Justia Contracts Opinion Summaries

The case involves a challenge to New York City's Guaranty Law, which was enacted in response to the COVID-19 pandemic. The law rendered personal guaranties of commercial lease obligations arising between March 7, 2020, and June 30, 2021, permanently unenforceable and identified efforts to collect on such guaranties as proscribed commercial tenant harassment. Plaintiffs, a group of New York City landlords, argued that the law violated the Contracts Clause of the U.S. Constitution.Initially, the United States District Court for the Southern District of New York dismissed the plaintiffs' constitutional challenges, but the United States Court of Appeals for the Second Circuit reversed the dismissal of the Contracts Clause challenge and remanded the case for further consideration. On remand, the district court granted summary judgment in favor of the plaintiffs, finding that the Guaranty Law was unconstitutional.The City of New York appealed, arguing that the plaintiffs lacked standing because the City did not enforce the Guaranty Law. The Second Circuit found that while the plaintiffs had standing at the pleadings stage due to the presumption of enforcement, they failed to meet the heightened burden on summary judgment to show a credible threat of imminent enforcement by the City. The City had unequivocally disavowed any intent to enforce the Guaranty Law against the plaintiffs.The United States Court of Appeals for the Second Circuit vacated the district court's award of summary judgment and remanded the case with instructions to dismiss for lack of subject matter jurisdiction. The court denied the City's request to vacate its earlier judgment reversing the dismissal of the Contracts Clause challenge and denied the City costs on the appeal due to its negligent delay in raising the enforcement-based standing challenge. View "Bochner v. City of New York" on Justia Law

A mother and son co-owned a property in Kodiak and hired an excavation company to build a retaining wall. The son made a $15,000 payment to the contractor by credit card. Disputes arose over the contract terms, leading both parties to sue each other for breach of contract. The superior court found that the contractor breached the contract and awarded damages to the mother and son, assuming the $15,000 payment would be reversed by the credit card company.The superior court's final judgment was issued on July 13, 2021. The contractor appealed, and the Alaska Supreme Court reversed several aspects of the superior court’s decision unrelated to the $15,000 payment. More than a year after the final judgment, the mother and son moved for relief from the judgment under Alaska Civil Rule 60(b), arguing that the court mistakenly assumed the $15,000 charge would be reversed. The superior court granted relief under Rule 60(b)(1), finding it had made a mistake about the credit card payment and adjusted its damages award accordingly.The contractor appealed to the Alaska Supreme Court, arguing that the superior court abused its discretion in granting relief under Rule 60(b)(1) because the motion was filed more than a year after the final judgment, making the delay unreasonable. The Alaska Supreme Court agreed, noting that Rule 60(b)(1) motions must be made within one year of the judgment and that this period cannot be tolled or extended. The court found that the superior court erred in tolling the one-year limitation period and that the Bishops' motion was untimely.The Alaska Supreme Court reversed the superior court’s order granting the Rule 60(b)(1) motion for relief from judgment and remanded for disbursement of the supersedeas bond consistent with its decision. View "Red Hook Construction, LLC v. Bishop" on Justia Law

The case involves eight multiemployer benefit plans (the "Funds") seeking to recover delinquent contributions from Stromberg Metal Works, Inc. for health, pension, and other benefits for sheet metal workers. The Funds allege that Stromberg underpaid contributions owed under a collective bargaining agreement (CBA) with the Sheet Metal, Air, Rail and Transportation Union (SMART Union) by hiring temporary workers through staffing agencies without making the required contributions.Initially filed in the Middle District of Tennessee, the case was transferred to the Eastern District of North Carolina. The district court denied Stromberg’s motion for summary judgment, granted the Funds’ cross-motion for summary judgment, and awarded the Funds over $823,000 in delinquent contributions and more than $430,000 in liquidated damages and interest. Stromberg appealed, challenging both the liability and damages rulings.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court affirmed the district court’s liability ruling, agreeing that the 2019 Settlement between Stromberg and Local 5 did not preclude the Funds from seeking delinquent contributions. The court emphasized that multiemployer benefit plans have distinct interests from local unions and are not bound by settlements to which they are not parties.However, the Fourth Circuit vacated the district court’s damages ruling. The appellate court concluded that while the Funds could rely on the CBA’s default staffing ratio to approximate damages due to Stromberg’s failure to maintain adequate records, Stromberg had presented sufficient evidence to cast doubt on the accuracy of the Funds’ damages calculation. The case was remanded for further proceedings to address the disputed damages issue. View "Sheet Metal Workers' Health & Welfare Fund of North Carolina v. Stromberg Metal Works, Inc." on Justia Law

In 1983, an Arkansas rural electric distribution cooperative, Carroll Electric, entered into a lease agreement with the City of Berryville and constructed a telecommunications tower. In 1994, Carroll Electric subleased the tower to Northwest Arkansas RSA Limited Partnership, allowing them to install and maintain radio communications equipment. The sublease was renewed multiple times, and in 2011, a Second Amendment was added, extending the agreement for additional terms unless terminated with six months' notice. In 2015, Northwest Arkansas was dissolved, and Alltel Corporation became its successor. In 2022, Alltel notified Carroll Electric of its intent to terminate the agreement, effective October 2022.Carroll Electric filed a breach of contract lawsuit in Arkansas state court, alleging wrongful termination. Alltel removed the case to the Western District of Arkansas, citing diversity jurisdiction. The district court granted Alltel's motion to dismiss, concluding that the contract unambiguously allowed Alltel to terminate the agreement. The court also awarded attorney’s fees to Alltel as the prevailing party under Arkansas law.The United States Court of Appeals for the Eighth Circuit reviewed the case. The court affirmed the district court's decision, agreeing that the contract provisions were unambiguous and did not conflict. The court held that Section 8(c) of the initial sublease allowed termination with six months' notice, while the Second Amendment dealt with automatic renewal, not termination. The court also upheld the award of attorney’s fees, finding no abuse of discretion by the district court. The judgment of the district court was affirmed. View "Carroll Electric Cooperative v. Alltel Corporation" on Justia Law

Plaintiffs Jay and Siv Bennett, along with their corporation Kesha Marketing, Inc., were long-time associates of Isagenix International LLC, a multi-level marketing company. In May 2023, Isagenix informed the Bennetts that it would not renew their accounts, which were set to expire in June 2023. The Bennetts, whose sole income came from Isagenix commissions, sued the company and obtained a preliminary injunction to prevent the termination of their business relationship.The United States District Court for the District of Arizona granted the preliminary injunction, finding that the Bennetts were likely to succeed on the merits of their claims. The court concluded that the contracts between the Bennetts and Isagenix were likely bilateral and that the modifications allowing Isagenix to terminate the contracts at will were not valid under Arizona law. The district court also found that the Bennetts would suffer irreparable harm due to the contractual limitation on consequential damages.The United States Court of Appeals for the Ninth Circuit reviewed the case and agreed with the district court that the Bennetts had shown a likelihood of success on the merits. The Ninth Circuit held that the contracts were likely bilateral and that the modifications were not validly executed under Arizona law. However, the Ninth Circuit found that the district court erred in its analysis of irreparable harm. The appellate court held that a contractual limitation on consequential damages does not constitute irreparable harm for purposes of equity. Consequently, the Ninth Circuit vacated the preliminary injunction and remanded the case for further proceedings to address the Bennetts' other theories of irreparable injury. View "BENNETT V. ISAGENIX INTERNATIONAL LLC" on Justia Law

Michael Hermalyn, a former employee of DraftKings, left his position to join a rival company, Fanatics, based in California. DraftKings, headquartered in Massachusetts, claimed that Hermalyn's new role violated a noncompete agreement he had signed, which included a Massachusetts choice-of-law provision and a one-year noncompete clause. DraftKings sued Hermalyn in the U.S. District Court for the District of Massachusetts for breach of the noncompete agreement.The district court sided with DraftKings, applying Massachusetts law to determine the enforceability of the noncompete agreement. The court found the noncompete enforceable and issued a preliminary injunction preventing Hermalyn from competing against DraftKings in the United States for one year. Hermalyn appealed, arguing that California law, which generally bans noncompetes, should apply instead of Massachusetts law. Alternatively, he argued that if Massachusetts law applied, the injunction should exclude California.The United States Court of Appeals for the First Circuit reviewed the case. The court examined whether the district judge abused her discretion in granting the preliminary injunction and whether she made any legal errors in applying Massachusetts law. The appellate court found that Massachusetts law was correctly applied, noting that Massachusetts generally respects choice-of-law provisions unless they violate a fundamental policy of another state with a materially greater interest. The court concluded that Hermalyn failed to demonstrate that California's interest in banning noncompetes was materially greater than Massachusetts's interest in enforcing them.The First Circuit also upheld the scope of the preliminary injunction, rejecting Hermalyn's argument to exclude California. The court reasoned that excluding California would undermine the effectiveness of the injunction, as Hermalyn's role involved interacting with clients in states where online sports betting is legal. Consequently, the appellate court affirmed the district court's decision and awarded costs to DraftKings. View "DraftKings Inc. v. Hermalyn" on Justia Law

Craig Reichel, a businessperson from Rochester, Minnesota, and his companies, including Reichel Foods, Inc., filed a legal malpractice lawsuit against the law firm Wendland Utz, LTD, and its former lawyer, Jerrie Hayes. Reichel alleged that despite an ultimately favorable outcome in prior litigation, the law firm’s negligence caused him to incur substantial attorney fees and costs. The underlying litigation involved a lawsuit filed by Craig’s brother, Bryan Reichel, claiming an equity interest in one of Craig’s companies. The district court issued several adverse rulings against Craig and his companies, leading to significant legal expenses. Eventually, the bankruptcy court confirmed Craig’s sole ownership of the companies, and the district court granted summary judgment in Craig’s favor.The Olmsted County District Court granted partial summary judgment in favor of Wendland Utz, dismissing Reichel Foods’ professional negligence claim on the grounds that Reichel Foods could not demonstrate that, but for the law firm’s conduct, it would have been successful in the underlying litigation. The district court did not address Reichel Foods’ other claims for breach of contract and breach of fiduciary duty, nor did it resolve the claims brought by Craig Reichel and his other companies.The Minnesota Supreme Court reviewed the case and concluded that the court of appeals lacked jurisdiction to decide claims still pending in the district court. The Supreme Court vacated the court of appeals’ rulings on those claims. Regarding the professional negligence claim of Reichel Foods, the Supreme Court held that a successful outcome in the underlying litigation does not categorically bar a legal malpractice claim. The court reversed the decision of the court of appeals affirming summary judgment on Reichel Foods’ professional negligence claim and remanded the case for further proceedings. View "Reichel vs. Wendland Utz, LTD" on Justia Law

In this case, Universal Development Corporation ("Universal"), Hatti Group RE, LLC ("Hatti Group"), and Harsha Hatti separately appealed judgments entered by the Jefferson Circuit Court in favor of Robbie Dellinger following a jury trial. The trial involved consolidated cases with claims asserted by Hatti, the Hatti Group, and Dellinger.The Jefferson Circuit Court had previously dismissed Universal from Dellinger's initial action against Hatti and the Hatti Group. However, Universal was later brought back into the litigation when Hatti and the Hatti Group filed a separate action against Dellinger, Universal, and others. The cases were consolidated, and Dellinger asserted a breach-of-contract cross-claim against Universal. The jury found in favor of Dellinger on his claims against Universal and Hatti, awarding him compensatory and punitive damages.The Supreme Court of Alabama reviewed the appeals. It dismissed the appeals of Hatti Group and Hatti, noting that Hatti's appeal in Hatti v. Universal was invalid because no adverse judgment was entered against Hatti in that case. Hatti's appeal in Dellinger v. Hatti was dismissed as untimely because it was filed more than 42 days after the final judgment.Regarding Universal's appeal, the court reversed the judgment against Universal and rendered a judgment in its favor. The court held that Dellinger's breach-of-contract claim against Universal was void because it was based on work performed without a general contractor's license, violating Alabama's licensure statutes. The court concluded that Dellinger acted as a general contractor under the Personal Services Agreement with Hatti, and since Dellinger was unlicensed, the contract was void as a matter of public policy. Consequently, Universal had no legal obligation to support Dellinger in seeking payments under an unenforceable contract. View "Universal Development Corporation v. Dellinger" on Justia Law

In 2006, Lisa Wilson's late husband, Mason, purchased a home in Coventry, Rhode Island, financing it with a $150,000 mortgage. Both Mason and Lisa signed the mortgage agreement, but only Mason signed the promissory note. The mortgage agreement included covenants requiring the "Borrowers" to defend the title, pay property taxes, and discharge any superior liens. In 2007, Deutsche Bank acquired the mortgage and note. Mason defaulted on the mortgage payments, and the Wilsons failed to pay property taxes, leading to a tax sale in 2014. Birdsong Associates bought the property and later obtained a court decree extinguishing Deutsche Bank's mortgage lien. Birdsong then sold the property to Coventry IV-14, RIGP, which eventually sold it to Dunkin Engineering Solutions, LLC, a company formed by Mason's parents. After Mason's parents' deaths, Lisa became the sole owner of Dunkin.Deutsche Bank sued Lisa, Mason, and Dunkin in the United States District Court for the District of Rhode Island, alleging breach of the mortgage covenants and seeking equitable relief. The district court granted summary judgment to Lisa and Dunkin, finding that the mortgage agreement had been extinguished by the 2016 court decree and that Deutsche Bank had no remaining contractual rights. The court also rejected Deutsche Bank's equitable claims, concluding that there was no evidence of a scheme to benefit Lisa and Mason and that no benefit had accrued to Dunkin or Lisa from Deutsche Bank's payments.The United States Court of Appeals for the First Circuit affirmed the district court's decision. The court held that the mortgage agreement did not unambiguously bind Lisa to the covenants, and thus, Deutsche Bank could not enforce those covenants against her. The court also found that Deutsche Bank failed to establish a fiduciary or confidential relationship necessary for its equitable claims and that Deutsche Bank's payments did not unjustly enrich Dunkin or Lisa. View "Deutsche Bank National Trust Company v. Wilson" on Justia Law

Dignity Health, operating as French Hospital Medical Center, filed a complaint against orthopedic surgeon Troy I. Mounts, M.D., and his corporation to recover an advance paid under their Physician Recruitment Agreement. Mounts filed a cross-complaint alleging retaliation for his complaints about patient care quality, interference with his economic opportunities, and unlawful business practices. Dignity responded with an anti-SLAPP motion to strike the cross-complaint, which the trial court initially denied. The appellate court reversed this decision and remanded the case for further consideration.Upon remand, the trial court concluded that Mounts had not demonstrated a probability of prevailing on his claims. The court found that Dignity's actions were protected by the litigation privilege, the common interest privilege, and were barred by the statute of limitations. Consequently, the court granted Dignity's motion to strike the cross-complaint and ordered Mounts to pay Dignity's attorney fees and costs.The California Court of Appeal, Second Appellate District, Division Six, reviewed the case. The court affirmed the trial court's decision, holding that all of Mounts' claims were based on conduct protected by the litigation privilege (Civil Code § 47, subd. (b)) and the common interest privilege (Civil Code § 47, subd. (c)). The court also found that Dignity's actions were immune under federal law (42 U.S.C. § 11137) and that some claims were barred by the statute of limitations. The appellate court upheld the trial court's orders granting the motion to strike and awarding attorney fees to Dignity. View "Dignity Health v. Mounts" on Justia Law