Justia Contracts Opinion Summaries

The Supreme Court affirmed the order of the district court staying proceedings and compelling Investors to submit all asserted claims against FSC Securities Corp. (FSC) and Rocky Mountain Financial Advisors, LLC and Eric Roshoven (collectively, RMF) to arbitration.On the recommendation of RMF brokers and advisors, Investors purchased securities in Invizeon Corporation through FSC. After Invizeon failed, Investors sued FSC and RMF, alleging that FSC failed adequately to supervise its registered RMF representatives and that RMF wrongfully induced Investors to invest in Invizeon on various grounds. FSC and RMF moved to stay proceedings and compel arbitration before the Financial Industry Regulatory Authority (FINRA). After a hearing, the district court issued an order compelling Investors to submit their claims to arbitration as provided in FSC customer agreement forms. The Supreme Court affirmed, holding that the district court (1) did not err in concluding that Investors knowingly, voluntarily, and intelligently assented to the terms of the standard-form arbitration agreements and validly waived their Montana constitutional rights to full legal redress and jury trial; (2) correctly concluded that the standard-form FSC arbitration agreements were not unconscionable; and (3) correctly compelled Investors to submit their claims against FSC and RMF to arbitration. View "Lenz v. FSC Securities Corp." on Justia Law

Insight Equity, a private-equity firm headquartered in Southlake, Texas, purchased Berry Family Nurseries, a nationwide wholesale nursery company headquartered in Tahlequah, Oklahoma, for $160 million. The Purchase Agreement entered into by the parties contained a Texas choice-of-law provision. The Agreement also contained a five-year non-compete provision, prohibiting the owners of Berry Family Nurseries, Bob Berry and Burl Berry, from owning a competing wholesale nursery company for five years. Park Hill Nursery, a nursery also located in Tahlequah, and owned by the Berrys, was not included in the Agreement, but the Agreement allowed the Berrys to continue to own and operate Park Hill Nursery so long as it did not compete with the newly formed BFN Operations. The parties performed under the terms of the Agreement for approximately three years until the Berrys, through Park Hill Nursery, began selling to several of BFN's largest customers. The Berrys sought a declaration that the restrictive covenants were unenforceable and void under Oklahoma law. BFN filed a counterclaim, seeking injunctive relief and monetary damages for the Berrys' breach of the covenants. Upon review, the Oklahoma Supreme Court concluded the Texas choice-of-law provision was valid, and the non-compete was enforceable under Texas law. The Berrys breached the non-compete, and Park Hill Nursery tortiously interfered with the parties' Agreement. BFN was entitled to injunctive relief through December 7, 2015, and was also entitled to monetary damages. The trial court's determination that BFN was entitled to attorney's fees was not a final judgment, and appeal of that issue was deemed premature. View "Berry & Berry Acquisitions v. BFN Properties" on Justia Law

Insight Equity, a private-equity firm headquartered in Southlake, Texas, purchased Berry Family Nurseries, a nationwide wholesale nursery company headquartered in Tahlequah, Oklahoma, for $160 million. The Purchase Agreement entered into by the parties contained a Texas choice-of-law provision. The Agreement also contained a five-year non-compete provision, prohibiting the owners of Berry Family Nurseries, Bob Berry and Burl Berry, from owning a competing wholesale nursery company for five years. Park Hill Nursery, a nursery also located in Tahlequah, and owned by the Berrys, was not included in the Agreement, but the Agreement allowed the Berrys to continue to own and operate Park Hill Nursery so long as it did not compete with the newly formed BFN Operations. The parties performed under the terms of the Agreement for approximately three years until the Berrys, through Park Hill Nursery, began selling to several of BFN's largest customers. The Berrys sought a declaration that the restrictive covenants were unenforceable and void under Oklahoma law. BFN filed a counterclaim, seeking injunctive relief and monetary damages for the Berrys' breach of the covenants. Upon review, the Oklahoma Supreme Court concluded the Texas choice-of-law provision was valid, and the non-compete was enforceable under Texas law. The Berrys breached the non-compete, and Park Hill Nursery tortiously interfered with the parties' Agreement. BFN was entitled to injunctive relief through December 7, 2015, and was also entitled to monetary damages. The trial court's determination that BFN was entitled to attorney's fees was not a final judgment, and appeal of that issue was deemed premature. View "Berry & Berry Acquisitions v. BFN Properties" on Justia Law

Baek purchased property through his LLC and obtained financing from Labe Bank; Frank was the loan officer. Frank later moved to NCB and asked Baek to move his business, representing that NCB would provide a larger construction loan at a lower rate. In 2006, Baek entered a construction loan with NCB for $11,750,000. Baek executed a loan agreement, mortgage, promissory note, and commercial guaranty. Baek’s wife did not sign the guaranty at closing. NCB maintains that, 18 months after closing, she signed a guaranty. One loan modification agreement bears her signature but Baek‐Lee contends that it was forged and that she was out of the country on the signing date. NCB repeatedly demanded additional collateral and refused to disburse funds to contractors. The Baeks claim that NCB frustrated Baek’s efforts to comply with its demands. In 2010, NCB filed state suits for foreclosure and on the guaranty. The Baeks filed affirmative defenses and a counterclaim, then filed a breach of contract and fraud suit against NCB. The Baeks later filed a federal Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1964(c), suit alleging fraud. The state court granted NCB summary judgment. The federal district court dismissed, citing res judicata. The Seventh Circuit affirmed. There has been a final judgment on the merits with the same parties, in state court, on claims arising from a single group of operative facts. View "Baek v. Clausen" on Justia Law

Baek purchased property through his LLC and obtained financing from Labe Bank; Frank was the loan officer. Frank later moved to NCB and asked Baek to move his business, representing that NCB would provide a larger construction loan at a lower rate. In 2006, Baek entered a construction loan with NCB for $11,750,000. Baek executed a loan agreement, mortgage, promissory note, and commercial guaranty. Baek’s wife did not sign the guaranty at closing. NCB maintains that, 18 months after closing, she signed a guaranty. One loan modification agreement bears her signature but Baek‐Lee contends that it was forged and that she was out of the country on the signing date. NCB repeatedly demanded additional collateral and refused to disburse funds to contractors. The Baeks claim that NCB frustrated Baek’s efforts to comply with its demands. In 2010, NCB filed state suits for foreclosure and on the guaranty. The Baeks filed affirmative defenses and a counterclaim, then filed a breach of contract and fraud suit against NCB. The Baeks later filed a federal Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1964(c), suit alleging fraud. The state court granted NCB summary judgment. The federal district court dismissed, citing res judicata. The Seventh Circuit affirmed. There has been a final judgment on the merits with the same parties, in state court, on claims arising from a single group of operative facts. View "Baek v. Clausen" on Justia Law

Terex USA, LLC ("Terex"), petitioned the Alabama Supreme Court for a writ of mandamus directing the Circuit Court to enforce an outbound forum-selection clause contained in a distributorship agreement between Terex and Cowin Equipment Company, Inc. ("Cowin"), and to dismiss Cowin's action against Terex based on improper venue pursuant to Rule 12(b)(3), Ala. R. Civ. P. Before August 2015, Cowin, a heavy-equipment dealer, had served as an authorized dealer of heavy equipment manufactured by the Liebherr Group for approximately 30 years. Cowin alleged Terex, a heavy-equipment manufacturer, began aggressively recruiting Cowin to become a dealer of its equipment in Alabama, Georgia, and Florida. At the time, Warrior Tractor & Equipment Company, Inc. ("Warrior"), was serving as the dealer for Terex's equipment in the region. Based on assurances from Terex that Cowin would be the only Terex dealer in the territory, Cowin allowed its relationship with Liebherr Group to expire. In August 2015, Cowin entered into a distributorship agreement with Terex to sell Terex heavy equipment in Alabama, Georgia, and Florida. Subsequent to entering into the distributorship agreement with Cowin, Terex entered into a new distributorship agreement with Warrior without providing notice to Cowin that Warrior would be reentering the heavy-equipment market. Cowin alleged Terex's failure to give it notice that Warrior would be reentering the market was contrary to common industry practices. Cowin sued Terex and Warrior, asserting various claims arising from Terex's alleged violation of the Alabama Heavy Equipment Dealer Act, sec. 8-21B-1 et seq., Ala. Code 1975 ("the AHEDA"). Terex moved the trial court pursuant to Rule 12(b)(3), Ala. R. Civ. P., to dismiss Cowin's complaint, arguing that venue in Jefferson County was improper because of the forum-selection clause in the distributorship agreement designating either the United States District Court for the Northern District of Georgia or the Georgia state court in Atlanta as the proper forum for any dispute between the parties arising from the distributorship agreement. "An outbound forum-selection clause is exactly the type of provision the legislature intended to prohibit because it would undermine the remedial measures and protections the legislature clearly intended to afford heavy-equipment dealers under the AHEDA; this is especially so as to the outbound forum-selection clause in this case, which also contains a choice-of-law provision designating Georgia law as controlling." The Alabama Supreme Court concluded Terex failed to establish a clear legal right to the relief it sought, so the Court denied its petition for a writ of mandamus. View "Ex parte Terex USA, LLC." on Justia Law

The agreement establishing a partnership in this case dictated that Defendant, a partner, wrongfully dissolved the partnership, but it was error to include the legal fees incurred by the remaining partners in the damages owed to them by Defendant.In 1985, Defendant and seven others entered into a written agreement to form a general partnership. In the mid-2000s, Defendant withdrew from the partnership. Plaintiffs, as the partnership’s executive committee and on behalf of the partnership, brought this breach of contract action seeking a declaratory ruling that Defendant had wrongfully dissolved the partnership, as well as damages. Supreme Court granted summary judgment to Plaintiffs, determining that the partnership was not an “at-will” partnership and therefore could not be dissolved without violation of the partnership agreement. The Appellate Division upheld Supreme Court’s ruling, concluding that Defendant wrongfully dissolved the partnership. On remand for the second time, Supreme Court awarded attorneys’ fees and experts’ fees. The Court of Appeals held (1) the lower courts erred in applying N.Y. P'ship Law 62(1)(b) to decide that Defendant violated the agreement, but they correctly concluded that Defendant’s dissolution was wrongful; but (2) Supreme Court erred in awarding fees to Plaintiffs as part of the statutory damages. View "Congel v. Malfitano" on Justia Law

The agreement establishing a partnership in this case dictated that Defendant, a partner, wrongfully dissolved the partnership, but it was error to include the legal fees incurred by the remaining partners in the damages owed to them by Defendant.In 1985, Defendant and seven others entered into a written agreement to form a general partnership. In the mid-2000s, Defendant withdrew from the partnership. Plaintiffs, as the partnership’s executive committee and on behalf of the partnership, brought this breach of contract action seeking a declaratory ruling that Defendant had wrongfully dissolved the partnership, as well as damages. Supreme Court granted summary judgment to Plaintiffs, determining that the partnership was not an “at-will” partnership and therefore could not be dissolved without violation of the partnership agreement. The Appellate Division upheld Supreme Court’s ruling, concluding that Defendant wrongfully dissolved the partnership. On remand for the second time, Supreme Court awarded attorneys’ fees and experts’ fees. The Court of Appeals held (1) the lower courts erred in applying N.Y. P'ship Law 62(1)(b) to decide that Defendant violated the agreement, but they correctly concluded that Defendant’s dissolution was wrongful; but (2) Supreme Court erred in awarding fees to Plaintiffs as part of the statutory damages. View "Congel v. Malfitano" on Justia Law

Alcon Laboratories Holding Corporation, a developer of artificial lenses, was exploring electroactive intraocular lens (“EAIOL”) that used electric power and changes in eye pupil size to “trigger” the focus of an artificial lens. Elenza, Inc. and Alcon decided to jointly pursue the technology, first by signing a Non-Disclosure Agreement (“NDA”), followed by a Stock Purchase Agreement (“SPA”). Unfortunately, the project fizzled after Elenza failed to meet development milestones in the SPA. Much to Elenza’s surprise, two years later, Alcon filed a patent application for an EAIOL and announced that it was working with Google, Inc. to develop an EAIOL. Elenza filed suit in Delaware, claiming Alcon breached its agreements with Elenza and misappropriated Elenza’s EAIOL trade secrets. Before trial, the Superior Court granted in part Alcon’s motion for summary judgment, finding that Elenza failed to support its trade secret claims. The court also limited Elenza’s damage claims. The contract claims went to trial, and a jury found against Elenza on all claims. On appeal, Elenza argued to the Delaware Supreme Court that the Superior Court erred when it granted summary judgment on its trade secret claims. According to Elenza, at the summary judgment stage, its trade secret disclosures were sufficient to prove that trade secrets existed and that Alcon used or disclosed those secrets in its later development efforts. The Supreme Court did not reach Elenza’s claim on appeal that it raised disputed factual issues about the existence of trade secrets because the Court agreed with the Superior Court that, at summary judgment, Elenza failed to support its claim that Alcon improperly used or disclosed any of Elenza’s alleged trade secrets. View "Elenza, Inc. v. Alcon Laboratories Holding Corporation, et al." on Justia Law

Merritt Charles Horning III; Riggers Store Holdings, LLC; Riggers Store 1, LLC; Chase Merritt Management, Inc.; Chase Merritt, LP; and Racers Store Management, LLC (collectively the "Horning defendants") appealed a district court order denying their motion to compel arbitration of Raymond Melendez's lawsuit against them. The issues in this appeal centered on whether Melendez's claims against the Horning defendants concerning the operation of a convenience store in Williston were arbitrable under an arbitration clause in an operating agreement for Riggers Store Holdings. After review, the North Dakota Supreme Court concluded the district court erred in deciding Melendez's claims were not arbitrable, and reversed the order denying arbitration and remanded for entry of an order compelling arbitration. View "Melendez v. Horning III" on Justia Law