Justia Contracts Opinion Summaries

John Kugler appealed the grant of summary judgment in his suit against Ron Nelson, David Powers, Steven Kenison, William Armstrong, and Powers Candy Co., Inc. (collectively “the Defendants”). Until mid-2010, Kugler, Nelson, Powers, Kenison, and Armstrong were all shareholders of H & M Distributing, Inc. (H & M), a wholesale distributor of beverages, cigarettes, and other miscellaneous items. In his complaint, Kugler alleged breach of various agreements and wrongful actions taken by the Defendants all in relation to Nelson's departure from H & M. The district court dismissed all of Kugler’s claims because it found that the claims were derivative and Kugler failed to comply with derivative action requirements. Finding no reversible error, the Supreme Court affirmed. View "Kugler v. Nelson" on Justia Law

Petitioner John Van Rees, Sr. contracted with respondent Unleaded Software, Inc. to perform web-related services and to design additional websites. After Unleaded missed deadlines and failed to deliver the promised services, Van Rees sued, asserting multiple tort claims, a civil theft claim, three breach of contract claims, and a claim for violations of the Colorado Consumer Protection Act (CCPA). The trial court granted Unleaded's 12(b)(5) motion, dismissing all but Van Rees' contract claims, on which a jury found in Van Rees' favor. Van Rees appealed, and the court of appeals affirmed. After its review, the Colorado Supreme Court affirmed in part and reversed in part. The appellate court had determined that the tort and civil theft claims were barred by the "economic loss rule" because they were related to promises memorialized in the contracts, and the CCPA claim failed to allege a significant public impact. The Supreme Court found the issue pertaining to the economic loss rule was not whether the tort claims related to a contract, but whether they stemmed from a duty independent of the contact. The Court found pre-contractural misrepresentations in this case distinct from the contract itself, and could have formed the basis of an independent tort claim. Accordingly, the Court reversed as to Van Rees' tort claims. With respect to civil theft, the court affirmed the court of appeals on the ground that the claim failed to adequately allege the "knowing deprivation of a thing of value." View "Van Rees v. Unleaded Software, Inc." on Justia Law

In 2013, Panther, a marketing and brand management company, signed a contract with IndyCar, to purchase access to coveted space in the “Fan Village” at IndyCar racing events, an area where sponsors set up displays to attract fans. The Army National Guard had been Panther’s team sponsor, 2008-2013. After it signed the 2013 contract, Panther learned that another team, RLL, intended to provide the Guard with Fan Village space. Believing that RLL had conspired with IndyCar and the Docupak agency to persuade the Guard to sponsor RLL instead of Panther, Panther brought suit in state court against RLL, Docupak, IndyCar, and active‐duty Guard member Metzler, who acted as the liaison between the Guard and Panther. The defendants removed the case to federal court, where the United States was substituted as a party for Metzler, 28 U.S.C. 2679(d); Panther filed an amended complaint that did not name either Metzler or the United States. The district court dismissed the complaint against RLL, IndyCar, and Docupak and found the United States’s motion to dismiss for lack of jurisdiction moot. The Seventh Circuit vacated and remanded for dismissal for lack of jurisdiction; the basis for federal jurisdiction disappeared when Panther amended its complaint. View "Panther Brands, LLC v. Indy Racing League, LLC" on Justia Law

Riverside, owned half by GMH and half by Heritage (Rezko’s company), owned a valuable Chicago property. Sirazi had helped Rezko finance several investments, including guaranteeing a $5 million loan from Republic. The loan came due in 2006. Rezko was already in default on millions of dollars borrowed from Sirazi. Sirazi and Rezko signed a settlement agreement: Rezko gave Sirazi a security interest in all distributions from Heritage and committed to a priority order for paying off debts using Heritage proceeds. Rezko defaulted on another loan, triggering Sirazi’s guaranty, so that Rezko then owed Sirazi $12.9 million. Meanwhile, Rezko had been indicted. GMH bought him out for $31.8 million. Rezko received $5 million, which paid for his criminal defense; the balance consisted of forgiveness of Rezko’s debt to GMH. With the approval of Heritage’s general counsel and GMH chairman Auchi, the agreement ignored Sirazi’s interest. A jury awarded Sirazi compensatory damages of $12.9 million against GMH and Auchi and punitive damages of $5 million against each; the judge set aside the award against Auchi. The Seventh Circuit affirmed in part, in favor of Sirazi. Rezko breached the settlement by failing to pay Sirazi; the jury reasonably found GMH liable for tortious interference with contract. GMH was enriched unjustly. The award was reduced by $524,000 that Sirazi received in Rezko’s bankruptcy and the award against Auchi was reinstated. View "Sirazi v. Gen. Mediterranean Holding, S.A." on Justia Law

An aviation company challenged the application of a statutory immunity provision to its claim of a breach of the implied warranty of merchantability found in the Uniform Commercial Code (UCC) arising from an alleged defect in product design or manufacturing. The issue this appeal presented for the Supreme Court's review was whether the immunity provision only applied in tort cases or if it also applied to contracts. The Court held the statutory immunity only applied in products liability cases involving personal injury or property damage, not in cases based solely on economic loss. View "Des Moines Flying Service, Inc. v. Aerial Services, Inc." on Justia Law

The trial court granted anti-SLAPP motions, Code of Civil Procedure section 425.16, against a city‘s exclusive agent in its action for breach of, and interference with, the agency contract and related causes of action. The court concluded that the alleged wrongful conduct in plaintiffs‘ tortious breach of contract cause of action is the City‘s violation of the terms of the Exclusive Agency Agreement (EAA) by allowing someone other than Rand Resources to act as its agent with respect to efforts to bring an NFL franchise to the City. Thus, the cause of action is not premised upon protected free speech or the right to petition for redress of grievances. The alleged wrongful conduct in plaintiffs‘ promissory fraud cause of action is the false representation regarding renewal of the EAA. Although the basis of the cause of action is a statement, the gravamen of the cause of action is the manner in which the City conducted itself in relation to the business transaction between it and Rand Resources, not the City‘s exercise of free speech or petitioning activity. The gravamen of the fourth cause of action with respect to the City is the City‘s violation of the terms of the EAA and the manner in which the City conducted itself in relation to the business transaction between it and Rand Resources, not the City‘s exercise of free speech or petitioning activity. The alleged wrongful conduct at the heart of plaintiffs‘ interference with contract and interference with prospective economic advantage causes of action is again the Bloom defendants‘ efforts to usurp Rand Resources‘s rights and role under the EAA. As addressed with respect to the fourth cause of action, this conduct arises from the Bloom defendants‘ private conduct of their own business, not their free speech or petitioning activities. Accordingly, the court reversed the order granting the anti-SLAPP motions and reversed the award of attorney fees. View "Rand Resources LLC v. City of Carson" on Justia Law

26th Street Hospitality, LLP appealed a district court's order granting a motion to compel arbitration; order lifting a stay in the proceedings, confirming the arbitration award, and awarding post-judgment interest; and final judgment. The Partnership argued the district court erred in ordering arbitration because the court was required to determine the validity of the contract before arbitration could be ordered and not all of the claims and parties were subject to arbitration. Finding no reversible error in the district court's judgment, the Supreme Court affirmed. View "26th Street Hospitality v. Real Builders" on Justia Law

The Texas Optometry Act prohibits commercial retailers of ophthalmic goods from attempting to control the practice of optometry; authorizes the Optometry Board and the Attorney General to sue a violator for a civil penalty; and provides that “[a] person injured as a result of a violation . . . is entitled to the remedies. In 1992, Wal-Mart opened “Vision Centers” in its Texas retail stores, selling ophthalmic goods. Wal-Mart leased office space to optometrists. A typical lease required the optometrist to keep the office open at least 45 hours per week or pay liquidated damages. In 1995, the Board advised Wal-Mart that the requirement violated the Act. Wal-Mart dropped the requirement and changed its lease form, allowing the optometrist to insert hours of operation. In 1998, the Board opined that any commercial lease referencing an optometrist’s hours violated the Act; in 2003, the Board notified Wal-Mart that it violated the Act by informing optometrists that customers were requesting longer hours. Optometrists sued, alleging that during lease negotiations, Wal-Mart indicated what hours they should include in the lease and that they were pressured to work longer hours. They did not claim actual harm. A jury awarded civil penalties and attorney fees. The Fifth Circuit certified the question of whether such civil penalties, when sought by a private person, are exemplary damages limited by the Texas Civil Practice and Remedies Code Chapter 41. The Texas Supreme Court responded in the affirmative, noting that “the certified questions assume, perhaps incorrectly, that the Act authorizes recovery of civil penalties by a private person, rather than only by the Board or the Attorney General.” View "Wal-Mart Stores, Inc. v. Forte" on Justia Law

This legal battle began in 2006 when American Biomedical Group, Inc. (ABGI) and ABG Cattletraq, LLC (Cattletraq) filed a petition in the district court against Techtrol, Inc. and William Ardrey (Defendants); Defendants then filed a counterclaim. ABGI and Cattletraq dismissed their claims and causes of action against Defendants (without prejudice), leaving Defendants' counterclaim pending. Two years later, Defendants filed a petition in the same court against ABGI, Cattletraq, and James Burgess, their sole shareholder and CEO (Plaintiffs). In 2009, Plaintiffs filed another petition alleging that Defendants "wrongfully exercised dominion and control over plaintiffs' personal and intellectual property" and "willfully, deliberately and maliciously converted plaintiffs' personal and intellectual property" for their own benefit. Plaintiffs sought damages based on Defendants' unjust enrichment from the conversion. The district court consolidated the three cases. When the cases were consolidated, Defendants' counterclaim, Defendants' petition alleging abuse of process, and Plaintiffs' petition alleging causes of action for conversion and unjust enrichment remained pending before the district court. In 2014, Defendants moved for summary judgment on Plaintiffs' claim for conversion, asserting that Oklahoma did not recognize a tort for conversion of intangible property, and for unjust enrichment, asserting Plaintiffs' claim was precluded because they had an adequate remedy at law for breach of contract. The question this appeal presented for the Supreme Court's review was whether Defendants supported their motion for summary judgment with undisputed, material facts sufficient to warrant the district court granting partial summary adjudication in their favor. After that review, the Court answered in the negative. "Defendants failed to show that they were entitled to summary judgment. Throughout their arguments before the district court and this Court, Defendants rely on allegations which they have failed to allege as undisputed in their motion for summary judgment, which have no supporting evidentiary materials, and which Plaintiffs contest or which Plaintiffs have not admitted." View "American Biomedical Group, Inc. v. Techtrol, Inc." on Justia Law

In 2003, a closely held corporation purchased a United life insurance policy on Clark, then its President. Buck, its COO, was the beneficiary. Clark thought that the $1 million death benefit would enable Buck to buy out his stock from Clark’s family. The policy was amended so that the benefit would go to the corporation. In 2005 Clark retired and sold his interest to Holtz, the firm’s new President. Buck remained as COO. Holtz owned 61% of the stock and Buck the rest. Holtz received a copy of the policy, including the amendment naming the corporation as the beneficiary. Another copy was in corporate files. Clark died in 2011. Buck told Holtz that the company was the beneficiary, but United paid the money to Buck. When Buck tried to use the proceeds to buy Holtz’s stock, he was removed from the board and quit as COO. The corporation sued. United conceded that the corporation was the beneficiary, but argued that the corporation knew the truth and allowed Buck to claim the money, carrying out the plan devised by Clark and Buck. During discovery,the corporation then admitted finding the amendment earlier. The judge entered summary judgment in favor of United. The Seventh Circuit affirmed, rejecting an argument that Holtz was misled by United’s error and had no reason to think that the corporation was the beneficiary. The corporation’s knowledge, not Holtz’s, is dispositive. View "Samaron Corp. v. United of Omaha Life Ins. Co." on Justia Law