Justia Contracts Opinion Summaries

Lauren Woods was injured in a car accident involving an underinsured motorist and sought benefits from her insurer, Progressive American Insurance Company, under her policy’s underinsured motorist provision. Progressive declined to pay the full policy limit. Woods then sued Progressive for breach of contract and statutory bad faith under Florida law, alleging that Progressive failed to settle her claim in good faith. After serving civil remedy notices, Woods’s case was removed to federal court based on diversity jurisdiction.The United States District Court for the Southern District of Florida first held a jury trial on Woods’s underinsured motorist claim, resulting in a verdict and final judgment in her favor that exceeded the policy limit. Woods then proceeded with her statutory bad faith claim before the same court. Prior to the bad faith trial, the parties stipulated to certain facts, including the existence and amount of the prior verdict and judgment. They also agreed that the magistrate judge would determine damages, and the jury would decide only liability. At the start of the bad faith trial, Woods limited her theory to Progressive’s conduct before the underinsured motorist trial, and the court excluded evidence and instructions regarding the prior verdict and excess judgment. The jury found for Progressive on the bad faith claim, and the court denied Woods’s motion for a new trial.On appeal, the United States Court of Appeals for the Eleventh Circuit held that the district court did not abuse its discretion in excluding the prior verdict and excess judgment from the bad faith trial. The court found that, given Woods’s stipulation limiting the scope of her claim and the parties’ agreement that damages would be determined by the judge, the excluded evidence was irrelevant to the jury’s determination of liability. The Eleventh Circuit affirmed the district court’s judgment in favor of Progressive. View "Woods v. Progressive American Insurance Company" on Justia Law

A Maryland real estate investment trust with over 12,000 shareholders entered into an advisory agreement with UMTH General Services, L.P. and its affiliates to manage the trust’s investments and operations. The agreement stated that the advisor was in a fiduciary relationship with the trust and its shareholders, but individual shareholders were not parties to the agreement. After allegations of mismanagement and improper advancement of legal fees surfaced, a shareholder, Nexpoint Diversified Real Estate Trust, sued derivatively in Maryland. The Maryland court dismissed the claims for lack of standing and subject matter jurisdiction. Nexpoint then transferred its shares to a subsidiary, which, along with Nexpoint, sued the advisors directly in Texas, alleging corporate waste and mismanagement, and claimed the advisory agreement created a duty to individual shareholders.In the 191st District Court of Dallas County, the advisors filed a plea to the jurisdiction, a verified plea in abatement, and special exceptions, arguing that the claims were derivative and belonged to the trust, so the shareholders lacked standing and capacity to sue directly. The trial court denied these motions. The advisors sought mandamus relief from the Fifth Court of Appeals, which was denied, and then petitioned the Supreme Court of Texas.The Supreme Court of Texas held that while the shareholders alleged a financial injury sufficient for constitutional standing, they lacked the capacity to sue individually because the advisory agreement did not create a duty to individual shareholders, nor did it confer third-party beneficiary status. The agreement benefited shareholders collectively through the trust, not individually. The court conditionally granted mandamus relief, directing the trial court to vacate its order and dismiss the case with prejudice, holding that shareholders must pursue such claims derivatively and in the proper forum as specified by the trust’s governing documents. View "IN RE UMTH GENERAL SERVICES, L.P." on Justia Law

Sanchez Energy Corporation, a gas producer, underwent Chapter 11 bankruptcy in 2019 due to significant debt, with its reorganization plan confirmed in April 2020. The company, later renamed Mesquite Energy, Inc., owned valuable fossil fuel reserves in the Comanche Field, Texas, and had several high-cost contracts for gathering, processing, transporting, and marketing natural gas and natural gas liquids. Carnero G&P, L.L.C., a midstream services provider, had a contract with Sanchez to serve as a backup provider. After Sanchez’s reorganization, Mesquite entered into new agreements with other parties to lower its midstream costs, which Carnero claimed breached its surviving contract.Following the bankruptcy, Carnero filed a state court lawsuit against Mesquite and other parties, asserting state law claims based on the new agreements. The suit was removed to the United States Bankruptcy Court for the Southern District of Texas, which denied Carnero’s request to remand and ultimately dismissed the case on the pleadings, finding it had “related-to” jurisdiction under 28 U.S.C. § 1334. The bankruptcy court reasoned that the dispute pertained to the implementation of the reorganization plan and that Carnero was barred from challenging the new agreements due to its failure to object during the bankruptcy proceedings. The United States District Court for the Southern District of Texas affirmed the bankruptcy court’s decision.On appeal, the United States Court of Appeals for the Fifth Circuit reviewed the jurisdictional question de novo. The Fifth Circuit held that the bankruptcy court lacked post-confirmation “related-to” jurisdiction over Carnero’s state law contract claims, as the dispute did not pertain to the implementation or execution of the reorganization plan. The court found that the new agreements were not executory contracts under the plan and that Carnero was not barred from pursuing its claims. The Fifth Circuit reversed the lower courts’ judgments and remanded the case with instructions to remand to state court. View "Carnero G&P v. SN EF Maverick" on Justia Law

RTI, LLC and RTI Holdings, LLC sought to construct a specialized clinical research facility in Brookings, South Dakota, designed for animal health research trials with stringent air filtration and ventilation requirements. Acting as the general contractor, RTI hired designArc Group, Inc. as architect and several contractors, including Pro Engineering, Inc., Ekern Home Equipment Company, FM Acoustical Tile, Inc., and Trane U.S. Inc., to design and build the facility. After completion in April 2016, RTI experienced significant issues with air pressure, ventilation, and ceiling integrity, leading to contamination problems that disrupted research and resulted in financial losses.The Circuit Court of the Third Judicial Circuit, Brookings County, reviewed RTI’s claims for breach of contract and breach of implied warranties against the architect and contractors. All defendants moved for summary judgment, arguing that RTI’s claims were based on professional negligence and required expert testimony, which RTI failed to provide. The circuit court agreed, finding RTI’s CEO unqualified as an expert, and granted summary judgment to all defendants. The court also denied RTI’s motion to amend its complaint to add negligence claims, deeming the amendment untimely and futile due to the lack of expert testimony.The Supreme Court of the State of South Dakota affirmed the summary judgment for designArc, Pro Engineering, and FM Acoustical, holding that expert testimony was required for claims involving specialized design and construction issues, and that RTI’s CEO was not qualified to provide such testimony. However, the court reversed the summary judgment for Trane and Ekern, finding genuine issues of material fact regarding Trane’s alleged faulty installation and Ekern’s potential vicarious liability. The court also reversed the denial of RTI’s motion to amend the complaint, concluding the proposed amendments were not futile and would not prejudice Trane or Ekern. The case was remanded for further proceedings. View "RTI, LLC v. Pro Engineering" on Justia Law

A marketing and e-commerce company based in Nevada provided services for the Kanye 2020 presidential campaign at the request of a group of Arizona-based political consultants (the Lincoln defendants). The company began work without a written contract, relying on assurances that terms would be formalized later. It created campaign materials, built a website, and managed digital operations, but was never paid for its work. The company sued Kanye 2020 and the Lincoln defendants in the United States District Court for the District of Wyoming, alleging breach of contract, breach of the implied duty of good faith and fair dealing, and unjust enrichment.The District of Wyoming found it lacked personal jurisdiction over the Lincoln defendants and transferred those claims to the District of Arizona under 28 U.S.C. § 1631, citing concerns about potential statute of limitations issues. The court dismissed the claims against Kanye 2020 for failure to state a claim, but did so without prejudice. Kanye 2020 moved for reconsideration, seeking dismissal with prejudice, but the Wyoming court declined, stating it no longer had jurisdiction after the transfer.On appeal, the United States Court of Appeals for the Tenth Circuit held that it lacked jurisdiction to review the interlocutory transfer order. The court affirmed the dismissal of the contract claims against Kanye 2020, finding the complaint failed to plausibly allege the existence of an oral or implied contract or unjust enrichment, as there were insufficient communications or notice to Kanye 2020 regarding payment expectations. However, the Tenth Circuit held that the district court erred in concluding it lacked jurisdiction to consider Kanye 2020’s motion for reconsideration. The case was remanded for the district court to determine whether the dismissal of the claims against Kanye 2020 should be with prejudice. View "SeedX v. Lincoln Strategy" on Justia Law

After purchasing a home with wooded acreage in Santa Cruz, the buyers discovered issues they believed the sellers had failed to disclose, including matters related to the septic system, property condition, and logging operations. The real estate transaction was governed by a standard form agreement that required the parties to attempt mediation before resorting to litigation or arbitration, and provided that the prevailing party in any dispute would be entitled to recover reasonable attorney fees, except as limited by the mediation provision.Following the sale, the buyers sued the sellers for breach of contract and fraud. The sellers filed a cross-complaint. After a three-day bench trial in the Santa Cruz County Superior Court, the court found in favor of the sellers on all claims and on their cross-complaint, determining that the sellers were the prevailing parties and entitled to recover attorney fees and costs, with the amount to be determined in post-trial proceedings. The sellers then moved for attorney fees and costs. The trial court denied the motion for attorney fees, concluding that the sellers’ initial refusal to mediate the dispute, as required by the contract, barred them from recovering attorney fees, even though they later expressed willingness to mediate before the buyers filed suit. The court also denied the motion for costs without prejudice due to procedural deficiencies.On appeal, the California Court of Appeal, Sixth Appellate District, held that the trial court’s initial statement regarding entitlement to attorney fees was interlocutory and not a final judgment on the issue. The appellate court further held that the sellers’ initial refusal to mediate did not automatically preclude them from recovering attorney fees if they later agreed to mediate before litigation commenced. The court reversed the postjudgment order denying attorney fees and remanded for further proceedings to determine whether the sellers effectively retracted their refusal to mediate before the lawsuit was filed. The denial of costs was affirmed due to the sellers’ failure to file a proper costs memorandum. View "Evleshin v. Meyer" on Justia Law

A commercial real estate broker and consultant partnered with three brothers who owned an architecture and construction company to develop and lease a commercial property. They planned to form a limited liability company (LLC) as equal members, contributing professional services and cash, but did not formalize their agreement in writing. After a dispute arose over a broker commission, the brothers executed a backdated operating agreement that excluded the broker from LLC membership. The broker alleged he was unfairly cut out of the deal and sued for breach of contract and unjust enrichment.The Marshall Circuit Court granted summary judgment to the brothers on the contract claim, finding that Indiana law required written confirmation for LLC membership, which the broker lacked. The court also denied the broker’s request for a jury trial on the unjust enrichment claim, holding that both the claim and the defense of unclean hands were equitable issues for the judge. After a bench trial, the court ruled against the broker on unjust enrichment, finding he failed to prove his claim and that unclean hands barred recovery.On appeal, the Indiana Court of Appeals reversed, holding that initial LLC membership could be established by oral agreement and that unjust enrichment claims for money damages were legal claims entitled to a jury trial. The Indiana Supreme Court granted transfer, vacating the appellate decision.The Indiana Supreme Court held that LLC membership under the Business Flexibility Act requires either a written operating agreement or written confirmation, and the broker was not a member as a matter of law. However, genuine factual disputes remained regarding whether the brothers breached an agreement to make him a member, precluding summary judgment. The Court also held that unjust enrichment claims for money damages are legal claims subject to a jury trial, and the unclean hands doctrine may be asserted as a defense. The judgment was vacated and the case remanded for a jury trial on both claims. View "Andrew Nemeth Properties, LLC v. Panzica" on Justia Law

Deepali Tukaye, an Indian cardiologist, was employed by Jack Stephens Heart Institute, which contracted with Conway Regional Medical Center to provide cardiologists. While working at Conway Regional, Tukaye raised concerns about the quality of care provided by a white cardiologist. Following her complaint, the CEO of Conway Regional, Matt Troup, threatened to terminate Jack Stephens’s contract unless Tukaye was reassigned. Jack Stephens did not reassign her, and Tukaye subsequently gave notice to leave her employment. After her notice, Conway Regional renewed its contract with Jack Stephens.Tukaye filed suit in the United States District Court for the Eastern District of Arkansas - Central Division against Troup, the City of Conway, the Health Facilities Board, and John Doe #1, alleging tortious interference with contract, due process violations, and employment discrimination. The district court dismissed her amended complaint with prejudice for failure to state a claim and denied her motion to alter or amend the judgment and to file a second amended complaint.On appeal, the United States Court of Appeals for the Eighth Circuit reviewed the district court’s dismissal de novo and the denial of the Rule 59(e) motion for abuse of discretion. The appellate court limited its review to Tukaye’s tortious interference claim against Troup, as she did not challenge the dismissal of other claims or defendants. The court held that Tukaye’s own action of providing notice to leave constituted a resignation, which was a superseding cause of her harm and defeated the proximate cause element required for tortious interference under Arkansas law. The court also found no manifest error or newly discovered evidence to justify post-judgment relief. Accordingly, the Eighth Circuit affirmed the district court’s judgment. View "Tukaye v. Troup" on Justia Law

Cocoa AJ Holdings, LLC is the developer of a mixed-use condominium project in San Francisco known as GS Heritage Place, which includes both timeshare and whole residential units. Stephen Schneider owns a timeshare interest in one of the fractional units and has voting rights in the homeowners association. In 2018, Schneider filed a class action lawsuit against Cocoa and others, alleging improper management practices, including the use of fractional units as hotel rooms and misallocation of expenses. The parties settled that lawsuit in 2020, with Schneider agreeing not to disparage Cocoa or solicit further claims against it, and to cooperate constructively in future dealings.In 2022, Schneider initiated another lawsuit against Cocoa. In response, Cocoa filed a cross-complaint against Schneider, alleging intentional interference with prospective economic advantage, breach of contract (the settlement agreement), unjust enrichment, and defamation. Cocoa claimed Schneider engaged in a campaign to prevent the sale of unsold units as whole units, formed unofficial owner groups, made disparaging statements, and threatened litigation, all of which allegedly violated the prior settlement agreement and harmed Cocoa’s economic interests.Schneider moved to strike the cross-complaint under California’s anti-SLAPP statute (Code of Civil Procedure section 425.16), arguing that Cocoa’s claims arose from his protected activities—namely, petitioning the courts and speaking on matters of public interest related to association management. The Superior Court of the City and County of San Francisco granted Schneider’s motion, finding that all claims in the cross-complaint arose from protected activity and that Cocoa failed to show a probability of prevailing on the merits.The California Court of Appeal, First Appellate District, Division Three, affirmed the trial court’s order. The court held that Cocoa’s claims were based on Schneider’s protected litigation and association management activities, and that Cocoa did not establish a likelihood of success on any of its claims. View "Cocoa AJ Holdings, LLC v. Schneider" on Justia Law

A security services company and its sole shareholder, who is also its president and CEO, provided security services to two Iowa cities under separate contracts. After the shareholder published a letter criticizing media coverage of law enforcement responses to protests, a local newspaper published articles highlighting his critical comments about protestors and the Black Lives Matter movement. Subsequently, a city council member expressed concerns about the shareholder’s views, and the city council voted unanimously to terminate the company’s contract. The council member also pressured officials in the other city to end their contract with the company. Facing negative publicity, the company voluntarily terminated its second contract to avoid harm to a pending business transaction.The plaintiffs filed suit in the United States District Court for the Southern District of Iowa against the city, the council member, and other council members, alleging First Amendment retaliation, tortious interference with business contracts, and defamation. The district court granted the defendants’ motion to dismiss all claims under Rule 12(b)(6). It found that the shareholder lacked standing to assert a First Amendment retaliation claim for injuries to the corporation, and that the corporation failed to state a retaliation claim because only the shareholder engaged in protected speech. The court dismissed the tortious interference claim for lack of sufficient factual allegations and because the contract was terminated voluntarily. The defamation claim was dismissed for failure to identify any actionable statements by the defendants.On appeal, the United States Court of Appeals for the Eighth Circuit affirmed the dismissal of the shareholder’s First Amendment retaliation and defamation claims, but directed that these dismissals be without prejudice. The court reversed the dismissal of the corporation’s First Amendment retaliation and tortious interference claims, finding that the complaint alleged sufficient facts to survive a motion to dismiss, and remanded those claims for further proceedings. View "Conley v. City of West Des Moines" on Justia Law