Justia Contracts Opinion Summaries

Articles Posted in Business Law
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In a dispute between two IT staffing firms, Vinculum, Inc. and Goli Technologies, LLC, the Supreme Court of Pennsylvania held that the trial court erred by not awarding attorney fees to Vinculum, as stipulated in their contract, after it found that Goli Technologies breached the contract. The court further held that the trial court did not err by limiting Vinculum's damages to the one-year non-compete period specified in the contract.The case originated from Goli Technologies' breach of a consulting agreement that contained a one-year non-compete provision. Vinculum sued for breach of contract, seeking both attorney fees and lost-profit damages. The trial court found for Vinculum but denied attorney fees and limited the award of damages to the one-year non-compete period. The Superior Court affirmed the trial court's decision.Reversing the Superior Court's decision regarding attorney fees, the Supreme Court held that the trial court should have awarded Vinculum attorney fees as stipulated in the contract. The court remanded the case to the trial court for a hearing to determine the reasonable amount of attorney fees to be awarded to Vinculum.Regarding the lost-profit damages, the Supreme Court agreed with the trial court and the Superior Court that Vinculum's damages were limited to the period of the non-compete clause. The court held that although damages beyond the non-compete period are not absolutely barred, Vinculum did not establish at trial that it suffered lost-profit damages extending beyond the non-compete period. Thus, the court affirmed the lower courts' decisions on this issue. View "Vinculum, Inc. v. Goli Technologies, LLC" on Justia Law

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In the case before the Supreme Court of the State of Alaska, MJ Corporation, the owner of an automated teller machine (ATM), sued Societe Financial, LLC, an ATM processor, and its owner, James Dainis, for breach of contract, conversion, and for piercing the corporate veil. MJ Corp. alleged that it had not been receiving its full share of transaction fees and reimbursement for vault cash dispensed by the ATM as per their agreement.The court reversed summary judgment on the breach of contract claim and piercing the corporate veil, as the processor presented genuine issues of material fact pertaining to those claims. The court held that while MJ Corp. presented admissible evidence of an implied contract and breach of the same, Dainis's affidavit raised a genuine dispute of material fact regarding the damages, thus barring summary judgment on the breach of contract claim.The court affirmed the superior court’s decision to grant summary judgment on the conversion claim. It found that MJ Corp. satisfied its prima facie burden for summary judgment, and Societe's evidence was too conclusory to present a genuine dispute of material fact regarding conversion.Regarding the claim to pierce the corporate veil, the court found that there was insufficient evidence on summary judgment to hold Dainis personally liable or to pierce the corporate veils of Societe's subsidiary company and another company owned by Dainis. The case was remanded for further proceedings in line with the court's opinion. View "Societe Financial, LLC v. MJ Corporation" on Justia Law

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In a dispute between Tara Shaw and Tara Shaw Designs, Ltd. (collectively, "Shaw") and Restoration Hardware ("RH"), the United States Court of Appeals for the Fifth Circuit upheld the district court's dismissal of Shaw's claims. Shaw, a furniture designer, had entered into a contract with RH for the sale and licensing of certain furniture designs. However, Shaw alleged that RH breached an oral agreement by using Shaw's artisans to produce items not part of their licensing agreement without seeking Shaw's permission and providing additional compensation.Shaw brought claims of breach of contract, detrimental reliance, and unjust enrichment against RH. However, the district court dismissed these claims and denied Shaw's motions to reconsider and amend the complaint. On appeal, the Court of Appeals affirmed these decisions.Regarding the breach of contract claim, the court stated that the alleged oral agreement was unenforceable because it left key terms for future negotiation, making it an "agreement to agree" which is not enforceable under Louisiana law.The court dismissed Shaw's detrimental reliance claim since Shaw failed to provide any evidence of damages or detriment due to their reliance on RH's alleged promise. The only detriment Shaw suffered was an opportunity to negotiate compensation in the future, which the court deemed insufficient for a detrimental reliance claim.The court also dismissed Shaw's unjust enrichment claim. While Shaw argued that the dismissal of their other claims demonstrated a lack of alternative remedies, the court found that Shaw failed to provide evidence of detriment necessary to support an unjust enrichment claim.Lastly, Shaw's motion to further amend the complaint was denied. The court found that Shaw failed to show good cause for amendment and that proposed amendments were futile. View "Shaw v. Restoration Hardware" on Justia Law

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The case involves Consolidated Restaurant Operations (CRO), a company that owns and operates dozens of restaurants, and Westport Insurance Corporation (Westport). CRO had an "all-risk" commercial property insurance policy with Westport, which covered "all risks of direct physical loss or damage to insured property." When the COVID-19 pandemic hit, causing CRO to suspend or substantially curtail its operations due to the presence of the virus in its restaurants and government restrictions on nonessential businesses, CRO sought coverage for the ensuing loss of revenue. Westport denied coverage, stating that the coronavirus did not cause "direct physical loss or damage" to CRO's properties. CRO filed a lawsuit seeking a declaration of Westport's obligations under the policy and damages for breach of contract.The Supreme Court of New York dismissed the complaint, declaring that the policy did not cover CRO's alleged losses. The Appellate Division affirmed this decision, interpreting "direct physical loss or damage" to require a tangible alteration of the property, which CRO had not demonstrated.The case was then brought to the New York Court of Appeals. The court held that "direct physical loss or damage" requires a material alteration or a complete and persistent dispossession of insured property. The presence of the virus in the restaurants and the resulting cessation of in-person dining services did not meet this requirement. The court thus affirmed the lower courts’ dismissal of the complaint. View "Consolidated Rest. Operations, Inc. v Westport Insurance Corp." on Justia Law

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In a dispute between SmartSky Networks, LLC and DAG Wireless, Ltd., DAG Wireless USA, LLC, Laslo Gross, Susan Gross, Wireless Systems Solutions, LLC, and David D. Gross over alleged breach of contract, trade secret misappropriation, and deceptive trade practices, the United States Court of Appeals for the Fourth Circuit ruled that the district court did not have the jurisdiction to enforce an arbitration award. Initially, the case was stayed by the district court pending arbitration. The arbitration tribunal found in favor of SmartSky and issued an award, which SmartSky sought to enforce in district court. The defendants-appellants argued that, based on the Supreme Court decision in Badgerow v. Walters, the district court lacked subject matter jurisdiction to enforce the arbitration award. The Fourth Circuit agreed, noting that a court must have a basis for subject matter jurisdiction independent from the Federal Arbitration Act (FAA) and apparent on the face of the application to enforce or vacate an arbitration award. The court concluded that the district court did not have an independent basis of subject matter jurisdiction to confirm the arbitration award. As such, the court reversed and remanded the case to the district court for further proceedings. View "Smartsky Networks, LLC v. DAG Wireless, LTD." on Justia Law

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The City of Richmond Heights, Missouri filed a claim with Mt. Hawley Insurance Company under a commercial property policy for losses of tax revenue due to government-mandated COVID-19 closures. Mt. Hawley denied the claim and sued for a declaratory judgment that it was not obligated to cover the losses. Richmond Heights counterclaimed with five counts: (1) breach of contract, (2) vexatious refusal to pay, (3) fraudulent inducement and misrepresentation, (4) negligent misrepresentation, and (5) breach of fiduciary duty. The United States District Court for the Eastern District of Missouri dismissed the counterclaims, denied amendments to two of them, and granted declaratory judgment to Mt. Hawley. On appeal, the United States Court of Appeals for the Eighth Circuit affirmed the decision of the lower court.The appellate court held that the insurance policy required "direct physical loss of or damage to property" for coverage which was not met by the COVID-19 shutdowns. The court also rejected the city's argument that the Additional Covered Property Endorsement in the policy removed the "physical damage or loss" requirement for losses of sales tax revenues. Furthermore, the court found that the city's claims of fraud, misrepresentation and breach of fiduciary duty were not distinct from its breach of contract claim and thus were properly dismissed by the district court. Lastly, the court affirmed the district court's denial of the city's motion to amend its breach of contract and vexatious refusal claims, concluding that the proposed amendments would not have survived a motion to dismiss. View "Mt. Hawley Insurance Company v. City of Richmond Heights" on Justia Law

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In this case, BioCorRx, Inc., a publicly traded company engaged in providing addiction treatment services and related medication, was involved in a dispute with VDM Biochemicals, Inc., a company specializing in chemical synthesis and distribution. The dispute arose from a business relationship in which BioCorRx intended to partner with VDM to develop and commercialize a compound for treating opioid overdose, known as VDM-001. BioCorRx issued several press releases, allegedly making misrepresentations and improperly disclosing confidential information about the development of VDM-001. VDM filed a cross-complaint against BioCorRx and its president, Brady Granier, for breach of contract, fraud, and violation of trade secrets among other claims. In response, BioCorRx and Granier filed a motion to strike the allegations based on the anti-SLAPP statute, arguing that the press releases were protected speech under the statute.The Court of Appeal of the State of California, Fourth Appellate District, Division Three, ruled that the press releases fell within the commercial speech exemption of the anti-SLAPP statute, as they were representations about BioCorRx’s business operations made to promote its goods and services to investors. As such, these statements were not protected by the anti-SLAPP statute. Consequently, the court reversed the portion of the trial court’s order granting the anti-SLAPP motion as to the press releases. However, the court affirmed the portion of the order granting the anti-SLAPP motion as to Brady Granier, BioCorRx’s president, due to insufficient argument presented against this part of the ruling. View "BioCorRx, Inc. v. VDM Biochemicals, Inc." on Justia Law

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In this case before the United States Court of Appeals for the Eighth Circuit, Jet Midwest International Co., Ltd. (Jet Midwest International) sought attorneys’ fees and costs from Jet Midwest Group, LLC (JMG) and other defendants (collectively referred to as the Ohadi/Woolley defendants). The request was made in connection with a fraudulent transfer action filed under the Missouri Uniform Fraudulent Transfer Act (MUFTA), following a term loan agreement between Jet Midwest International and JMG which JMG failed to repay. The district court awarded attorneys’ fees and costs against the Ohadi/Woolley defendants, who were not parties to the term loan agreement, based on its finding that they conspired with JMG to violate the MUFTA.On appeal, the Eighth Circuit found that the district court erred in awarding attorneys’ fees and costs against the Ohadi/Woolley defendants based on the term loan agreement since they were not parties to that agreement. However, the court held that the district court's finding of "intentional misconduct" by the Ohadi/Woolley defendants in conspiring with JMG to violate the MUFTA could justify an attorneys’ fees award under the "special circumstances" exception to the American Rule (which generally requires each party to bear its own attorneys’ fees).The court vacated the award and remanded the case back to the district court to calculate a reasonable attorneys’ fee using the lodestar method (multiplying the number of hours reasonably expended by the reasonable hourly rates), and to determine the extent to which the claimed costs are recoverable under the relevant statute. The court's holding did not limit JMG’s ultimate responsibility for attorneys’ fees and costs under the term loan agreement. View "Jet Midwest International Co. v. Ohadi" on Justia Law

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In the case before the Supreme Court of Alabama, David and Anna Roberson appealed from an order by the Jefferson Circuit Court that dismissed their indemnification claim against Drummond Company, Inc. ("Drummond"). David, a former vice president of Drummond, was convicted of bribery in federal court for approving payments that were part of an environmental public-relations campaign. After his conviction, Drummond continued to pay David's salary and benefits for a period, but later terminated his employment. The Robersons then sued Drummond and others, asserting multiple claims, including one for indemnification. They alleged that Drummond had directed David to make the payments that were later deemed to be bribes, and that he had incurred damages as a result, for which Drummond had a duty to indemnify him. The circuit court dismissed the indemnification claim, ruling that indemnification generally comes into play in a contractual arrangement, and the Robersons had neither produced nor alleged the existence of a contract or agreement establishing such a duty. The Robersons appealed this decision.The Supreme Court of Alabama affirmed the lower court's decision. The court found that the losses the Robersons sought to recover were not indemnifiable, as they were not judicially imposed liabilities to a third party or out-of-pocket expenses that David incurred in processing the invoices. The court also found that the Robersons failed to demonstrate they had sufficiently pleaded a claim for common-law indemnification. The court rejected the Robersons' argument that Drummond's resolution to pay David's salary and benefits constituted a contract for indemnification, stating that the obligation they alleged Drummond undertook was not a promise to indemnify David, but simply a promise not to fire him. Finally, the court found that the Robersons had failed to preserve their claim for court-ordered indemnification under the Alabama Business and Nonprofit Entity Code for appellate review, as they had not asserted this argument in the trial court. View "Roberson v. Drummond Company, Inc." on Justia Law

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In a contractual dispute between Blueacorn PPP, LLC and Paynerd LLC, Paynerdier LLC, Matthew Mandell, and Taylor Hendricksen, the Court of Chancery of the State of Delaware denied the defendants' motion to dismiss Blueacorn's complaint for negligent misrepresentation. The defendants argued that there was no equity jurisdiction because there was no fiduciary or special relationship between the parties, and the relationship was governed by commercial contracts negotiated and performed at arms' length. However, Blueacorn claimed that Pay Nerd had a pecuniary duty to provide accurate information which they breached by supplying false information, and Blueacorn suffered a pecuniary loss due to reliance on that false information.The court found that Blueacorn had sufficiently alleged misrepresentation by claiming that the defendants' false statements were made with the intention of inducing a buyer to form a new company to engage in business with the seller. The court also noted that Blueacorn's claim of negligent misrepresentation had been pled with enough particularity as required by Rule 9(b). However, the court also expressed reservations about whether Blueacorn had pled a pecuniary interest strong enough to invoke equity jurisdiction based on negligent misrepresentation, noting that nearly every party involved in a business contract dispute would have a pecuniary interest in the transaction. Despite this, the court decided not to dismiss the claim at this stage, citing the interest of judicial economy. The court left open the possibility of revisiting the motion to dismiss at the conclusion of the trial. View "Blueacorn PPP, LLC v. Pay Nerd LLC" on Justia Law