Justia Contracts Opinion Summaries

The case involves a dispute between partners in a limited partnership formed to develop and operate an affordable housing project in Boston. The financing and structure of the project were driven by the Low Income Housing Tax Credit (LIHTC) program, which incentivizes private investment in affordable housing through tax credits. The partnership agreement included a right of first refusal (ROR) for the nonprofit general partner to purchase the property at a below-market price after the compliance period.In the Superior Court, the judge ruled on cross motions for summary judgment, concluding that the investor limited partner, AMTAX, did not have a consent right over a sale to the nonprofit general partner under the ROR agreement. However, the judge also ruled that the purchase price under the ROR agreement must include the limited partners' exit tax liability. The judge dismissed the remaining claims and counterclaims due to lack of evidentiary support or as a consequence of these rulings.The Supreme Judicial Court of Massachusetts reviewed the case. The court affirmed the lower court's decision, holding that AMTAX's consent was not required for the preliminary steps leading to a sale under the ROR agreement. The court also held that the limited partners' exit taxes were "attributable to" the sale of the property and must be included in the purchase price. The court found that the notice of consent rights recorded by AMTAX was accurate and did not constitute slander of title or tortious interference. Consequently, the plaintiffs' claims for breach of contract, breach of the implied covenant of good faith and fair dealing, tortious interference, slander of title, and violation of G. L. c. 93A were dismissed. The judgment was affirmed. View "Tenants' Development Corporation v. Amtax Holdings 227, LLC" on Justia Law

Mark Nelson, operating North Country Weatherization Technologies, provided ice removal services to Pine View First Addition Association, a Minnesota non-profit homeowners' association, in spring 2023. Pine View's property manager, a North Dakota LLC, contacted Nelson for urgent ice removal due to water damage. Nelson completed the work and invoiced Pine View, but payment was delayed, allegedly due to Pine View's attempt to have insurance cover the costs. Nelson filed a lawsuit in North Dakota for breach of contract and unjust enrichment, seeking $79,695 plus interest and attorney’s fees.The District Court of Cass County, East Central Judicial District, granted Pine View's motion to dismiss for lack of personal jurisdiction, concluding that North Dakota did not have jurisdiction over Pine View, as it is a Minnesota entity and the services were performed in Minnesota. The court also denied Pine View's motion for Rule 11 sanctions against Nelson and his attorney, as well as Nelson's request for prevailing party attorney’s fees.The Supreme Court of North Dakota reviewed the case and reversed the district court's decision. The Supreme Court held that North Dakota has specific personal jurisdiction over Pine View because Pine View, through its North Dakota-based property manager, initiated contact with Nelson for the ice removal services. The court found that Pine View's contacts with North Dakota were sufficient to satisfy the state's long-arm provision and due process requirements. The Supreme Court also determined that the district court abused its discretion in denying Nelson's request for prevailing party attorney’s fees under Rule 11(c)(2), as Pine View's motion for sanctions against Nelson violated Rule 11(c)(5)(A). The case was remanded for further proceedings and to determine the amount of attorney’s fees Nelson is owed. View "Nelson v. Pine View First Addition Association" on Justia Law

Plaintiff, Shareholder Representative Services LLC, acting as the Equityholder Representative, filed a breach of contract action against Defendant, Renesas Electronics Corporation. The dispute arises from a 2021 Merger Agreement under which Renesas acquired Celeno Communications Incorporated. Plaintiff alleges that Renesas failed to pay two Earn-Out Milestone payments related to the development of a semiconductor chip, the [REDACTED] Product, as stipulated in the Merger Agreement. Plaintiff seeks damages and specific performance of certain contractual provisions.The Court of Chancery assigned the action to the current court on November 6, 2023. Plaintiff filed its Verified Complaint on October 31, 2023, and Renesas moved to partially dismiss the complaint. Plaintiff then filed a Verified Amended Complaint on February 28, 2024, asserting four breach of contract claims. Renesas sought dismissal of Counts One, Two, and Four. Plaintiff opposed the motion, and Renesas replied. A hearing was held on September 5, 2024, after which the court took the motion under advisement.The Court of Chancery of the State of Delaware reviewed the case. The court granted in part and denied in part Renesas's partial motion to dismiss. The court denied the motion regarding Counts One and Two, finding that Plaintiff had sufficiently alleged that the Tape-Out Milestone and Mass Production Milestone were met, despite Renesas's arguments to the contrary. However, the court granted the motion regarding Count Four, determining that specific performance of the meeting requirement was not warranted, as monetary damages would provide an adequate remedy. The court found that the contractual provision establishing irreparable harm was sufficient but noted that the ultimate relief sought was payment of the Earn-Out Amounts, not a meeting. View "Shareholder Representative Service LLC v. Renesas Electronics Corp." on Justia Law

LKQ Corporation, a Delaware corporation in the auto salvage and recycled parts business, designated certain employees as "Key Persons" eligible for Restricted Stock Units (RSUs) through RSU Agreements. These agreements included non-competition clauses and provisions for forfeiture of RSUs and any stock issued if the employee competed with LKQ within nine months post-departure. Robert Rutledge, a plant manager at LKQ, signed these agreements and received stock under them. In April 2021, Rutledge resigned and joined a competitor shortly after.LKQ sued Rutledge in Illinois federal court for breach of contract and unjust enrichment, seeking to enjoin him from working for a competitor and to recover proceeds from the sale of LKQ stock. The district court dismissed the unjust enrichment claim and granted summary judgment for Rutledge on the contract claims, holding that the non-competition provisions were unreasonable restraints of trade under Illinois law and unenforceable under Delaware law, based on the Court of Chancery's decision in Ainslie v. Cantor Fitzgerald, L.P.The United States Court of Appeals for the Seventh Circuit affirmed the district court's dismissal of the unjust enrichment claim and the summary judgment ruling on the Restrictive Covenant Agreements. However, it was uncertain about the enforceability of the RSU Agreements' forfeiture-for-competition provisions under Delaware law, especially after the Delaware Supreme Court reversed the Court of Chancery's decision in Cantor Fitzgerald. The Seventh Circuit certified two questions to the Delaware Supreme Court regarding the applicability of Cantor Fitzgerald outside the limited partnership context.The Delaware Supreme Court held that the principles from Cantor Fitzgerald, which endorse the employee choice doctrine and prioritize freedom of contract, apply beyond the limited partnership context, including to RSU agreements. The court emphasized that forfeiture-for-competition provisions do not restrict competition or an employee's ability to work and should be treated as enforceable terms subject to ordinary breach of contract defenses. View "LKQ Corp. v. Rutledge" on Justia Law

Daniel Genho and Riverdale Hot Springs, LLC had a dispute over payment for construction work Genho performed at Riverdale Resort. Genho was not a registered contractor at the start of the project but became registered midway through. Riverdale refused to pay Genho and prevented him from retrieving his tools and materials. Genho filed a Mechanic’s and Materialmen’s Lien and sued for breach of contract, unjust enrichment, quantum meruit, conversion, and to foreclose on the lien.The District Court of the Sixth Judicial District of Idaho granted Riverdale’s motion for a directed verdict on the breach of contract claim but denied it on the other claims. The court found that there were two separate transactions: one before and one after Genho became a registered contractor. The court allowed the jury to consider the unjust enrichment, quantum meruit, conversion, and lien foreclosure claims. The jury found in favor of Genho, awarding him $295,568, which was later reduced to $68,681. The district court also awarded attorney fees to Genho.The Supreme Court of Idaho reviewed the case and affirmed the district court’s decision in part and reversed it in part. The court held that equitable remedies are available under the Idaho Contractor Registration Act (ICRA) for work performed after a contractor becomes registered, provided the work is severable from the unregistered work. The court affirmed the denial of a directed verdict on the unjust enrichment, quantum meruit, and lien foreclosure claims but reversed the award of attorney fees for the conversion claim, as it was not based on a commercial transaction. The court also affirmed the award of attorney fees for the foreclosure action under Idaho Code section 45-513. Neither party was awarded attorney fees on appeal. The judgment was vacated and remanded for modification consistent with the opinion. View "Genho v. Riverdale Hot Springs, LLC" on Justia Law

Minority partners in various cellular telephone partnerships hired attorney Michael A. Pullara to pursue breach of fiduciary duty claims against the majority partner, AT&T. The client agreements allowed Pullara to hire joint venture counsel, and he retained Ajamie LLP. Both firms agreed to a 50% discount on their hourly rates in exchange for a contingency fee if they prevailed. After lengthy litigation, the minority partners reached a favorable settlement with AT&T. However, a dispute arose between Pullara and Ajamie over the fee division, leading Ajamie to file for a charging lien to secure its fee.The Court of Chancery of the State of Delaware granted a charging lien to preserve Ajamie’s claim against the settlement proceeds. Ajamie then sought to enforce the lien. The court held that the fee-sharing agreement between Pullara and Ajamie was unenforceable under the Texas Disciplinary Rules of Professional Conduct because the clients had not consented to the specific terms of the fee-sharing arrangement. However, the court ruled that Ajamie was still entitled to reasonable compensation under the principle of quantum meruit.The court calculated Ajamie’s lodestar at $13,178,616.78, based on market rates adjusted annually. Considering the Mahani factors, the court found that an upward adjustment was warranted due to the complexity and duration of the litigation, the significant results obtained, and the partially contingent nature of the fee arrangement. The court awarded Ajamie a total fee of $15,814,340.14, including a 20% increase for the contingency risk. After deducting amounts already paid, Ajamie was awarded $13,014,721.87 plus pre- and post-judgment interest. The court ordered the escrow agent to release this amount to Ajamie. View "Cellular Telephone Company Litigation cases" on Justia Law

Garret Hirchak, Manufacturing Solutions, Inc., and Sunrise Development LLC (plaintiffs) appealed a trial court's order dissociating Garret from Hirchak Brothers LLC and Hirchak Group LLC (defendants) and requiring the LLCs to pay over $900,000 in equity interest, unpaid compensation, and reimbursements. Plaintiffs argued that the trial court erred in not recognizing oppression by the majority members of the LLCs, treating a $300,000 down payment made by Garret as gratuitous, declining to order reimbursements for certain services and cash advances, and refusing to assess prejudgment interest on any of the reimbursements. Defendants cross-appealed, arguing that the court erred in awarding compensation to Garret after he breached his fiduciary duties.The Superior Court, Lamoille Unit, Civil Division, found that Garret had breached his fiduciary duties by failing to make explicit agreements on service rates and withholding financial records. The court ordered Garret's dissociation from the LLCs and required the LLCs to pay Garret $375,000 for his equity interest, $215,430 for cash advances made before March 2020, and $213,591.84 for unpaid compensation from October 2019 to January 2021. The court also ordered reimbursement of $71,537.64 and $50,214.57 for unpaid invoices from MSI and Sunrise, respectively, before March 2020. The court denied prejudgment interest on any reimbursements and rejected Garret's claim for the $300,000 down payment.The Vermont Supreme Court affirmed the trial court's decision, agreeing that Garret was not entitled to reimbursement for the $300,000 down payment or for cash advances and invoices after March 2020 due to his breach of fiduciary duties. The court also upheld the denial of prejudgment interest, finding it was within the trial court's discretion. However, the Supreme Court reversed the trial court's award of compensation to Garret after March 2020, concluding that his breach of fiduciary duties forfeited his right to compensation during that period. The case was remanded for a recalculation of the compensation due to Garret. View "Hirchak v. Hirchak" on Justia Law

Windy Cove, Inc., HB Fuels, Inc., and Staffing and Management Group, Inc. (collectively “Windy Cove”) are gasoline dealers who own Mobil-branded stations in southern California. In 2012, they entered into a 15-year exclusive fuel supply agreement with Circle K Stores Inc. as required by the agreement under which they purchased their gas stations from ExxonMobil. Windy Cove alleged that Circle K did not set gasoline prices in good faith under this exclusive distributorship contract.The United States District Court for the Southern District of California granted summary judgment in favor of Circle K. The court found that the prices charged by Circle K were within the range of those charged by its competitors, including at least one refiner, and thus were set in good faith under California Commercial Code § 2305(2). Windy Cove failed to provide evidence that Circle K's prices were discriminatory or commercially unreasonable.The United States Court of Appeals for the Ninth Circuit reviewed the case. The court affirmed the district court’s summary judgment, holding that Circle K’s prices were presumptively set in good faith because the contract had a “price in effect” term. The court noted that the safe harbor provision under Uniform Commercial Code § 2-305, which is codified as California Commercial Code § 2305(2), presumes good faith if the prices are within the range of those charged by competitors. The court found that Circle K’s prices were lower than at least one refiner, thus falling within the range of prices charged by competitors. Windy Cove’s arguments regarding Circle K’s use of a non-industry-standard pricing formula and higher prices compared to other wholesalers did not rebut the presumption of good faith. The court concluded that summary judgment was appropriate and affirmed the district court’s decision. View "WINDY COVE, INC. V. CIRCLE K STORES INC." on Justia Law

Beijing Abace Biology Co., Ltd. (Abace) filed a lawsuit against Dr. Chunhong Zhang and MtoZ Biolabs, Inc. (MtoZ) after Dr. Zhang, a former employee, co-founded MtoZ, a company providing similar services to Abace. Abace claimed that Dr. Zhang breached her contract and fiduciary duty, and that MtoZ tortiously interfered with Abace's business. Dr. Zhang had signed several employment-related agreements, including non-compete clauses, while working for Abace. The dispute centered on whether these non-compete agreements were enforceable under Chinese law.The United States District Court for the District of Massachusetts granted summary judgment in favor of Dr. Zhang and MtoZ, concluding that Dr. Zhang did not fall within the categories of employees subject to non-compete agreements under Chinese law. The court found that Dr. Zhang was neither senior management nor senior technical personnel, and did not have access to trade secrets or confidential information that would justify a non-compete restriction.The United States Court of Appeals for the First Circuit reviewed the case de novo and affirmed the district court's decision. The appellate court agreed that under Chinese law, non-compete agreements are enforceable only against senior management, senior technical personnel, or employees with access to trade secrets. The court found no evidence that Dr. Zhang held a senior management or technical role, or that she had access to trade secrets. Consequently, the non-compete agreements were unenforceable, and the summary judgment in favor of Dr. Zhang and MtoZ was upheld. View "Beijing Abace Biology Co., Ltd. v. Zhang" on Justia Law

Plaintiff and her partner, owners of Health Hero Farm LLC, sought to buy out a local farming family from their partnership. During this period, they befriended the defendant, a local auto-repair shop owner with a small farm. They discussed forming a partnership with him, and plaintiff represented to the Vermont Land Trust that they were partnering with the defendant to secure approval for the buyout. Plaintiff and defendant agreed to purchase Galloway cattle, with plaintiff advancing the funds. Plaintiff insisted on a written agreement, but defendant preferred a handshake deal. Eventually, defendant signed a promissory note without reading it, which included an attorney’s-fees provision.The Superior Court, Grand Isle Unit, Civil Division, held a bench trial and concluded that the promissory note did not accurately reflect an agreement between the parties. The court found that the note was a contract of adhesion and awarded plaintiff damages and prejudgment interest under a theory of unjust enrichment, rather than enforcing the promissory note.The Vermont Supreme Court reviewed the case and held that the promissory note was unambiguous and enforceable according to its terms. The court found that defendant’s failure to read the note before signing it did not constitute a defense to enforcement. The court also determined that the note was not a contract of adhesion and was not unconscionable. The Supreme Court reversed the trial court’s decision and remanded the case for further proceedings consistent with its opinion. View "Falcao v. Richardson" on Justia Law