Justia Contracts Opinion Summaries

A consumer purchased a used vehicle from a dealership, with the transaction documented in two contracts: a purchase order and a retail installment sale contract (RISC). The purchase order included an arbitration provision for disputes arising from the purchase or financing of the vehicle, while the RISC detailed the financing terms but did not include an arbitration clause. The RISC contained an assignment clause by which the dealership assigned its interest in "this contract" (the RISC) to a third-party lender, and defined the agreement between the buyer and the assignee as consisting "only" of the RISC and any addenda. The consumer later filed a class action against the lender, alleging improper fees under Maryland law.The Circuit Court for Baltimore City found for the lender, ruling that the purchase order and RISC should be read together as one contract for the purposes of the transaction, and that the arbitration agreement was enforceable against the consumer. The court granted the lender’s motion to compel arbitration. On appeal, the Appellate Court of Maryland affirmed, holding that the consumer was bound by the arbitration provision and that the assignee lender could enforce it, even though the consumer did not receive or sign a separate arbitration agreement.The Supreme Court of Maryland reviewed the case, focusing on contract interpretation and the scope of the assignment. The court held that, even if the purchase order’s arbitration provision was binding between the consumer and the dealer, it was not within the scope of the assignment to the lender. The RISC’s assignment language made clear that only the RISC and its addenda, not the purchase order or its arbitration clause, were assigned to the lender. As a result, the Supreme Court of Maryland reversed the judgment of the Appellate Court and remanded the case for further proceedings. View "Lyles v. Santander Consumer USA" on Justia Law

This case involves a class action dispute over late payments of oil proceeds to royalty and working interest owners in Oklahoma. The plaintiff, an Oklahoma landowner with royalty interests in three oil wells, alleged that Sunoco, Inc. and Sunoco Partners Marketing & Terminals, L.P. failed to pay statutory interest on late payments as required by Oklahoma’s Production Revenue Standards Act (PRSA). The PRSA mandates that first purchasers of oil must pay proceeds within strict timeframes and include 12 percent interest on any late payments. The class was defined to include all owners who received late payments from Sunoco without the required interest.After Sunoco removed the case to the United States District Court for the Eastern District of Oklahoma, the court certified the class in 2019, finding common questions predominated, including whether Sunoco owed interest on untimely payments and whether a demand was required. The district court granted partial summary judgment on liability for the PRSA claim, and after a bench trial, awarded the class over $103 million in actual damages (including prejudgment interest) and $75 million in punitive damages. Sunoco appealed, challenging class certification, standing for certain class members, the calculation of prejudgment interest, and the punitive damages award. The Tenth Circuit previously remanded for clarification on damages allocation for unidentified owners, which the district court addressed.On appeal, the United States Court of Appeals for the Tenth Circuit affirmed the district court’s rulings on class certification, ascertainability, standing, and the award of actual damages including prejudgment interest. The court held that the PRSA requires automatic payment of statutory interest on late payments, and that prejudgment interest should be compounded until paid. However, the Tenth Circuit vacated the punitive damages award, holding that punitive damages are not available for breach of contract claims under Oklahoma law when the only claim proven was a PRSA violation. The case was remanded for amendment of the judgment consistent with this opinion. View "Cline v. Sunoco" 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

Two plaintiffs, each holding checking accounts with a bank, brought a class action lawsuit challenging the bank’s practices regarding overdraft fees. One plaintiff alleged that the bank breached its contract by charging multiple overdraft fees on transactions that did not initially overdraw the account but were later settled when the account was already overdrawn. The other plaintiff claimed a breach of contract when the bank charged multiple overdraft fees for repeated attempts to process a single payment that was returned for insufficient funds. Both plaintiffs sought to represent similarly situated customers.The Shawnee District Court granted the bank’s motion to dismiss, relying on a contract provision requiring customers to notify the bank of any “errors or improper charges” within 30 days of receiving their account statement. The court found this notice provision unambiguous and concluded that, because the plaintiffs did not provide timely notice, they were barred from bringing their claims. The Kansas Court of Appeals reversed, holding that the term “improper charges” in the contract was ambiguous and that the district court improperly engaged in fact-finding at the motion to dismiss stage. The appellate court determined that whether the notice provision applied was a factual question and that the ambiguity should be construed against the bank as the contract’s drafter.The Supreme Court of the State of Kansas reviewed the case and agreed with the Court of Appeals that the term “improper charges” was ambiguous. The Supreme Court went further, holding that this ambiguity must be construed against the bank, and as a matter of law, the notice provision did not apply to the overdraft fees at issue. The Supreme Court affirmed the judgment of the Court of Appeals, reversed the district court’s dismissal, and remanded the case for further proceedings. View "Harding v. Capitol Federal Savings Bank " on Justia Law

Noah Gilbert purchased a motor vehicle insurance policy from Progressive Northwestern Insurance Company, initially declining underinsured motorist (UIM) coverage but later adding a UIM endorsement with $25,000 per person and $50,000 per accident limits. The policy included an offset provision, reducing any UIM payout by amounts received from another party’s insurance. Gilbert paid premiums for this coverage but never filed a UIM claim or experienced an accident triggering such coverage. He later filed a putative class action, alleging that Progressive’s UIM coverage was illusory under Idaho law and asserting claims for breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, fraud, and constructive fraud.The District Court of the Fourth Judicial District, Ada County, reviewed cross-motions for summary judgment. The court raised the issue of standing and ultimately held that Gilbert lacked standing because he had not filed a claim or been denied coverage, and thus had not suffered an injury-in-fact. Alternatively, the court found that Gilbert’s claims failed on the merits: there was no breach of contract or bad faith without a denied claim, no damages to support fraud or constructive fraud, and unjust enrichment was unavailable due to the existence of a valid contract. The court granted summary judgment for Progressive and denied Gilbert’s motion for class certification as moot.On appeal, the Supreme Court of the State of Idaho held that Gilbert did have standing, as payment of premiums for allegedly illusory coverage constituted a concrete injury. However, the Court affirmed the district court’s judgment, finding that Gilbert’s claims failed on the merits because he never filed a claim, was never denied coverage, and did not incur damages. The Court also affirmed the dismissal of the unjust enrichment claim, as an enforceable contract provided an adequate legal remedy. The judgment in favor of Progressive was affirmed. View "Gilbert v. Progressive Northwestern Insurance Co." on Justia Law

A borrower in Rhode Island financed a home purchase with a mortgage from a national bank. The mortgage required the borrower to make advance payments for property taxes and insurance into an escrow account managed by the bank. The bank did not pay interest on these escrowed funds, despite a Rhode Island statute mandating that banks pay interest on such accounts. Years later, the borrower filed a class action lawsuit against the bank, alleging breach of contract and unjust enrichment for failing to pay the required interest under state law.The United States District Court for the District of Rhode Island dismissed the complaint, agreeing with the bank that the National Bank Act preempted the Rhode Island statute. The court reasoned that the state law imposed limits on the bank’s federal powers, specifically the power to establish escrow accounts, and thus significantly interfered with the bank’s incidental powers under federal law. The court did not address class certification or the merits of the unjust enrichment claim, focusing solely on preemption.On appeal, the United States Court of Appeals for the First Circuit reviewed the case after the Supreme Court’s decision in Cantero v. Bank of America, N.A., which clarified the standard for preemption under the National Bank Act. The First Circuit held that the district court erred by not applying the nuanced, comparative analysis required by Cantero. The appellate court found that the bank failed to show that the Rhode Island statute significantly interfered with its federal banking powers or conflicted with the federal regulatory scheme. The First Circuit vacated the district court’s judgment and remanded the case for further proceedings, allowing the borrower’s claims to proceed. View "Conti v. Citizens Bank, N.A." on Justia Law

A property management company operating several apartment buildings in Missoula County contracted with a waste management provider for “three-yard” dumpster service. After the expiration of their initial service agreement, the provider continued to supply waste removal services on an invoice-by-invoice basis. The property management company later discovered that many of the dumpsters labeled as “three-yard” actually had a capacity of less than three cubic yards, with one model measuring approximately 2.52 cubic yards. The waste management provider rotated these containers among customers and did not maintain records of which customers received which models. The property management company alleged that it was charged overage fees for exceeding the stated capacity of these undersized containers.The property management company filed suit in the Fourth Judicial District Court, Missoula County, asserting claims for breach of contract and negligent misrepresentation, and sought to represent a class of similarly situated customers. The District Court bifurcated discovery and, after briefing and oral argument, certified two classes: one for breach of contract and one for negligent misrepresentation, both defined as customers who paid for “three-yard” service but received dumpsters of 2.6 cubic yards or less. The District Court found that common questions predominated over individual issues and that class litigation was superior to individual actions.On appeal, the Supreme Court of the State of Montana reviewed whether the District Court abused its discretion in finding predominance of common questions and whether it erred by not considering the ascertainability of class members. The Supreme Court held that the District Court did not abuse its discretion in certifying the classes, as common questions regarding the provider’s contractual and legal obligations predominated, and individualized damages did not preclude certification. The Court also held that ascertainability is not a mandatory requirement under Montana’s class action rule. The District Court’s order granting class certification was affirmed. View "Allied Waste v. LH Residential" on Justia Law

Two former employees of a fire alarm and sprinkler company provided fire alarm testing and inspection services on public works projects in New York. They alleged that their employer failed to pay them the prevailing wages required by New York Labor Law § 220, which mandates that workers on public works projects receive at least the prevailing rate of wages. The contracts between the employer and various public entities included clauses that either disclaimed the applicability of prevailing wage laws, were silent on the issue, or referenced prevailing wage rates. Many contracts also contained a provision shortening the statute of limitations for any action against the company to one year.The United States District Court for the Northern District of New York granted partial summary judgment in favor of the employer on all prevailing wage-related claims. The court found that: (1) the contracts did not expressly promise to pay prevailing wages; (2) the one-year contractual limitations period barred the claims; and (3) fire alarm testing and inspection work was not covered by § 220’s prevailing wage requirement. The court also dismissed related quantum meruit and unjust enrichment claims and later approved a class action settlement on other claims, with the prevailing wage claims reserved for appeal.On appeal, the United States Court of Appeals for the Second Circuit held that, based on a 2009 New York State Department of Labor opinion letter and relevant precedent, fire alarm testing and inspection work is covered by § 220, entitling the plaintiffs to prevailing wages. However, the Second Circuit found New York law unsettled on whether a promise to pay prevailing wages is implicit in every public works contract (even if not expressly stated) and whether a contractual one-year limitations period is enforceable against workers’ third-party beneficiary claims. The court therefore certified these two questions to the New York Court of Appeals for resolution. View "Walton v. Comfort Systems" on Justia Law

NCR Corporation established five “top hat” retirement plans to provide supplemental life annuity benefits to senior executives. Each plan promised participants a fixed monthly payment for life, with language allowing NCR to terminate the plans so long as no action “adversely affected” any participant’s accrued benefits. In 2013, NCR terminated the plans and paid participants lump sums it claimed were actuarially equivalent to the promised annuities, using mortality tables, actuarial calculations, and a 5% discount rate. NCR knew that, statistically, about half of the participants would outlive the lump sums if they continued to withdraw the same monthly benefit, resulting in some participants receiving less than they would have under the original annuity.Participants filed a class-action lawsuit in the United States District Court for the Northern District of Georgia, alleging breach of contract and seeking either replacement annuities or sufficient cash to purchase equivalent annuities. The district court certified the class and granted summary judgment for the participants, finding that NCR’s lump-sum payments adversely affected the accrued benefits of at least some participants, in violation of the plan language. The court ordered NCR to pay the difference between the lump sums and the cost of replacement annuities, plus prejudgment and postjudgment interest.On appeal, the United States Court of Appeals for the Eleventh Circuit reviewed the district court’s summary judgment order de novo. The Eleventh Circuit held that the plan language was unambiguous and did not permit NCR to unilaterally replace life annuities with lump sums that reduced the value of accrued benefits for any participant. The court affirmed the district court’s judgment, including the remedy of requiring NCR to pay the cost of replacement annuities and awarding prejudgment interest. View "Hoak v. NCR Corp." on Justia Law

Several individuals and an LLC, who own oil and gas interests in West Virginia, leased their mineral rights to EQT, a group of related energy companies. The leases, numbering nearly 3,843, required EQT to pay royalties to the lessors. During the period from January 1, 2012, to February 28, 2021, EQT extracted “wet gas” from the wells, which contains valuable natural gas liquids (NGLs) like propane and butane. EQT sold the wet gas at the wellhead to its own affiliates and paid royalties to the lessors based on the energy content (BTU) of the wet gas, not on the value of the NGLs. EQT then separated and sold the NGLs to third parties but did not pay additional royalties for these sales. In 2021, EQT notified lessors it would begin calculating royalties based on the separate value of NGLs and residue gas.The plaintiffs filed a putative class action in the United States District Court for the Northern District of West Virginia, alleging breach of contract and fraudulent concealment, and sought class certification. The district court granted partial summary judgment, finding EQT’s affiliates were its alter egos, and certified classes for both claims, later dividing the class into three subclasses based on lease language. EQT petitioned for interlocutory appeal of the class certification order.The United States Court of Appeals for the Fourth Circuit reviewed the district court’s certification order. The Fourth Circuit affirmed the certification of the breach of contract claim, holding that the class was ascertainable and that common questions of law and fact predominated, given EQT’s uniform royalty payment method and the immateriality of lease language variations under West Virginia law. However, the Fourth Circuit reversed the certification of the fraudulent concealment claim, holding that individual questions of reliance would predominate, making class treatment inappropriate for that claim. Thus, the district court’s order was affirmed in part and reversed in part. View "Glover v. EQT Corporation" on Justia Law