Justia Contracts Opinion Summaries

BP retained the Responders (O’Brien’s and NRC) for nearly $2 billion to assist with the cleanup of the Deepwater Horizon oil spill. Thousands of the Responders' workers filed personal injury lawsuits against BP, which were consolidated and organized into “pleading bundles.” The B3 bundle included “all claims for personal injury and/or medical monitoring for exposure or other injury occurring after the explosion and fire of April 20, 2010.” In 2012, BP entered the “Medical Settlement” on the B3 claims with a defined settlement class. The opt-out deadline closed in October 2012. The Medical Settlement created a new type of claim for latent injuries, BackEnd Litigation Option (BELO) claims. After the settlement, plaintiffs could bring opt-out B3 claims if they did not participate in the settlement, and BELO claims if they were class members who alleged latent injuries and followed the approved process. Responders were aware of the settlement before the district court approved it but neither Responder had control over the negotiations, nor did either approve the settlement.In 2017, BP sought indemnification for 2,000 BELO claims by employees of the Responders. The Fifth Circuit held that BP was an additional insured up to the minimum amount required by its contract with O’Brien’s; the insurance policies maintained by O’Brien’s cannot be combined to satisfy the minimum amount. O’Brien’s is not required to indemnify BP because BP materially breached its indemnification provision with respect to the BELO claims. View "O'Brien's Response Management, L.L.C. v. BP Exploration & Production, Inc." on Justia Law

Ngo purchased a BMW. The dealership financed Ngo’s purchase; the purchase agreement contained an arbitration clause. As a result of alleged defects with the car, Ngo sued BMW, the manufacturer, which was not a signatory to the purchase agreement. BMW moved to compel arbitration. The district court granted the motion, finding BMW to be a third-party beneficiary.The Ninth Circuit reversed. Under California law, a nonsignatory is a third-party beneficiary only to a contract made expressly for its benefit. Any benefit that BMW might receive from the clause was peripheral and indirect because it was predicated on the decisions of others to arbitrate. The purchase agreement was drafted with the primary "motivating purpose" of securing benefits for the contracting parties; third parties were not the purposeful beneficiaries of that undertaking. Nothing in the contract evinced any intention that the arbitration clause should apply to BMW. The parties easily could have indicated that the contract was intended to benefit BMW but did not do so. The court declined to apply equitable estoppel to compel arbitration. Ngo did not allege any “concerted misconduct.” BMW was mistaken that, under the Song-Beverley and Magnuson-Moss Warranty Acts, Ngo’s claims were inextricably intertwined with the terms of the purchase agreement. View "Ngo v. BMW of North America, LLC" on Justia Law

Robert, David, and Troy Taylor were partners in a commercial fire prevention business based in Alaska. Troy later formed his own business that directly competed with the partnership. In January 2015, Robert, David, and Troy signed an eight-paragraph agreement (“the Agreement”) that settled all potential legal claims relating to Troy’s competing business. The Agreement provided that Robert and David would buy Troy’s interest in the partnership. In exchange, Troy agreed to pay Robert and David $30,000 each and not work in the fire prevention industry in Alaska and Nevada. In March 2018, Robert and David brought this action in Idaho alleging, among other things, that Troy had breached the Agreement by working for a competing fire prevention business in Nevada. Troy counterclaimed, asserting Robert and David had breached the Agreement. Robert and David voluntarily dismissed some claims and the district court dismissed the rest. In addition, the district court granted summary judgment in Troy’s favor on his breach of contract counterclaim. Robert and David appealed, challenging the district court’s rulings that: (1) the noncompete provision in the Agreement was unenforceable; (2) the Agreement was severable and enforceable without the noncompete provision; and (3) they could not assert an affirmative defense of excusable nonperformance based on their allegation that Troy materially breached the Agreement. After review, the Idaho Supreme Court found the district court only erred in finding the noncompete clause was severable from the Agreement as a matter of law. The Court affirmed in all other respects. View "Taylor v. Taylor" on Justia Law

After Midwest failed to meet its sales quota for two or more consecutive quarters, Exactech terminated its Agency Agreement with Midwest. The Agreement contained a non-compete provision entitling Midwest to Restricted Period Compensation (RPC) after termination. Midwest filed suit seeking, among other things, a declaratory judgment as to the amount of RPC.The Eighth Circuit reversed the district court's judgment, concluding that the district court did not apply the plain and ordinary meaning of Paragraph 5.D.ii as required by Minnesota law. Furthermore, nothing in the remainder of the Agreement contradicts the plain meaning of Paragraph 5.D.ii. There is no claim of unilateral or mutual mistake and the court remanded for further proceedings. View "Midwest Medical Solutions, LLC v. Exactech U.S., Inc." on Justia Law

This appeal arose from a dispute over a Stock Purchase Agreement (“SPA”) formed between Valley Joist BD Holdings, LLC (“VJ Holdings”) and EBSCO, Industries Inc. (“EBSCO”). In December 2017, EBSCO sold all of its stock in Valley Joist, Inc. to VJ Holdings. After closing, VJ Holdings discovered structural defects in one of the buildings acquired as part of the transaction. In July 2018, VJ Holdings sought indemnification from EBSCO through the procedure outlined in the SPA. Two years after receiving no response to the notice, VJ Holdings filed suit in the Superior Court for breach of contract and fraud in the inducement. The Superior Court granted EBSCO’s motion to dismiss the fraud claim for failure to plead sufficient facts to satisfy Superior Court Civil Rule 9(b). The court also dismissed the breach of contract claim as barred under the SPA’s one-year contractual statute of limitations. VJ Holdings appealed: (1) challenging whether it pled sufficient facts to show pre-closing knowledge of fraud; and (2) challenged whether the Superior Court properly relied on a bootstrapping doctrine to dismiss the fraud claim. The Delaware Supreme Court reversed, finding that the allegations in the complaint, when viewed in the light most favorable to the non-moving party, lead to a reasonable inference that EBSCO knew of the structural defects in the building at the time of closing the SPA, contrary to its representation in the SPA that the building was in good operating condition and repair. As for the bootstrapping argument, the Supreme Court determined the Superior Court did not rely on a bootstrapping doctrine to dismiss the fraud claim. View "Valley Joist BD Holdings, LLC v. EBSCO Industries, Inc." on Justia Law

Uber’s wholly-owned Dutch subsidiaries retained Rattagan, an Argentinian attorney, to serve as their legal representative in Buenos Aires in connection with a new Uber subsidiary in Argentina. Uber representatives from San Francisco allegedly assumed responsibility for communicating with Rattagan. According to Rattagan, Uber launched its platform in Argentina before its subsidiary was registered with the proper tax authority, despite knowing that Rattagan, as the entities’ legal representative, could be subject to personal liability for Uber’s violations of Argentine law. Law enforcement authorities raided Rattagan’s office and the homes of his business colleagues; his offices were surrounded by protestors and he received negative press. Rattagan later was charged with aggravated tax evasion for his perceived involvement with the Uber launch.Rattagan sued for negligence, breach of the implied covenant of good faith and fair dealing, fraudulent concealment, and aiding and abetting fraudulent concealment. Applying California law, the district court dismissed, as time-barred, Rattagan’s negligence and breach of the implied covenant claims, and held that the fraudulent concealment claims were foreclosed by the economic loss rule, which prevents a party to a contract from recovering economic damages resulting from breach of contract under tort theories. The Ninth Circuit noted that Rattagan’s appeal hinges on whether fraudulent concealment claims are exempt from California’s economic loss rule and certified that question to the California Supreme Court. View "Rattagan v. Uber Technologies, Inc." on Justia Law

This appeal presented an issue of first impression for the Court of Appeals: does a commercial property insurance policy provide coverage for a business’s lost income due to the COVID-19 pandemic? After review of the specific insurance policy that California Mutual Insurance Company (California Mutual) issued to The Inns by the Sea (Inns) for its five lodging facilities, the Court determined Inns could not recover from California Mutual for its lost business income resulting from the COVID-19 pandemic. Further, Inns did not identify any manner in which it could amend its complaint to state a claim for coverage. Accordingly, the Court affirmed the trial court’s order sustaining California Mutual’s demurrer without leave to amend. View "The Inns by the Sea v. Cal. Mutual Ins. Co." on Justia Law

One beverage distributorship sued another and ultimately narrowed its lawsuit to a single tort claim for intentional interference with prospective economic advantage premised solely on the theory that the defendant had engaged in independently wrongful conduct by breaching a nondisclosure and non-circumvention agreement. This is an invalid theory as a matter of law under California Supreme Court precedent; an actor’s breach of contract, without more, is not “wrongful conduct” capable of supporting a tort, including the tort of intentional interference with prospective economic advantage. No one caught the error until the jury returned a special verdict in the plaintiff’s favor that was premised solely on the breach of the agreement.The court of appeal reversed. A jury’s special verdict for the plaintiff, based on conduct that does not constitute an actionable tort, cannot stand. Just as a trial court lacks subject matter jurisdiction to enter judgment for conduct that does not violate a criminal or civil statute, a trial court also lacks subject matter jurisdiction to enter judgment for allegedly tortious conduct, fashioned by common law, that the state’s highest court has determined is not tortious. A party’s conduct cannot confer subject matter jurisdiction upon a court, so the defendant’s delay in objecting is irrelevant. View "Drink Tank Ventures LLC v. Real Soda in Real Bottles, Ltd." on Justia Law

Lakeside, a Michigan corporation, fabricates stone countertops in Michigan. Cambria a Minnesota LLC, is a nationwide manufacturer of countertop products. Lakeside buys “solid surface products” from manufacturers like Cambria. In 2011, the two companies executed a Business Partner Agreement (BPA) including a Credit Agreement, a Security Agreement, Order Terms and Conditions, Lifetime Limited Warranty, and a Business Operating Requirements Manual Acknowledgment Form. The BPA’s choice-of-law provision and forum-selection clause, in a single paragraph, state: This agreement shall be governed by and construed in accordance with the laws of the State of Minnesota. Any proceeding involving this Agreement and/or any claims or disputes relating to the agreements and transactions between the parties shall be in the ... State of Minnesota. Pursuant to the BPA, Lakeside opened a fabrication facility in 2017. Discussions about Lakeside becoming Cambria’s sole Michigan fabricator led to Lakeside terminating the relationship.Lakeside filed suit in the Western District of Michigan, alleging breach of contract, violations of the Michigan Franchise Investment Law (MFIL), UCC violations, and promissory estoppel. The Sixth Circuit reversed the dismissal of the suit, finding the forum-selection clause unenforceable. MFIL’s prohibition on forum-selection clauses is a strong Michigan public policy and enforcing the forum-selection clause here would clearly contravene that policy. The MFIL claim is not Lakeside’s only claim, and the choice-of-law provision may be applied, as appropriate, to claims within its scope. View "Lakeside Surfaces, Inc. v. Cambria Co., LLC" on Justia Law

McKeon has sold “MACK’S” earplugs to retail consumers since the 1960s. In the 1980s, Honeywell's predecessor began marketing and selling MAX-brand earplugs to distributors. The brand names are phonetically identical. In 1995, McKeon sued. The parties entered a settlement agreement that the district court approved by consent decree. To prevent customer confusion, Honeywell agreed not to sell its MAX-brand earplugs into the “Retail Market” but could continue to sell its earplugs in “the Industrial Safety Market and elsewhere." The agreement and the consent decree never contemplated the internet. In 2017, McKeon complained about sales of MAX-brand earplugs on Amazon and other retail websites.The district court ruled in favor of McKeon. The Sixth Circuit affirmed and remanded. Laches is available to Honeywell as an affirmative defense but does not apply to these facts. Parties subject to consent decrees cannot scale their prohibited conduct over time, using minor undetected violations to justify later larger infringements. Honeywell did not establish that McKeon should have discovered the breaching conduct before Honeywell drastically increased online sales. McKeon’s interpretation of the consent decree is the better reading. Concluding that Amazon is a “retail establishment” makes sense given the parties’ intent. View "McKeon Products, Inc. v. Howard S. Leight & Associates, Inc." on Justia Law