circuit affirmed. The court explained that the district court sufficiently protected the executives from the prejudice of duplicative litigation by essentially inviting them to move for payment of their costs and fees if the companies ever refiled their federal lawsuit. The court adequately explained its reasoning for granting the dismissal without prejudice on that condition. In all aspects of the decision, the court acted within its discretion. View "Emergency Recovery, Inc., et al v. Bryan Hufnagle, et al" on Justia Law

Service hired Forwarders as its agent in 2010. The Agreement had a three-year term, a continuous one-year renewal option, and a mutual nonrenewal provision. A 2013 amendment stated that the Agreement would renew perpetually for consecutive one-year terms, unless Service, in its sole discretion, notifies Forwarders of its intention to terminate the Agreement 30 days before the annual expiration date. The amendment, however, left undisturbed the Agreement’s provision that Service shall not be deemed to be in default unless Forwarders has provided written notice of an alleged material breach and has given Service an opportunity to cure, after which Forwarders may terminate. “[T]ermination of this Agreement by [Forwarders] for any other reason shall be deemed a termination without cause.”Forwarders sought a declaratory judgment that the amended Agreement was terminable at will. Service conceded that the amended Agreement was of indefinite duration and that Illinois law presumes that such contracts are terminable at will but argued the presumption was rebutted because the Agreement provided that Forwarders could end the Agreement only if Service failed to timely cure a material breach after notification. The court granted judgment on the pleadings that the termination was lawful. The Seventh Circuit affirmed. The amended Agreement lacks a clear statement that the contract can only be terminated based upon the occurrence of certain conditions or events. Service has not rebutted the Illinois law presumption that this contract of indefinite duration is terminable at will. View "Beach Forwarders, Inc. v. Service By Air, Inc." on Justia Law

Plaintiff Zubair Kazi, through co-plaintiff KFC of Pueblo, Inc., owned the only Kentucky Fried Chicken restaurant in Pueblo, Colorado. In 2019 Defendant KFC US, LLC licensed a second Kentucky Fried Chicken restaurant in Pueblo. Kazi believed that KFC acted improperly in how it went about licensing this second restaurant and sued KFC for breach of contract, bad faith (breach of the implied covenant of good faith and fair dealing), promissory estoppel, and unjust enrichment. His lawsuit went to trial on his bad-faith claim only, and the jury found in his favor. KFC appealed. The Tenth Circuit held that Kazi’s claim for breach of the implied covenant of good faith and fair dealing was barred by Kentucky law because KFC’s alleged bad faith did not undermine any benefit or protection afforded to Kazi by his franchise agreement with KFC. The court therefore vacated the judgment and remanded for entry of judgment in favor of KFC and against Kazi and KFC of Pueblo, Inc. View "Kazi, et al. v. KFC US" on Justia Law