Justia Contracts Opinion Summaries

In 2009, Carhartt contracted with Innovative to create a flame-resistant fleece fabric for use in its line of flame-resistant garments. The fabric that Innovative developed for Carhartt, “Style 2015," contained a modacrylic fiber, “Protex-C.” Innovative agreed that it would conduct flame-resistance testing on the Style 2015 fabric before shipping it to Carhartt, using the industry-standard test, ASTM D6413. Carhartt sent Innovative emails in 2008, 2010, 2011, 2012, and 2013 stating that Carhartt would do “regular, random testing on the product that is received.” Carhartt performed visual inspections but did not conduct flame-resistance testing until 2016. The Style 2015 fabric failed the D6413 test. Carhartt notified Innovative, which then conducted its own testing and concluded that Style 2015 fabrics dating back to 2014 did not pass flame-resistance testing. In 2013, Innovative stopped using Protex-C and began using a different modacrylic fiber without notice to Carhartt.The district court granted Innovative summary judgment on Carhartt’s negligence, fraud, misrepresentation, false advertising claims. breach of contract and warranty claims. The court reasoned that Carhartt did not notify Innovative of the suspected breach within a reasonable amount of time after Carhartt should have discovered the defect, as required by Michigan’s Uniform Commercial Code. The Sixth Circuit reversed. Reasonable minds could differ as to whether Carhartt should have discovered the breach sooner by performing regular, destructive fire-resistance testing on the fabric. View "Carhartt, Inc. v. Innovative Textiles, Inc." on Justia Law

Pillar hired Epiphyte to convert its cryptocurrency into Euros. Epiphyte informed Pillar that it used Payward’s online exchange to convert its clients’ cryptocurrencies. Pillar transferred its cryptocurrency into Epiphyte’s account on Payward’s platform. After Epiphyte converted the currency but before the exchanged funds were transferred to Pillar’s bank account, four million Euros belonging to Pillar were stolen from Epiphyte’s account.Pillar sued Payward, alleging Payward knew or should have known that Epiphyte was using its Payward account on Pillar's behalf, failed to use standard security measures that would have prevented the theft, and falsely advertised that it provided the best security in the business. Payward moved to compel arbitration, claiming that Epiphyte agreed to Payward’s “Terms of Service” when it created an account, as required for all users, that those Terms included an arbitration agreement, and that Pillar was bound by that agreement.The court of appeal affirmed the denial of Payward’s motion. There is no evidence Epiphyte was acting as Pillar’s agent when it agreed to the Terms two years before Pillar hired it or that the agency relationship automatically bound the principal to the agent’s prior acts. There is no evidence Pillar knew the arbitration agreements existed or had a right to rescind them. No ratification occurred. There was no intent to benefit Pillar or similar parties. Pillar’s claims are not inextricably intertwined with the Terms. View "Pillar Project AG v. Payward Ventures, Inc." on Justia Law

In March 2018, following sexual misconduct allegations against TWC’s co-founder Harvey Weinstein, TWC sought bankruptcy protection. TWC and Spyglass signed the Asset Purchase Agreement (APA). The sale closed in July 2018. Spyglass paid $287 million. Spyglass agreed to assume all liabilities associated with the Purchased Assets, including some “Contracts.” The APA identifies “Assumed Contracts,” as those Contracts that Spyglass would designate in writing, by November 2018.In May 2018, TWC filed an Assumed Contracts Schedule, with a disclaimer that the inclusion of a contract did not constitute an admission that such contract is executory or unexpired. A June 2018 Contract Notice, listed eight Investment Agreements as “non-executory contracts that are being removed from the Assumed Contracts Schedule.” The Investment Agreements, between TWC and Investors, had provided funding for TWC films in exchange for shares of future profits. Spyglass’s November 2018 Contract Notice listed nine Investment Agreements as “Excluded Contracts,”In January 2019, the Investors requested payments from Spyglass--their asserted share of a film’s profits. The Bankruptcy Court rejected the Investors’ claim that Spyglass bought all the Investment Agreements under the APA. The district court and Third Circuit affirmed. The Investment Agreements are not “Purchased Assets” and the associated obligations are not “Assumed Liabilities.” The Investment Agreements are not executory contracts under the Bankruptcy Code. View "The Weinstein Co. Holdings, LLC v. Y Movie, LLC" on Justia Law

In this case involving the scope of the attorney-immunity defense, the Supreme Court held that attorney immunity applies in all adversarial contexts in which an attorney has a duty to zealously represent a client, including in a business-transactional context, but only when the claim against the attorney is based on the type of conduct attorney immunity protects.At issue was whether the attorney-immunity defense applies to a non-client's claims that are based on an attorney's conduct performed outside of the context of litigation. The court of appeals reversed the trial court's summary judgment in this case, concluding that attorney immunity does not extend beyond the litigation context and should not be extended to a business transaction. The Supreme Court reversed, holding (1) attorney immunity provides a defense to a non-client's claims based on an attorney's conduct that constitutes the provision of legal services involving the unique office of an attorney and the conduct that the attorney engages in to fulfill the attorney's duties in representing the client within an adversarial context in which the client and the non-client do not share the same interests; and (2) attorney immunity applies to claims based on conduct the attorney performed in a non-litigation context so long as the conduct qualifies as this "kind" of conduct. View "Hayes & Boone, LLP v. NFTD, LLC" on Justia Law

GXP Capital, LLC filed two lawsuits against defendants in different federal courts. GXP alleged defendants violated non-disclosure agreements by using confidential information to buy key assets at bargain prices from GXP’s parent company. Those cases were dismissed for lack of personal and subject matter jurisdiction. GXP then filed a third suit in Delaware Superior Court, which stayed the case on forum non conveniens grounds to allow GXP to file the same case in California state court - a forum the court decided had a greater connection to the dispute and was more convenient for the parties. On appeal GXP argued: (1) the Superior Court did not apply the correct forum non conveniens analysis when Delaware was not the first-filed action, the prior-filed lawsuits have been dismissed, and no litigation was pending in another forum; and (2) defendants waived any inconvenience objections in Delaware under the forum selection clause in their non-disclosure agreements. The Delaware Supreme Court affirmed, finding the trial court properly exercised its discretion in this case’s procedural posture to stay the Delaware case in lieu of dismissal when another forum with jurisdiction existed and that forum was the more convenient forum to resolve the dispute. “And certain of the defendants’ consent to non-exclusive jurisdiction in California did not waive their right to object to venue in other jurisdictions, including Delaware.” View "GXP Capital v. Argonaut Manufacturing Services, et al" on Justia Law

In 2012, Bishop Lawrence sought to disaffiliate his South Carolina-based diocese from the Episcopal “Mother Church”. Some parishes followed suit. The Mother Church purported to remove Lawrence and selected a new bishop. The Disassociated Diocese and Parishes sued the Mother Church to clarify their property rights in diocesan. The Mother Church filed counterclaims and separately filed trademark and false-advertising claims. Both cases are ongoing.The Church Insurance Company, wholly owned by the Church Pension Fund, is a freestanding nonprofit affiliated with the Mother Church. Captive insurance companies may only cover the risks of their parent companies and related entities. Before the schism, the Company issued a Diocesan Program Master Policy, listing as “named insured” the Episcopal diocese and listing 56 participant parishes, including the now-Disassociated Parishes, in its declarations. Each parish has a separate, individualized insurance policy and paid premiums directly to the Company. The policies provide liability coverage for injuries arising out of “infringement of copyright, title, slogan, trademark, or trade name” and include a broad duty to defend. The Company has reimbursed the Disassociated Parishes’ defense costs in connection with both lawsuits.The Associated Diocese sued the Company, alleging breach of contract, bad faith, breach of fiduciary duty, and aiding and abetting breach of fiduciary duty. The Fourth Circuit affirmed the dismissal of that suit for lack of standing. The Company has not strayed beyond its limitations as a captive insurer or breached its obligations under the policies, so there is no injury traceable to such conduct. View "Episcopal Church in South Carolina v. Church Insurance Company of Vermont" on Justia Law

The Supreme Court reversed the judgment of the court of appeals denying Defendants' motion to dismiss under the Texas Citizens Participation Act (TCPA), Tex. Civ. Proc. & Rem. Code 27.001-.011, as untimely, holding that because Plaintiff's amended petition in this case asserted new legal claims, Defendants' motion to dismiss those claims was timely.In his original petition, Plaintiff asserted claims for deceptive trade practice, negligence, and negligent misrepresentation. Plaintiff subsequently filed an amended petition reasserting the same claims, adding new claims for fraud, conspiracy to commit fraud, fraudulent concealment, and breach of contract, and alleging the same essential facts alleged in the original petition and requesting the same relief. The trial court denied Defendants' TCPA dismissal motion, concluding that the motion was untimely. The court of appeals affirmed. The Supreme Court reversed, holding that the court of appeals erred in holding that Defendant's motion to dismiss the new claims was untimely because the amended petition asserted new legal actions and thus triggered new sixty-day period for Defendants to file a motion to dismiss those new claims. View "Monteglongo v. Abrea" on Justia Law

Plaintiff, cross-defendant and appellant Nissan Motor Acceptance Corporation (NMAC) was a subsidiary of nonparty Nissan Motors of North America. NMAC was a specialty lender that loaned money to Nissan automobile dealers. Defendants, cross-complainants and appellants, Michael A. Kahn (Kahn) and his wife Tami L. Kahn, plus a group of now defunct limited liability company auto dealerships they owned, were NMAC borrowers (collectively, “Superior”). This appeal and cross-appeal stemmed from the retrial of Superior’s cross-claims against NMAC. The jury awarded Superior $256.45 million in compensatory and punitive damages based on two promissory fraud theories: negligent misrepresentation and fraudulent concealment. The trial court granted NMAC’s motion for new trial based on juror misconduct, but denied NMAC’s motion for judgment notwithstanding the verdict (JNOV). Superior contended NMAC forfeited its right to complain about juror misconduct. It also challenged the sufficiency of the evidence to support the trial court’s discretionary decision to grant NMAC’s new trial motion. After review, the Court of Appeal concluded NMAC did not forfeit the basis for its new trial motion and substantial evidence supported the court’s juror misconduct findings. And contrary to Superior’s claim, the Court found nothing arbitrary or capricious in its prejudice ruling. Accordingly, the Court affirmed the new trial order. View "Nissan Motor Acceptance Cases" on Justia Law

Pittsburgh Logistics Systems, Inc. (“PLS”) was a third-party logistics provider that arranged the shipping of its customers’ freight with selected trucking companies. Beemac Trucking (“Beemac”) was a shipping company that conducted non-exclusive business with PLS. In 2010, PLS and Beemac entered into a one-year Motor Carriage Services Contract (“the Contract”), which automatically renewed on a year to year basis until either party terminated it. The Contract contained both a non-solicitation provision and the no-hire provision. In this appeal, the Pennsylvania Supreme Court considered whether no-hire, or “no poach,” provisions that were ancillary to a services contract between business entities, were enforceable under the laws of the Commonwealth. While the Contract was in force, Beemac hired four PLS employees. PLS sued Beemac, alleging breach of contract, tortious interference with contract, and a violation of the Pennsylvania Uniform Trade Secrets Act. PLS also sued the four former employees, alleging they had breached the non-competition and non-solicitation provisions of their employment contracts. The trial court held the worldwide non-compete clauses in the employees' contracts were “unduly oppressive and cannot be subject to equitable modification.” With respect to the contract between the companies, the trial court held the pertinent no-poach clause was void against public policy. “If additional restrictions to the agreement between employer and employee are rendered unenforceable by a lack of additional consideration, PLS should not be entitled to circumvent that outcome through an agreement with a third party.” Finding no reversible error in the trial court's judgments, the Supreme Court affirmed. View "Pgh. Logistics Systems, Inc. v. Beemac Trucking, et al." on Justia Law

The Court of Chancery granted Defendants' motion for judgment on the pleadings in this action seeking to draw or claw back several million dollars in cash, holding that Defendants were entitled to the motion.Seller sold all outstanding shares of its wholly owned subsidiary (together, with its subsidiaries, Target) to Buyer (together with Target, Defendants). All of Target's assets, except for those excluded by the parties' purchase agreement, were transferred in the stock transaction (the disputed cash). After the transaction closed, millions of dollars in cash remained in Target's bank accounts. Seller asked Buyer to return the disputed cash but Buyer refused. Seller then brought this complaint. Defendants sought judgment on the pleadings in their favor. The Court of Chancery granted the motion, holding that no material issue of fact existed and that Defendants were entitled to judgment as a matter of law. View "Deluxe Entertainment Services Inc. v. DLX Acquisition Corp." on Justia Law