Justia Contracts Opinion Summaries

In this dispute between the residents of a senior-living facility in a receivership over the proceeds generated by the sale of the facility the Supreme Court reversed the decision of the court of appeals reversing the conclusion of the circuit court that Bondholders' mortgage lien was superior to Residents' entrance fee claims, holding that Bondholders' mortgage lien was superior to Residents' contract claims.After Atrium, the subject senior-living facility, defaulted on debt service payments to Bondholders, it filed a petition for receivership. The receiver sold the assets for more than $4 million in proceeds. Atrium owed Bondholders more than $6 million secured by a valid mortgage lien on the facility's estate, but many of the facility's Residents claimed they were owed reimbursement of the entrance fees they paid to Atrium. The circuit court entered judgment for Bondholders, and the court of appeals reversed. The Supreme Court reversed, holding that Bondholders were entitled to first payment from the proceeds of the sale of Atrium's assets. View "Casanova v. Polsky" on Justia Law

Plaintiff, a franchisor of tax preparation services, appeals from the district court’s denying its motion for preliminary injunctive relief to enforce, among other things, covenants not to compete or solicit former clients against Defendants, its former franchisees. On appeal, Plaintiff argues that the district court erroneously applied a heightened standard for obtaining preliminary injunctive relief, failed to credit an undisputed fact that Plaintiff had grounds to terminate the franchise agreements because Defendants were violating federal tax laws, and was compelled as a matter of law to find that it would suffer irreparable harm to its goodwill and client relationships in the absence of an injunction.   The Second Circuit affirmed the order denying preliminary relief. The court concluded that the district court applied the appropriate standard, permissibly credited Defendants’ denials that they violated federal tax laws, and acted well within its discretion in concluding that Plaintiff would not suffer irreparable harm. The court reasoned that nothing in the court’s precedents compels a district court to find irreparable harm to goodwill and client relationships in covenant-not-to-compete or -solicit cases simply because irreparable harm is often found in such cases. Instead, a plaintiff must present the district court with actual evidence. On that record, the court wrote it cannot conclude that the district court’s finding that Plaintiff had failed to make a strong showing of irreparable injury represented a clear error or exceeded the court’s discretion. View "JTH Tax d/b/a Liberty Tax Service v. Agnant" on Justia Law

Plaintiffs William Kainz and GeoChemicals, LLC appealed a district court’s order granting Jacam Chemical Co. 2013, LLC’s motion to abate and an order and judgment awarding attorney’s fees to Jacam. Plaintiffs argued the district court erred by abating the action and by awarding attorney’s fees. The North Dakota Supreme Court concluded the district court misapplied the law in granting the motion to abate and abused its discretion by awarding attorney’s fees. Accordingly, judgment was reversed and the case remanded for further proceedings. View "Kainz, et al. v. Jacam Chemical Co. 2013" on Justia Law

Nodak Insurance Company (“Nodak”) appealed, and John D. Miller, Jr. d/b/a John Miller Farms, Inc. and JD Miller, Inc. (collectively, “Miller”) cross-appealed a judgment determining Miller’s insurance policy with Nodak provided coverage and awarding Miller damages. The dispute arose from Miller’s sale of seed potatoes to Johnson Farming Association, Inc. (“Johnson”). Miller operated a farm in Minto, North Dakota. During the 2015 planting season, Miller planted seed potatoes. Miller claimed a North Dakota State Seed Department representative inspected the field where the seed was being grown on July 13, July 26, and September 3, 2015, which indicated no problems with the seed crop. On or about September 3, 2015, Miller “killed the vines” in anticipation of and as required to harvest the seed crop. Miller harvested the seed crop between September 18 and September 25, 2015, and the harvested seed crop was immediately taken from the field to Miller’s storage facility south of Minto. n December 31, 2015, Miller and Johnson entered into a contract for the sale of seed potatoes. The contract for sale disclaimed any express or implied warranty of merchantability or fitness for a particular purpose and contained a limitation of consequential damages and remedies. In June or July 2016, Johnson informed Miller of problems with some of the seed potatoes he had purchased. Johnson stated an analysis definitively showed very high levels of the herbicide glyphosate, which caused the problems with the seed potatoes. The seed potatoes did not grow properly, and Johnson alleged damages as a result. It was undisputed the seed potatoes were damaged because an employee of Miller inadvertently contaminated the seed potatoes with glyphosate while they were growing on Miller’s Farm. In July 2016, Miller sought coverage for the loss from Nodak. Because the North Dakota Supreme Court concluded a policy exclusion applied and precluded coverage, the North Dakota Supreme Court reversed the district court's judgment. View "Miller, et al. v. Nodak Ins. Co." on Justia Law

The Supreme Court held that on-going, at-will, consumer-business relationships consist of the day-to-day offer and acceptance of unilateral contracts, and thus, businesses may effectively modify the non-negotiated, standardized terms governing those relationships if the business can demonstrate certain elements.The United States District Court for the District of Arizona certified to the Supreme Court the question of whether an effective modification of a consumer contract can occur when the offeror sends notice of the proposed modification to the offeree through a communication channel to which the offeree previously consented even if the offeree fails to respond. In considering the requirements for modifying the terms of at-will, on-going, business-consumer relationships, the Supreme Court held that its jurisprudence did not provide definitive guidance and that Restatement of Consumer Contracts 3 is hereby adopted to fill that void. View "Cornell v. Desert Financial Credit Union" on Justia Law

Ross worked as a sales representative for First Financial until 2018. Ross sued First Financial and two of its senior executives for sales commissions he claimed he was owed. Under the terms of his employment contract, Ross could earn a commission both when a customer first leased an item from First Financial and then at the end of a lease term, if the customer either extended the lease or purchased the equipment outright. In early 2017, First Financial acted to reduce future commission rates. Ross argued that First Financial breached his contract by applying the new, lower commission rates to end-of-lease transactions that occurred after the change took effect if the leases originally began before the change.The Seventh Circuit affirmed summary judgment in favor of the defendants. The company’s commission payments to Ross were correct because commissions on end-of-lease transactions are not earned until the customer actually agrees to and pays for the new transactions. Although Ross was reluctant to accept the new plan, he still accepted it by continuing to work for First Financial under its terms. View "Ross v. First Financial Corporate Services, Inc." on Justia Law

Stryker develops, manufactures, and sells spinal implants and products, and employed Abbas from 2013-2022. Abbas purports to have worked exclusively within Stryker’s finance department. Stryker claims that Abbas worked in various roles, including in sales. Abbas regularly used significant amounts of Stryker’s confidential information and trade secrets and supported Stryker’s litigation efforts. Abbas entered into confidentiality, noncompetition, and nonsolicitation agreements with Stryker when he commenced his employment, and again in 2022.Alphatec competes with Stryker. Stryker alleges that Alphatec "systematically misappropriate[s] Stryker[’s] confidential information, trade secrets, customer goodwill, and talent” and is litigating against Alphatec and former Stryker employees in several cases. Abbas resigned from Stryker to take a newly-developed position with Alphatec, a sales role, “crafted to protect Stryker’s confidential information.” Stryker sued for breach of contract and misappropriation of trade secrets.The Sixth Circuit affirmed the issuance of a preliminary injunction on behalf of Stryker. The district court crafted the injunction to preserve the status quo, reserving the possibility that other prospective jobs might be consistent with Abbas's employment agreement. It is not an impermissible industry-wide ban. Stryker is likely to succeed on the merits, based on findings that Abbas worked for Stryker in both sales and finance; Abbas had unfettered access to Stryker’s most sensitive sales and financial information, Stryker’s sales representatives, and key customer decision-makers; the Alphatec position involved work similar to the work Abbas performed for Stryker; and Abbas supported Stryker on litigation matters. View "Stryker Employment Co., LLC v. Abbas" on Justia Law

G Companies Management, LLC, a California limited liability company, appealed an order staying its cross-complaint against LREP Arizona, LLC, based on the forum selection clause in a loan agreement between the parties. The cross-complaint alleged multiple causes of action, all based on the assertion that the interest rates charged in the loan agreement were usurious under California law, and G Companies contended the trial court erred because a forum selection clause was not enforceable if doing so would deprive a California resident of the protections of the state's fundamental public policy. The trial court held enforcement of the selection clause was appropriate because: (1) the loan transaction was substantially related to the chosen forum (Arizona); and (2) California had a complicated relationship with usury and allowed unlimited interest rates to be charged in numerous circumstances. LREP contended the court’s decision was correct because the “many exceptions” to California’s interest rate limits demonstrate that the prohibition of usury “is not a fundamental policy” in California. To this, the Court of Appeal disagreed and therefore reversed. "By virtue of its inclusion in article XV, section 1, of our Constitution, and because it cannot be waived, we find that California’s usury law does reflect a significant public policy. It prohibits money lending at rates higher than specified, even while recognizing numerous exceptions to those rate limitations. The complexity of the law does not imply a lack of commitment to the policy. To the contrary, such a fine-tuned approach suggests that significant effort has gone into determining the circumstances under which interest rate limitations are necessary for the protection of Californians." View "G Companies Management, LLC v. LREP Arizona LLC" on Justia Law

In this appeal, the issue presented was whether a contract for the sale of business assets also contained language conveying an enforceable leasehold interest in real property in favor of the buyer. At summary judgment, the district court determined that the Ellis Family Trust owned the real property underlying this leasehold dispute, and that the contract selling the assets of Pullover Prints Corporation (“PPC”) to 616, Inc. (“616”) did not convey a leasehold interest to 616 because material terms necessary to form a valid and enforceable lease were missing. Instead, the district court concluded that the contract involving the sale of assets only contained an “agreement to agree” on the terms of a written lease at a later date. Accordingly, the district court entered judgment in favor of the Ellis Family Trust. 616 appealed, arguing that all material terms necessary to form a valid and enforceable lease could be found within the asset contract. Respondents PPC, Mae Properties, LLC (“Mae”), and Ellis in his individual capacity and in his capacity as trustee for the Ellis Family Trust, cross-appealed the district court’s decision regarding their collective motion for attorney fees. Finding no reversible error in either the appeal or cross-appeal, the Idaho Supreme Court affirmed. View "616 Inc. v. Mae Properties, LLC" on Justia Law

The Supreme Court affirmed the judgment of the trial court in this dispute over whether a property insurance policy providing coverage for "direct physical loss of or physical damage to" covered property provided coverage for business income losses arising from the suspension of business operations during the COVID-19 pandemic, holding that the trial court correctly granted Defendant's motion for summary judgment.Plaintiffs, who suspended their business operations during the COVID-19 pandemic and consequently lost business income and incurred other expenses, filed claims for losses with Defendants. After Defendants denied the claims Plaintiffs brought this actin seeking a judgment declaring that the relevant insurance policies covered their economic losses under the circumstances. The trial court granted summary judgment for Defendants. The Supreme Court affirmed, holding that because Plaintiffs did not suffer any "direct physical loss" of covered property, there was no genuine issue of material fact as to whether the policies did not cover Plaintiffs' claims. View "Connecticut Dermatology Group, PC v. Twin City Fire Insurance Co." on Justia Law