Justia Contracts Opinion Summaries

Bio‐Systems produced biodegradation products that use bacteria to break down waste. Customers often required certificates of analysis, so Bio‐Systems counted the bacteria in a product before its sale. Betco purchased Bio‐Systems, after visiting Bio‐Systems’s sites, speaking with personnel, and examining financial information. Betco paid Peacock $5 million and placed $500,000 in escrow, to be released two years after closing if Belco had not identified any problems. Peacock continued to run the plant. Betco instructed him to focus on sales and profits. Betco knew before closing that the bacteria yields were inconsistent at the plant; it learned within a year of closing that some products were being shipped with below‐specification bacteria counts. Betco nonetheless released the escrow early in exchange for a discount. Betco subsequently discovered that certificates of analysis were being falsified. Betco sued Peacock. The court dismissed negligent misrepresentation and breach of contract claims as time‐barred by the Agreement, and found that Betco failed to prove violation of the duty of good faith and hadn’t shown any cognizable injury from the alleged violation. The Seventh Circuit affirmed rejection of all of Betco’s claims. When Betco purchased Bio‐Systems, it expected profitability and not to face claims for shipping products with intentionally falsified certificates; it received that. Betco did not expect that it was purchasing flawless processes. Under Wisconsin law, the inquiry is not whether Betco paid the appropriate price but whether Betco received the benefits that it expected. View "Betco Corp., Ltd. v. Peacock" on Justia Law

Laboratory Specialists International, Inc. (LSI) filed a complaint in Orange County Superior Court alleging causes of action against Shimadzu Scientific Instruments, Inc. (Shimadzu) for breach of contract, conversion, breach of the implied covenant of good faith and fair dealing, intentional interference with contractual relations, and intentional and negligent interference with prospective economic relations. LSI appealed when the trial court dismissed its lawsuit against Shimadzu under the forum selection clause in the parties’ contract. LSI contended Shimadzu erred by requesting a dismissal in its demurrer dismissal based on the forum selection clause, rather than by a separate motion, and that the trial court erred by granting Shimadzu leave to recast its request for dismissal in a separate motion. In the alternative, LSI argued the court erred by: (1) dismissing LSI’s tort claims, which LSI argued did not arise out of or “pertain[]” to the parties’ contract; (2) finding the forum selection clause mandated Maryland as the proper fourm, rather than conducting an analysis under discretionary forum non conveniens factors; and (3) dismissing rather than staying LSI’s lawsuit. As we explain, these contentions are without merit, and we therefore affirm the court’s dismissal order. View "Laboratory Specialists International v. Shimadzu Scientific etc." on Justia Law

General Motors provides sales incentives to dealers who sell cars to GM employees, retirees, and their family members at a discounted rate. The dealer must collect a signed agreement from the purchaser that establishes his eligibility for the program. In 2014, GM audited one of its Ohio dealers, Sims, and discovered transactions in which Sims had failed to collect the agreement from purchasers within the timeline set by GM in a 2012 dealership bulletin. GM debited Sims’ account $47,493.28 for improper incentive payments. Sims is located near a large GM plant in Lordstown, and the Purchase Program accounts for 80% to 90% of its sales. Sims filed suit alleging breach of contract and violations of the Ohio Dealer Act. The district court granted GM summary judgment. The Sixth Circuit affirmed. The parties’ dealership arrangement permitted the debit and a timely filed Consumer Dealer Agreement constitutes “material documentation” under Section 4517.59(A)(20)(a) of the Ohio Dealer Act. View "Sims Buick-GMC Truck, Inc. v. General Motors, LLC" on Justia Law

Jesse Craig appealed a judgment awarding TJ Haugrud $120,000 plus interest on Haugrud's breach of contract claim against Craig, dismissing Craig's counterclaims against Haugrud, and sanctioning Craig's attorney $5,000. Haugrud and Craig formed Acquisition, LLC, for the purpose of developing, owning and managing real estate, and each were 50 percent owners of the limited liability company. In October 2016, Haugrud and Craig entered into a written agreement for Craig to purchase Haugrud's interest in the company for $130,000 payable in two installments. Craig paid $10,000 by November 1, 2016 for the first installment, but did not pay the $120,000 second installment which was due by December 1, 2016. Haugrud sued Craig for breach of contract seeking the unpaid installment of $120,000. Craig filed a counterclaim against Haugrud alleging actual fraud, constructive fraud, deceit, unintentional misrepresentation, and civil conspiracy in connection with the parties' business dealings, including transactions between their respective business entities that were not made parties to the lawsuit. The district court granted summary judgment on Haugrud's breach of contract claim because Craig "conceded" he failed to make the second installment payment required by the contract. The court also dismissed Craig's counterclaims for failure to state claims upon which relief can be granted because Craig "treats [Haugrud] as an individual with respect of his sole interest" in the limited liability companies, Craig "made no allegation to pierce the corporate veil," and Craig "treats his own interest" in the limited liability companies "as giving rise to personal claims" which belong to the separate entities. The court further found Craig's "attempt to make [Haugrud] responsible as a shareholder of a corporation, the obligations of the corporation, is not grounded in law" and awarded Haugrud $5,000 in attorney fees as a sanction assessed against Craig's counsel. After review, the North Dakota Supreme Court affirmed the district court's grant of summary judgment on Haugrud's breach of contract claim. The Court reversed dismissal of Craig's counterclaims on the pleadings and the sanction, and remanded for further proceedings. View "Haugrud v. Craig" on Justia Law

Jami Johnston appealed a judgment entered in favor of Castles and Crowns, Inc. ("Castles"). Castles was a children's clothing company formed by Julie Vickers and Amy Bowers. Brandi Stuart, Johnston's sister, worked for Castles from 2006 until 2011. From 2009 to 2010, while she was working with Castles, Stuart had 7,149 pounds of Castles' clothing shipped either to Johnston or to consignment companies used by Johnston. In January 2011, Vickers terminated Stuart's employment based on issues with her performance. In April 2011, Castles sued Stuart and Johnston, alleging conversion; civil conspiracy; "willfulness, negligence, and wantonness"; trespass to chattel; and unjust-enrichment against Johnston and Stuart. It also asserted fraudulent-misrepresentation and suppression claims against Stuart. Johnston answered, also asserting a counterclaim against Castles and a third-party complaint against Vickers. In her counterclaim and third-party complaint, Johnston alleged claims of defamation; "negligence, wantonness, and willfulness"; conspiracy; and tortious interference with business and contractual relations. She also sought recovery against Castles under the theory of respondeat superior. In this case, the trial court instructed the jury to consider Castles' unjust-enrichment claim against Johnston if it did not find against Johnston on the conversion and conspiracy claims. The jury found against Johnston on both the conversion and conspiracy claims. However, it then considered the unjust-enrichment claim and found against Johnston on that claim as well. The Alabama Supreme Court concluded the jury's verdict was inconsistent with the trial court's instructions and "was obviously the result of confusion on the part of the jury." After it had discharged the jury, the trial court acknowledged the inconsistency in the jury's verdict. The trial court attempted to cure that inconsistency by setting aside the award in favor of Castles on the unjust-enrichment claim. However, the Supreme Court found the trial court's attempt to reconcile the inconsistency in the jury's verdict was based on mere speculation about the jury's intent. Additionally, the jury failed to follow the trial court's instructions, and Johnston moved for a new trial on that ground. The Supreme Court concluded Johnston was entitled to a new trial because the jury failed to follow the trial court's instructions. For these reasons, the trial court erred when it denied Johnston's motion for a new trial. View "Johnston v. Castles & Crowns, Inc." on Justia Law

The Santa Cruz Operation, Inc. (Santa Cruz) entered into a business arrangement with International Business Machines Corp. (IBM) to develop a new operating system that would run on a more advanced processor manufactured by Intel Corporation (Intel). The parties signed an agreement memorializing this relationship, calling it “Project Monterey.” Another technology company, The SCO Group, Inc. (SCO), then acquired Santa Cruz’s intellectual property assets and filed this lawsuit for IBM’s alleged misconduct during and immediately after Project Monterey. SCO accused IBM of stealing and improperly using source code developed as part of the Project to strengthen its own operating system, thereby committing the tort of unfair competition by means of misappropriation. The district court awarded summary judgment to IBM on this claim based on the independent tort doctrine, which barred a separate tort action where there was no violation of a duty independent of a party’s contractual obligations. SCO also accused IBM of disclosing Santa Cruz’s proprietary materials to the computer programming community for inclusion in its Linux open-source operating system. In a separate order, finding insufficient evidence of actionable interference by IBM, the district court granted summary judgment in favor of IBM on these tortious interference claims. Finally, after the deadline for amended pleadings in this case, SCO sought leave to add a new claim for copyright infringement based on the allegedly stolen source code from Project Monterey. SCO claimed it had only discovered the essential facts to support this claim in IBM’s most recent discovery disclosures. The district court rejected SCO’s proposed amendment for failure to show good cause. SCO appealed. After review, the Tenth Circuit reversed the district court’s order awarding IBM summary judgment on the misappropriation claim, and affirmed as to all other issues. View "SCO Group v. IBM" on Justia Law

The Supreme Court affirmed in part, reversed in part and remanded the judgment of the circuit court dismissing La Bella Dona Skin Care, Inc.’s (LBD) civil conspiracy claims, granting summary judgment on LBD’s claim for fraudulent conveyance, and applying a clear and convincing standard of proof to LBD’s mere continuation theory of successor liability. LBD filed this complaint against eleven defendants seeking damages and injunctive relief as a result of Defendants’ involvement in a series of allegedly fraudulent conveyances designed to avoid an outstanding judgment in favor of LBD. The court held that the circuit court (1) did not err when it dismissed LBD’s civil conspiracy claims on demurrer where a fraudulent conveyance under Va. Code 55-80 cannot serve as the predicate unlawful act needed to support a claim for statutory or common law conspiracy; (2) erred in dismissing LBD’s fraudulent conveyance claim on summary judgment where a prima facie case of fraudulent conveyance may be established when the recipient is a third party creditor with a higher security interest; and (3) erred by applying a clear and convincing standard of proof to LBD’s mere continuation theory of successor liability. View "La Bella Dona Skin Care, Inc. v. Belle Femme Enterprises" on Justia Law

The Court of Chancery granted Defendants’ motion to dismiss Plaintiff’s claims for breach of fiduciary duty, waste, and unjust enrichment and dismissed the complaint with prejudice as to the named plaintiff because the claims were released as a part of a settlement agreement.Plaintiff brought these claims derivatively on behalf of Viacom Inc. challenging Viacom’s payment of approximately $13 million of compensation to its founder and then-chairman from 2014 to 2016 when Viacom’s directors purportedly knew that he was incapacitated and incapable of doing his job. The Court of Chancery held that the plain terms of the release in the settlement agreement entered into by Viacom in 2016 barred litigation of the derivative claims asserted in this case. View "Feuer v. Dauman" on Justia Law

The Supreme Court reversed the circuit court’s grant of summary judgment in favor of Respondents in this action in which Respondents added Petitioner as a defendant. Respondents settled a lawsuit against certain companies (the Brozik companies) for failing to pay the purchase price under an agreement to buy the assets of Respondents’ business. The circuit court later awarded Respondents $47,184 to be paid by the Brozik companies based upon the cessation of payments pursuant to the settlement. This judgment became a lien. The assets of one of the Brozik companies was then sold to Petitioner, and Respondents amended their complaint to add Petitioner as a defendant. In reversing the circuit court's judgment, the Supreme Court held that Respondents did not satisfy their burden of showing the absence of any genuine issues of material fact, and therefore, summary judgment should not have been granted. View "Kourt Security Partners, LLC v. Judy's Locksmiths, Inc." on Justia Law

Wiseman filed suit seeking to recover "carrying charges" it paid Southern on the theory that those charges were not permitted by the Alcoholic Beverage Control Act. The trial court ruled that the California Department of Alcoholic Beverage Control (Department) has exclusive jurisdiction over Wiseman's claims because its allegations directly implicate the sale of alcohol. The Court of Appeal held that, although the Department does have exclusive jurisdiction to issue, deny, suspend and revoke alcoholic beverage licenses according to terms of the ABC Act and regulations adopted pursuant to it, the consequences of committing a violation of the ABC Act by imposing charges of the type collected by Southern from Wiseman in this case were not limited to those which the Department may impose on its licensees and did not bar the contract, unfair competition and declaratory relief claims alleged in Wiseman's complaint. Accordingly, the court reversed the trial court's order sustaining Southern's demurrer and remanded for further proceedings. View "Wiseman Park v. Southern Glazer's Wine and Spirits" on Justia Law