Justia Contracts Opinion Summaries

In this case, Eli Global, LLC, and Greg Lindberg appealed a summary judgment entered against them by the Mobile Circuit Court in Alabama. The dispute involved Eli Global's alleged failure to fulfill its obligations on a promissory note and Lindberg's alleged failure to fulfill his obligations on a guaranty of that promissory note. The promissory note and guaranty were part of an agreement to purchase a healthcare company. Eli Global and Lindberg also challenged the circuit court's award of attorney fees and expenses to the plaintiffs.The Supreme Court of Alabama affirmed the lower court's judgment finding Eli Global and Lindberg liable based on the promissory note and the guaranty, and its award of the principal amount plus interest due based on that liability. The court found that the promissory note was not a negotiable instrument under New York law, and even if it was, the plaintiffs were not required to prove who possessed the promissory note because Eli Global and Lindberg waived that argument in the lower court. In addition, the court found that one of the plaintiffs did not release his claims against Lindberg that were based on the guaranty.However, the court remanded the case back to the lower court to provide a more detailed explanation for the award of attorney fees and expenses. The court found that the lower court's order did not provide sufficient explanation on how it determined the award of attorney fees and expenses. The lower court was instructed to return its explanation to the Supreme Court within 42 days. View "Eli Global, LLC v. Cieutat" on Justia Law

Plaintiff Team Industrial Services, Inc. (Team) suffered a $222 million judgment against it in a wrongful-death lawsuit arising out of a steam-turbine failure in June 2018 at a Westar Energy, Inc. (Westar) power plant. Team sought liability coverage from Westar, Zurich American Insurance Company (Zurich), and two other insurance companies, arguing that it was, or should have been, provided protection by Westar’s Owner-Controlled Insurance Program (OCIP) through insurance policies issued by Zurich and the two other insurers. Team’s claims derived from the fact that its liability for the failure at the Westar power plant arose from work that had previously been performed by Furmanite America, Inc. (Furmanite), which had coverage under Westar’s OCIP. The district court granted summary judgment to Defendants, and Team appealed. Not persuaded by Team's arguments for reversal, the Tenth Circuit affirmed the district court. View "Team Industrial Services v. Zurich American Insurance Company, et al." on Justia Law

Ann Hon and Herman Yee worked together in Hon’s company, but they sued each other when their relationship ended. Their litigation turned up a lien on one of their homes—a lien in favor of a long-suspended corporation called Panrox International (USA), Inc. A third-party attorney heard about the lien, revived Panrox, and entered the litigation between Hon and Yee, claiming Hon and Yee owed Panrox $141,000 from a 1995 debt. Hon and Yee said their debt to Panrox was resolved in 1999. In 2022, the trial court ruled for Hon and Yee. Panrox appealed.   The Second Appellate District affirmed. The court explained that Panrox’s first claim of error is that the trial court erroneously shifted the burden of proof to Panrox by ordering it to file a motion demonstrating the validity of its Los Angeles deed of trust. Panrox forfeited this objection by failing to raise it in the trial court. Had Panrox made this objection, the trial court could have addressed the issue and, if need be, rectified the problem on the spot. It is detrimental for parties to store up secret objections they deploy only if they lose and, after much cost and delay, appeal. Similarly, Panrox, in a footnote, complained the trial court never afforded it the opportunity “to present a summary judgment motion or some other procedural vehicle that would have properly shifted the burden of proof to Respondents Hon and Yee after Panrox made its initial showing.” The court explained that Panrox forfeited this argument by failing to present it to the trial court. View "Yee v. Panrox Internat. (USA), Inc." on Justia Law

The Court of Chancery denied Sunder Pros LLC's application for a preliminary injunction against Tyler Jackson because Sunder could not establish a reasonable likelihood of success on the merits and further denied Sunder's application for a preliminary injunction against the remaining defendants for lack of an underlying breach of contract.Jackson, the former head of Sunder's sales who lived in Texas, joined Solar Pros, LLC and resigned from Sunder. Sunder, whose headquarters were in Utah but was a Delaware LLC, brought this suit arguing that Jackson was bound by restrictive covenants (the covenants). The Court of Chancery denied relief, holding (1) the covenants, which were facially unreasonable in their own right, were part of an agreement that could not be enforced against Jackson because the agreement originated in an egregious breach of fiduciary duty; and (2) as to the remaining Defendants, there was no underlying breach of contract, and Defendants did not engage in conduct that could support a claim for tortiously interfering with the covenants as required by Utah law. View "Sunder Energy, LLC v. Jackson" on Justia Law

Gary Sepanossian, dba G.S. Construction (Sepanossian), individually and as class representative, filed a class action against National Ready Mix Concrete Co., Inc. (Ready Mix), alleging Ready Mix charged its customers an “energy” fee and an “environmental” fee “wholly untethered to any actual cost for ‘energy’ or ‘environmental’ issues” that Ready Mix instead “recognize[s] as profit.” The complaint alleges causes of action for (1) violation of California’s Unfair Competition Law (UCL) under the fraudulent and unfair business practices prongs; (2) breach of contract; and (3) “unjust enrichment.” After Ready Mix answered the complaint, Sepanossian filed a motion for class certification. The trial court granted class certification but expressed doubts about Sepanossian’s legal claims and invited the parties to present a motion for judgment on the pleadings to address the merits before class notice. The parties agreed to do so, and Ready Mix subsequently filed a motion for judgment on the pleadings, which the trial court granted on the UCL and unjust enrichment causes of action.   The Second Appellate District reversed because Sepanossian alleged facts sufficient to state a cause of action under the UCL but affirmed dismissal of the unjust enrichment cause of action. The court explained that here, Ready Mix customers cannot buy concrete from it while avoiding being charged energy and environmental fees. On a motion for judgment on the pleadings, the court wrote that it must accept as true Sepanossian’s allegation the fees were unavoidable for customers who wished to purchase concrete from Ready Mix. View "Sepanossian v. Nat. Ready Mix Co." on Justia Law

Plaintiff filed a putative shareholder class action complaint in New York State Supreme Court, alleging Maryland state law claims on behalf of himself and all similarly situated preferred stockholders of Cedar Realty Trust, Inc. (“Cedar”), a New York-based corporation incorporated in Maryland, following its August 2022 merger with Wheeler Real Estate Investment Trusts, Inc. (“Wheeler”) (collectively, “Defendants”). The complaint alleged Cedar and its leadership breached fiduciary duties owed to, and a contract with, shareholders such as Plaintiff and that Wheeler both aided and abetted the breach and tortiously interfered with the relevant contract. The Defendants collectively removed the case, invoking federal jurisdiction under the Class Action Fairness Act (CAFA), but the district court remanded the case to state court after Krasner argued that an exception to CAFA jurisdiction applied to his claims.   The Second Circuit dismissed Defendants’ appeal and concluded that the “securities-related” exception applies. The court explained that here, the securities created a relationship between Cedar and Plaintiff that gave rise to fiduciary duties on the part of Cedar and the potential for additional claims against those parties who aid and abet Cedar’s breach of those duties. Thus, the aiding and abetting claim—and by the same logic, the tortious interference with contract claim—“seek enforcement of a right that arises from an appropriate instrument.” As such, the securities-related exception applies, and the district court properly remanded the case to state court. View "Krasner v. Cedar Realty Trust, Inc." on Justia Law

Monarch Casino & Resort, Inc. appealed a district court’s grant of Affiliated FM Insurance Company’s (“AFM”) motion for partial judgment on the pleadings, which denied Monarch coverage under AFM’s all-risk policy provision, business-interruption provision, and eight other additional-coverage provisions. Monarch also moved the Tenth Circuit Court of Appeals to certify a question of state law or issue a stay. Monarch presented AFM with claims incurred through business interruption losses from COVID-19 and government orders directing Monarch to close its casinos. AFM denied certain coverage on the ground that COVID-19 did not cause physical loss of or damage to property. Monarch sued for breach of contract, bad faith breach of insurance contract, and violations of state law. The Tenth Circuit denied Monarch’s motions to certify a question of state law and issue a stay. And it affirmed the district court’s judgment: (1) AFM’s policy had a Contamination Exclusion provision that excludes all-risk coverage and business-interruption coverage from the COVID-19 virus; and (2) Monarch could not obtain coverage for physical loss or damage caused by COVID-19 under AFM’s all-risk provision, business-interruption provision, or eight additional-coverage provisions because the virus could not cause physical loss or damage and no other policy provisions distinguished this case. Accordingly, Monarch could not obtain the coverage that the district court denied. View "Monarch Casino & Resort v. Affiliated FM Insurance Company" on Justia Law

In this case surrounding the acquisition of Twitter Inc., the Court of Chancery denied Plaintiff's motion for mootness fees, holding that Plaintiff's claim was without merit.Defendants Elon R. Musk, X Holdings I, Inc., and X Holdings II, Inc. agreed to acquire Twitter Inc. pursuant to an agreement and plan of merger (merger agreement). After Defendants' counsel sent a letter to Twitter claiming to terminate the merger agreement Twitter filed a complaint seeking specific enforcement. Thereafter, the deal closed on the original terms of the merger agreement. Plaintiff, who held 5,500 shares of Twitter common stock, brought suit seeking specific performance and damages, claiming that Elon Musk breached his fiduciary duties as a controller of Twitter and that Defendants breached the merger agreement. This Court issued a memorandum opinion dismissing most of Plaintiff's complaint, leaving open the possibility that the damages provision in the merger agreement conveyed third-party beneficiary status to stockholders claiming damages for breach of the agreement. Months later, Plaintiff claimed partial credit for the consummation of the deal and petitioned for mootness fees in the amount of $3 million. The Court of Chancery denied Plaintiff's motion for mootness fees, holding that Plaintiff's claim was not meritorious when filed. View "Crispo v. Musk" on Justia Law

In 2008 Plaintiff Bill Grubb signed an employment agreement with Defendant DXP Enterprises to lead the development and production of horizontal pumps. The agreement recited that the parties intended to create a new company to produce the pumps, and Grubb would own 10%. If the project became a success, Grubb had the right under the employment agreement to require DXP to buy his ownership stake at a price based on the new company’s gross revenue. The project was successful; in March 2019, Grubb gave notice to DXP that he wanted to sell his ownership stake in accordance with the agreement. But DXP informed Grubb it had never formed the new company, so there was nothing for it to purchase under the agreement. Grubb brought this action in the United States District Court for the Northern District of Oklahoma against DXP, asserting claims for breach of contract, actual and constructive fraud, conversion, breach of fiduciary duty, and unjust enrichment; and sought a declaratory judgment. After the parties filed cross-motions for summary judgment, the district court granted summary judgment in favor of DXP on all claims. Grubb appealed. After review, the Tenth Circuit found sufficient evidence of bad faith by DXP (in failing to form the new company) to support Grubb’s breach-of-contract claim but otherwise found no error in the rulings by the district court. Accordingly, the Court reversed in part the judgment below and remanded for further proceedings. View "Grubb v. DXP Enterprises" on Justia Law

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