Justia Contracts Opinion Summaries

Wilfred L. Doll and Cheri L. Doll (Dolls) were members of Little Big Warm Ranch, LLC (LBWR), a business formed to manage water rights in Phillips County. Dolls negotiated a settlement with Finch/Dements for senior water rights, which devalued LBWR’s property. LBWR members consented to the settlement on the day they closed on the Finch/Dement property. Dolls later filed a complaint seeking dissolution of LBWR or a buy-out of their shares. LBWR amended its operating agreement to expel adverse members and seek attorney fees and costs, excluding Dolls from the meeting where these amendments were ratified.The Seventeenth Judicial District Court, Phillips County, ruled that Dolls dissociated from LBWR on February 2, 2018, when they filed their complaint. The court also granted LBWR summary judgment on its counterclaims for breach of fiduciary duties and the obligation of good faith and fair dealing, applying the eight-year statute of limitation for contracts. A jury awarded LBWR $2.5 million in compensatory and punitive damages. The District Court ordered Dolls to pay LBWR with 11.25% interest and LBWR to pay Dolls $434,000 per share with 7.5% interest.The Supreme Court of the State of Montana affirmed the District Court’s ruling that Dolls dissociated on February 2, 2018, and upheld the calculation of Dolls’ distributional interest. The court determined that the eight-year statute of limitation for contracts applied to LBWR’s counterclaims, as the fiduciary duties arose from the operating agreement. However, the court found that punitive damages were improper because they are not allowed in breach of contract actions under Montana law. The case was remanded to the District Court to modify its judgment to exclude punitive damages. View "Doll v. Little Big Warm Ranch, LLC" on Justia Law

Taxinet Corporation sued Santiago Leon, alleging various claims stemming from a joint effort to secure a government concession for a taxi-hailing app in Mexico City. The district court granted summary judgment for Leon on all claims except for a Florida-law unjust enrichment claim, which went to trial along with Leon’s counterclaims for fraudulent and negligent misrepresentation. The jury awarded Taxinet $300 million for unjust enrichment and Leon $15,000 for negligent misrepresentation. However, the district court granted Leon’s Rule 50(b) motion for judgment as a matter of law, ruling that the damages award was based on inadmissible hearsay and was speculative.The United States District Court for the Southern District of Florida initially allowed testimony regarding a $2.4 billion valuation by Goldman Sachs, which was later deemed inadmissible hearsay. The court concluded that without this evidence, there was insufficient support for the jury’s $300 million award. The court also noted that the valuation was speculative and not directly tied to the benefit conferred by Taxinet in 2015.The United States Court of Appeals for the Eleventh Circuit affirmed the district court’s Rule 50(b) order, agreeing that the valuation evidence was inadmissible hearsay and that the remaining evidence was insufficient to support the $300 million award. However, the appellate court exercised its discretion to remand for a new trial on the unjust enrichment claim. The court found that Taxinet had presented enough evidence to show that it conferred a benefit on Leon, which he accepted, and that it would be inequitable for him to retain the benefit without payment. The court also noted that Taxinet could potentially present other evidence of damages in a new trial.The appellate court affirmed the district court’s summary judgment on Taxinet’s other claims, ruling that the alleged joint venture agreement was subject to Florida’s statute of frauds, as it could not be completed within a year. Thus, any claims based on the existence of the joint venture agreement were barred. View "Taxinet Corp. v. Leon" on Justia Law

Jason Ziemann, the plaintiff, became involved in the operation of Grosz Wrecking, a business owned by his grandmother, Juanita Grosz, after her husband passed away. Ziemann moved into a home on the business property in 2014. In 2022, Grosz sought to evict Ziemann after he refused to purchase the home. Ziemann then sued Grosz, alleging they had an oral partnership agreement and sought a declaration of partnership, accounting, and dissolution, along with claims for breach of fiduciary duties and tortious interference with a business relationship. Grosz denied the partnership and counterclaimed for trespass.The District Court of McLean County denied Ziemann’s motion for partial summary judgment, ruling factual issues existed regarding the partnership. The court granted Grosz’s motion, dismissing Ziemann’s claims for tortious interference and breach of fiduciary duty, citing inadmissible hearsay and lack of evidence for damages. After a bench trial, the court found the parties had formed a partnership with specific profit-sharing terms and dismissed Grosz’s trespass claim, allowing Ziemann to remain on the property until the business was dissolved. The court ordered the liquidation of partnership assets and awarded Ziemann costs.The Supreme Court of North Dakota reviewed the case. It affirmed the lower court’s findings that a partnership existed and that Grosz contributed property to it. The court also upheld the dismissal of Grosz’s trespass claim and Ziemann’s claims for tortious interference and breach of fiduciary duty. However, it reversed the lower court’s decision not to apply the default partnership winding up provisions under N.D.C.C. § 45-20-07. The case was remanded for the district court to enter judgment consistent with this decision. The Supreme Court affirmed the award of costs and disbursements to Ziemann as the prevailing party. View "Ziemann v. Grosz" on Justia Law

In this case, Randall C. Belyea was the sole shareholder and president of Belyea Enterprises, Inc. (BEI), which had a contract with FedEx. Due to a misdemeanor charge, FedEx refused to renew the contract with Belyea, leading him to transfer his interest in BEI to his fiancée, Heather A. Campbell, under the understanding that she would be the owner in name only while he continued to run the business. However, in 2018, Campbell terminated Belyea's employment and restricted his access to BEI's bank accounts.The Superior Court (Aroostook County) initially granted Campbell’s motion for judgment as a matter of law on Belyea’s conversion claim and later entered judgment as a matter of law in favor of Campbell on Belyea’s breach of contract claim, despite a jury verdict in Belyea’s favor. The court found that there was insufficient evidence of an enforceable contract between Belyea and Campbell, as the terms were too vague and indefinite.The Maine Supreme Judicial Court reviewed the case and affirmed the lower court's decisions. The court held that the terms of the alleged contract between Belyea and Campbell were not sufficiently definite to form an enforceable contract. The terms did not clearly define the roles and obligations of each party, the duration of the contract, or the details regarding a possible reconveyance of BEI to Belyea. Consequently, the court also upheld the judgment in favor of Campbell on the conversion claim, as Belyea did not have a legal interest in BEI in 2018. View "Belyea v. Campbell" on Justia Law

John Gomez, Gilbert Hurtado, and Jesus Hurtado were members of G&H Dairy, LLC, which defaulted on its loans in 2013. To avoid bankruptcy, they negotiated with Wells Fargo and signed a Letter of Intent (LOI) to distribute G&H's assets among themselves. Gomez and Jesus Hurtado purchased the personal property assets and assumed portions of G&H’s debt, but they could not agree on the sales price for the real property. Gomez sued the Hurtado brothers and G&H for breach of contract, estoppel, unjust enrichment, and breach of fiduciary duty, and sought judicial dissolution of G&H. The Hurtados counterclaimed for damages and also sought dissolution.The District Court of the Fifth Judicial District of Idaho granted summary judgment for the Hurtados on Gomez’s breach of contract claim, ruling the LOI unenforceable, but denied summary judgment on the other claims. After a bench trial, the court ordered the dissolution and winding up of G&H and dismissed the remaining claims. Gomez appealed.The Supreme Court of Idaho affirmed the district court’s decision. It held that the LOI was unenforceable as it was an offer contingent on future agreements and lacked definitive terms. The court also found no breach of fiduciary duty by the Hurtados, as the LOI was unenforceable and the parties had not agreed on the real property transfer terms. The court dismissed Gomez’s quasi-estoppel claim, concluding that the Hurtados did not change their legal position since the LOI was not enforceable. The court also upheld the district court’s final accounting and winding up of G&H, finding no error in the characterization of transactions or member allocations. The court awarded attorney fees to the Hurtados, determining that Gomez’s appeal was pursued unreasonably and without legal foundation. View "Gomez v. Hurtado" on Justia Law

Josh and Mackie were partners in a marijuana business, Culta, LLC, in Maryland. Josh temporarily relinquished his ownership due to concerns about a past misdemeanor affecting their license application, with an agreement to be reinstated later. However, Mackie prevented Josh from rejoining. Josh sued Mackie and Trellis Holdings Maryland, Inc. (Trellis), Mackie’s company, for breach of contract. The district court found Mackie and Trellis liable and awarded Josh $6.4 million in damages. Mackie and Trellis did not appeal or pay the judgment.Josh sought to enforce the judgment. The district court ordered Mackie and Trellis to sell Trellis’s equity in Culta and turn over the proceeds to Josh, and to avoid devaluing the equity until the sale. Mackie and Trellis appealed, arguing for the first time that enforcing the judgment would violate the Controlled Substances Act (CSA) and that the district court lacked authority under Colorado Rule of Civil Procedure (C.R.C.P.) 69(g). They also moved the district court to reconsider the original judgment, which was denied, leading to a second appeal. The appeals were consolidated.The United States Court of Appeals for the Tenth Circuit reviewed the case. It affirmed the original judgment, rejecting Mackie and Trellis’s argument that Josh lacked standing. The court found that Josh had standing as he suffered an injury from the breach of contract, caused by Mackie and Trellis, and the damages awarded were redressable. The court also held that the district court had authority under C.R.C.P. 69(g) to issue the judgment enforcement order, as a charging order was not the exclusive remedy and Mackie and Trellis had sufficient control over Trellis’s equity.However, the Tenth Circuit vacated the judgment enforcement order due to concerns that it might require Mackie and Trellis to violate federal drug laws, and remanded the case for further proceedings to address these public policy concerns. View "Bartch v. Barch" on Justia Law

The case involves a dispute between two parties who entered into a partnership agreement that specified the financial conditions under which the appellant would receive a distribution upon the sale of the partnership’s principal asset. The agreement set a net-sale-price threshold above which the appellant would receive a distribution, and it directed the general partner to calculate that net sale price by deducting certain categories of costs from the gross sales price. The general partner determined that the deductions reduced the net sale price below the minimum threshold for a distribution. The appellant challenged several of these deductions, particularly the costs incurred to defease the interest payments on the mortgage.The Court of Chancery of the State of Delaware reviewed the case and held that the deduction for the costs to defease the interest payments on the mortgage was proper under the partnership agreement. The court concluded that this deduction was outcome determinative and entered judgment in favor of the partnership. The court also noted that the general partner acted in good faith in calculating the net sale price, which eliminated any breach of contract claim.The Supreme Court of the State of Delaware reviewed the case and affirmed the Court of Chancery’s judgment. The Supreme Court held that the plain language of the partnership agreement and the formula used permitted the challenged deduction for defeasance costs. The court did not reach the effect or correctness of the Court of Chancery’s alternative holding regarding the general partner’s good faith. The Supreme Court concluded that the defeasance costs were properly deducted, which reduced the net resale price below the threshold required for the appellant to receive a distribution. View "Exit Strategy, LLC v. Festival Retail Fund BH, L.P." on Justia Law

Davidson Oil Company entered into a fixed-price requirements contract with the City of Albuquerque to supply all of the city's fuel needs for a year. Shortly after the contract was signed, fuel market prices dropped significantly. The city requested a price reduction, which Davidson Oil refused, citing potential losses due to hedge contracts it had entered into to protect against market fluctuations. The city then terminated the contract using a termination for convenience clause, prompting Davidson Oil to sue for breach of contract.The United States District Court for the District of New Mexico granted summary judgment in favor of Davidson Oil, awarding damages for the value of the hedge contracts. The court found that while the city did not breach the explicit terms of the contract, it violated an implied covenant by terminating the contract in bad faith to secure a better bargain elsewhere.The United States Court of Appeals for the Tenth Circuit reviewed the case and affirmed the district court's decision. The Tenth Circuit held that the City of Albuquerque breached the contract by exercising the termination for convenience clause solely to obtain a better deal from another supplier. The court emphasized that such an action violated the implied covenant of good faith and fair dealing inherent in the contract. The court also upheld the district court's award of damages, including the hedge contract losses, as incidental damages under the Uniform Commercial Code, finding them to be commercially reasonable and directly resulting from the breach. View "Davidson Oil Company v. City of Albuquerque" on Justia Law

Yorktown Systems Group Inc. and Threat Tec LLC, both defense contractors, entered into a mentor-protégé relationship under the Small Business Administration’s program to jointly pursue government contracts. They formed a joint venture (JV) and were awarded a $165 million contract with the U.S. Army. The JV agreement allocated specific work shares to each company. However, the relationship soured, and Threat Tec attempted to terminate Yorktown’s subcontract, effectively cutting Yorktown out of its share of the contract.The United States District Court for the Northern District of Alabama granted Yorktown a preliminary injunction, preventing Threat Tec from terminating the subcontract and depriving Yorktown of its rights under the JV agreement. The court found that Yorktown had shown a substantial likelihood of success on its breach of contract and breach of fiduciary duty claims and faced irreparable harm. The court noted that Threat Tec’s CEO had made false statements and lacked candor, leading to the belief that Threat Tec’s motives were unethical.The United States Court of Appeals for the Eleventh Circuit reviewed the case and affirmed the district court’s decision. The appellate court found no clear error in the district court’s factfindings and concluded that the district court acted within its discretion. The court held that Threat Tec, as the managing member of the JV, owed fiduciary duties of loyalty and care to Yorktown and likely breached those duties by attempting to cut Yorktown out of its contractually specified workshare. The court also agreed that Yorktown faced irreparable harm, including potential damage to its business reputation and the loss of highly skilled employees, which could not be remedied by monetary damages alone. View "Yorktown Systems Group Inc. v. Threat TEC LLC" on Justia Law

In 2006, David and Jill Landrum, along with Michael and Marna Sharpe, purchased land in Madison County to develop a mixed-use project called the Town of Livingston. The project stalled due to the 2008 financial crisis and legal issues. In 2010, Jill and Marna formed Livingston Holdings, LLC, which owned the development properties. Marna contributed more financially than Jill, leading to a disparity in ownership interests. In 2014, Marna sold her interest to B&S Mississippi Holdings, LLC, managed by Michael Bollenbacher. Jill stopped making her required monthly contributions in December 2018.The Madison County Chancery Court disqualified Jill as a derivative plaintiff, realigned Livingston Holdings as a defendant, and dismissed several claims. The court found that Jill did not fairly and adequately represent the interests of the company due to personal interests and economic antagonisms. The court also granted summary judgment in favor of several defendants and denied the Landrums' remaining claims after a bench trial.The Supreme Court of Mississippi reviewed the case and affirmed the lower court's decision to disqualify Jill as a derivative plaintiff and exclude the Landrums' expert witness. The court found that Jill's personal interests and actions, such as failing to make required contributions and attempting to gain control of the company, justified her disqualification. The court also affirmed the dismissal of claims for negligent omission, misstatement of material facts, civil conspiracy, fraud, and fraudulent concealment due to the Landrums' failure to cite legal authority.However, the Supreme Court reversed and remanded the case on the issues of remedies and attorneys' fees under the Second Memorandum of Understanding (MOU) and the alleged breach of fiduciary duty between B&S and Jill. The court found that the chancellor erred in interpreting the Second MOU as providing an exclusive remedy and remanded for further proceedings to determine if Livingston is entitled to additional remedies and attorneys' fees. The court also remanded for factual findings on whether B&S breached its fiduciary duty to Jill regarding property distribution and tax loss allocation. View "Landrum v. Livingston Holdings, LLC" on Justia Law