Justia Contracts Opinion Summaries

The trial court entered a default judgment against Defendant Wanu Water Inc. on June 16, 2020, and on December 7, 2020, Defendant filed a motion to set aside its default and vacate the default judgment under the mandatory attorney-fault provision of Code of Civil Procedure section 473, subdivision (b) (section 473(b)). The trial court denied Defendant’s motion and gave no reason for its ruling.   The Second Appellate District vacated the default judgment. The court explained that the mandatory provision requires the court to vacate the default judgment if the application is filed “no more than six months after entry of judgment,” is “in proper form,” and is accompanied by an attorney’s affidavit of fault unless the court finds the default “was not in fact caused by” the attorney’s mistake, inadvertence, surprise or neglect. Here, the trial court denied Defendant’s motion and gave no reason for its ruling. The record shows the filing was timely and was accompanied by an attorney’s affidavit of fault. Thus, the only bases for denying the motion to vacate the default judgment were that the application was not “in proper form” or that the default “was not in fact caused by” the attorney’s neglect. View "Dollase v. Wanu Water Inc." on Justia Law

A healthcare provider contended it was underpaid for substance abuse treatment that it rendered to 29 patients. Seeking to recover the difference directly from the insurance company, the provider filed suit alleging the insurer entered into binding payment agreements during verification of benefits and authorization calls with the provider and otherwise misrepresented or concealed the amounts it would pay for treatment. The trial court entered summary judgment against the provider. After review, the Court of Appeal concluded the court did not err in determining one or more elements of the provider’s causes of action could not be established. View "Aton Center v. United Healthcare Ins. Co." on Justia Law

In 2007, Defendant PHL Variable Insurance Company issued two life-insurance policies to Plaintiff Catholic Charities of Southwest Kansas, Inc. on the lives of Elwyn Liebl and John Killeen. Both policies guaranteed Plaintiff, as their named beneficiary, $400,000 upon the insureds’ death. Between 2013 and 2014, Defendant sent Plaintiff grace notices for both policies and demanded premium payments. Plaintiff believed the demanded premium payments were too high and that the grace notices were defective and untimely under the policies. So Plaintiff did not pay the requested premiums. Because Plaintiff did not pay the requested premiums, Defendant sent cancellation notices, informing Plaintiff that both policies had lapsed. In 2016, the insureds died. Plaintiff sought payment of benefits under both policies. Defendant declined, believing that it terminated Plaintiff’s policies for nonpayment of premiums two to three years earlier. In 2020, Plaintiff sued Defendant in the District of Kansas for failure to pay the death benefits under both policies. Defendant moved to dismiss both claims, arguing that Kansas’s five-year statute of limitations for breach of contract actions bars them. According to Defendant, the statute of limitations began to run in 2013 and 2014 when it informed Plaintiff that it was terminating the policies. In response, Plaintiff asserted that Defendant first breached both insurance contracts when it failed to pay the benefits upon the insureds’ death in 2016 because Defendant never successfully terminated the policies. The district court agreed with Defendant and dismissed Plaintiff’s claims as untimely. The appeal this case presented for the Tenth Circuit's review centered on a question of when the statute of limitations for a breach of contract claim alleging the wrongful termination of a life insurance contract began to run under Kansas law: if the limitations period began when Defendant acted to terminate Plaintiff’s policies, the district court correctly dismissed Plaintiff’s complaint; if the limitations period began when Plaintiff’s death benefits became due, the district court erred. Finding the district court did not err in dismissing Plaintiff's claims, the Tenth Circuit affirmed. View "Catholic Charities of Southwest Kansas v. PHL Variable Insurance Company" on Justia Law

Kendall Hunt Publishing Company (Kendall Hunt) filed suit against The Learning Tree Publishing Corporation (Learning Tree) in district court in Iowa, where Kendall Hunt is located. The complaint alleged, as relevant here, claims of copyright infringement, tortious interference with contract, and unfair competition. The district court1 granted Learning Tree’s motion to dismiss for lack of personal jurisdiction, concluding that the California corporation lacked minimum contacts with Iowa.   The Eighth Circuit affirmed. The court wrote that Learning Tree’s contacts with Iowa were as follows: it maintains a nationally available website through which an Iowa resident purchased the allegedly infringing work. This conduct was not “uniquely or expressly aimed at” Iowa, however, particularly in light of the fact that Learning Tree did not advertise in Iowa and its litigation-anticipated sale to a Kendall Hunt employee occurred in Iowa. Although Kendall Hunt argued in its brief that this online sale was sufficient to create jurisdiction in Iowa, our court subsequently decided on similar facts that a single online sale did not establish personal jurisdiction over Defendant. The remaining specific-jurisdiction analysis factors do not tip the balance in Kendall Hunt’s favor. The court concluded that because Learning Tree’s connections with Iowa were not such that it would reasonably have anticipated being haled into court there, the district court lacked personal jurisdiction over the corporation. View "Kendall Hunt Publishing Company v. The Learning Tree Publishing Corporation" on Justia Law

Plaintiff, on behalf of a putative class of students, sued Southern Methodist University (“SMU”) for refusing to refund tuition and fees after the university switched to remote instruction during the COVID-19 pandemic. The district court dismissed Plaintiff’s complaint for failure to state a claim.   The Fifth Circuit reversed that decision in light of King v. Baylor University, 46 F.4th 344 (5th Cir. 2022), which was issued after the district court’s ruling and which teaches that Hogan adequately pled a breach-of-contract claim. Alternatively, the district court held that Texas’s Pandemic Liability Protection Act (“PLPA”) retroactively bars Plaintiff’s claim for monetary relief and is not unconstitutionally retroactive under the Texas Constitution. That latter ruling raises a determinative-but-unsettled question of state constitutional law, which the court certified to the Texas Supreme Court: Does the application of the Pandemic Liability Protection Act to Plaintiff’s breach-of-contract claim violate the retroactivity clause in article I, section 16 of the Texas Constitution? View "Hogan v. Southern Methodist Univ" on Justia Law

Defendant Union Mutual Fire Insurance Company appealed a superior court grant of summary judgment to plaintiff CC 145 Main, LLC, in a declaratory judgment action regarding the interpretation of an insurance policy exclusion. CC 145 Main owned an apartment building and purchased a “Businessowners Coverage” insurance policy that included “all risk” property insurance, which provided that Union Mutual would “pay for direct physical loss of or damage to” the covered property, unless coverage was specifically limited or excluded by the policy. The insured property sustained damage when a tenant poured cat litter down a toilet, clogging an interior pipe and causing water to overflow from a shower and toilet. The property required significant cleaning and repair, and tenants were required to temporarily relocate. CC 145 Main filed a claim with Union Mutual for water damage, which Union Mutual denied pursuant to a provision in the insurance policy excluding coverage for damage caused by “[w]ater that backs up or overflows or is otherwise discharged from a sewer, drain, sump, sump pump or related equipment.” CC 145 Main filed a complaint seeking a declaration that the water exclusion does not apply to its claim. Union Mutual filed a motion for summary judgment, arguing that the damage at issue was caused by water that overflowed from “drains” within the meaning of the exclusion. The trial court concluded it was unclear whether the word “drain” in the water exclusion applied to shower and toilet drains and, therefore, the water exclusion was ambiguous and had to be construed in favor of CC 145 Main. Defendant challenged the trial court’s ruling that the policy’s water damage exclusion was ambiguous and its decision to construe the policy, therefore, in favor of CC 145 Main. But finding no reversible error, the New Hampshire Supreme Court affirmed the trial court. View "CC 145 Main, LLC v. Union Mutual Fire Insurance Company" on Justia Law

An Asset Purchase Agreement provided that the sellers could receive variable payments (Earn-Out Consideration) if the post-merger company (IAS) achieved specific benchmarks. Section 2.6(c) specifies that IAS had to provide the sellers with the computation for each period, to become final unless they submitted a “notice of disagreement.” Any disagreement would be settled according to Section 2.3(e),” which refers to resolution by an accounting firm. Section 11.17, however, directs the parties generally to use non-binding mediation, followed by litigation if mediation fails.IAS determined that the company did not meet its targets. The sellers claim that IAS intentionally prevented the company from hitting its targets. Negotiations failed. The sellers sued for breach of contract and tortious interference; later, they filed a notice of disagreement and sought a declaration that the lawsuit was outside the scope of sections 2.3(e) and 2.6(d). IAS sought to compel arbitration under 2.3(e). The district court held that the Agreement contained a valid agreement to arbitrate. An accounting firm subsequently determined that the sellers had no right to Earn-Out Consideration. The district court entered judgment for IAS.The Third Circuit vacated. The Purchase Agreement contains an agreement to submit narrow disputes to an accounting firm for expert determination, not arbitration. Although the statement of IAS’s financial benchmarks becomes final after the expert completes its accounting analysis, the authority to resolve legal questions—like whether IAS violated the duty of good faith— remains with the courts. View "Sapp v. Industrial Action Services LLC" on Justia Law

In March 2020, Concord Baptist Church of Jefferson City, Inc. (Concord Baptist) sustained damage to its facilities in a severe storm. After disagreements with its insurer, Church Mutual Insurance Company (Church Mutual), regarding the amount of loss, Concord Baptist initiated this action, alleging breach of contract and vexatious refusal to pay. The district court granted summary judgment in favor of Church Mutual, concluding that the undisputed facts demonstrated that Concord Baptist failed to comply with a cooperation clause contained in the insurance policy, which precluded coverage. Concord Baptist appealed.   The Eighth Circuit affirmed. The court explained that because Concord Baptist admits that it materially breached the policy, the court need not address Concord Baptist’s argument regarding whether the failure to submit to an EUO was a material breach. However, the court noted that Missouri courts have found a material breach where an insured failed to submit to an EUO before commencing an action against the insurer. Regarding the second element, whether Church Mutual suffered substantial prejudice from Concord Baptist’s material breach, the court agreed with the district court that the undisputed facts show that it did. Finally, as to the third element, whether Church Mutual exercised reasonable diligence in attempting to procure Concord Baptist’s cooperation, the court again agreed with the district court that the undisputed facts demonstrate Church Mutual’s diligence. View "Concord Baptist Church of Jefferson City v. Church Mutual Insurance Company" on Justia Law

This dispute involves several insurers and one defendant insurer’s alleged duty to defend a lawsuit brought against a general contractor of a residential building project. The district court entered partial summary judgment, holding that the defendant insurer had a duty to defend the general contractor in the underlying action for construction defects. The court also issued a stay of other issues raised by the parties, and administratively closed the case. After the defendant insurer filed the present appeal, the underlying action was resolved in a settlement agreement.   The Fourth Circuit concluded that it lacks jurisdiction to consider the present interlocutory appeal challenging the defendant insurer’s duty to defend the general contractor. Therefore, the court dismissed the appeal. The court explained that while the relief granted in the district court’s order originally may have been prospective in nature, the resolution of the underlying action has eliminated from that order any forward-looking mandate. Thus, the court explained that the order before the court in this appeal currently lacks the character of an injunction and does not require the court to consider any question separate from issues that may be appealed after entry of a final judgment in the district court. View "Westfield Insurance Company v. Selective Insurance Company" on Justia Law

MSSC, Inc., sued Airboss Flexible Products Co., alleging anticipatory breach of contract and seeking to enforce a purchase order between the parties after Airboss threatened to stop filling orders unless MSSC agreed to a price increase. Airboss supplied products to MSSC, and MSSC used those products to manufacture parts for their customers. The parties’ purchase order for the Airboss products was identified as a “blanket” order that listed the parts to be supplied but did not include specific quantities. Instead, the purchase order indicated that quantities would be based on the needs of an MSSC customer. MSSC was obligated to create and send “releases” per the terms and conditions, but neither the purchase order nor the terms and conditions obligated MSSC to send any number of firm orders to Airboss—either as a raw number or as a percentage of MSSC’s total need. The trial court granted a preliminary injunction in favor of MSSC, finding that the contract was a requirements contract and was likely enforceable. Airboss moved for summary judgment, arguing that the purchase order failed to satisfy the statute of frauds of the Uniform Commercial Code, MCL 440.1101 et seq. In response, MSSC moved for summary judgment, arguing that the blanket purchase order was a requirements contract that satisfied the statute of frauds. The trial court granted MSSC’s motion, concluding that because the purchase order was identified as a “blanket” order, it contained a “quantity term” that satisfied the statute of frauds. Airboss appealed, and the Court of Appeals affirmed. Contrary to the lower courts, the Michigan Supreme Court found the parties entered into a release-by-release contract, which allowed Airboss to stop selling parts to MSSC. View "MSSC, Inc v. Airboss Flexible Products Co." on Justia Law