Justia Contracts Opinion Summaries

In 2008 Motorola agreed to make a good-faith effort to purchase two percent of its cell-phone user-manual needs from Druckzentrum, a printer based in Germany. After a year, Motorola’s sales contracted sharply. Motorola consolidated its cell-phone manufacturing and distribution operations in China, buying all related print products there. Motorola notified Druckzentrum. The companies continued to do business for a few months. After losing Motorola’s business Druckzentrum entered bankruptcy and sued Motorola, alleging breach of contract and fraud in the inducement. Druckzentrum claimed that the contract gave it an exclusive right to all of Motorola’s user-manual printing business for cell phones sold in Europe, the Middle East, and Asia during the contract period. The district judge entered summary judgment for Motorola. The Seventh Circuit affirmed. The written contract contained no promise of an exclusive right and was fully integrated, so Druckzentrum cannot use parol evidence of prior understandings. Although Motorola promised to make a good-faith effort, the contract listed reasons Motorola might justifiably miss the target, including business downturns. There was no evidence of bad faith. The evidence was insufficient to create a jury issue on the claim that Motorola fraudulently induced Druckzentrum to enter into or continue the contract. View "Druckzentrum Harry Jung GmbH v. Motorola Mobility LLC" on Justia Law

In 1999 Seltzer registered the word “Kashwére” as a trademark for chenille soft goods. In 2009, Seltzer sold his company’s assets, including the trademark, to its principal officers. They formed TMG, which granted Seltzer an exclusive license to sell chenille products under the Kashwére name in Japan, through Flat Be. TMG claims that Seltzer violated his license by creating USAJPN and transferring to it all rights conferred by his license, to create an appearance of distance between Seltzer and Flat Be. Although Seltzer owned a majority interest in USAJPN, he needed TMG’s approval for the transfer. Flat Be also created a line of fabrics, “Kashwére Re,’ that are not chenille. Seltzer’s license does not authorize use of the Kashwére name for products that are not chenille, but he claimed that a TMG owner approved the Kashwére Re project. USAJPN also failed to comply with a requirement to disclose the TMG licensee. The district judge denied TMG’s request to order the license cancelled or to enjoin future violations and award damages. The Seventh Circuit upheld summary judgment in favor of TMG on Seltzer’s and Flat Be’s counterclaims, but reversed summary judgment in favor of Seltzer and Flat Be on TMG’s claims.View "Kashwere, LLC v. Kashwere USAJPN, LLC" on Justia Law

Whirlpool purchased injection-molded plastic knobs and decorative metal stampings from Grigoleit. In 1992 Whirlpool told Grigoleit that it would start using products made by Phillips. Grigoleit believed that Phillips was using a method protected by its patents. Ultimately Grigoleit licensed its patents to Whirlpool and Phillips; instead of royalties Grigoleit got Whirlpool’s business for the “Estate” and “Roper” brand lines and a promise of consideration for other business. The agreement and the patents expired in 2003. An arbitrator concluded that Whirlpool had failed to consider Grigoleit’s parts for some lines of washers and dryers and was liable for payment of money royalties or damages. Grigoleit demanded the profit it would have made had Whirlpool purchased its requirements of knobs exclusively from Grigoleit. The district court concluded that a reasonable royalty fell in the range of 1¢ to 12¢ per part and the parties then agreed that royalties would then be $140,000. The Seventh Circuit affirmed, reasoning that lost profits differ from royalties. The caption on the contract is “LICENSE AGREEMENT” and the heading on paragraph 3 is “Royalties.” The agreement is a patent license; the court was not obliged to treat it as a requirements contract.View "Grigoleit Co. v. Whirlpool Corp." on Justia Law

Gerdau leased a locomotive from Titan for use in switching at its Knoxville mill. Titan shipped the locomotive in 2008, but it was damaged in transit and sent for repair. It did not reach Gerdau’s plant until 2009. Gerdau rejected it, stating that it needed further repairs. While the locomotive was being repaired, Titan assigned the lease to Leasing, an affiliated business, which then used the lease as security for a loan from Wells Fargo. The loan is nonrecourse: Wells Fargo agreed to look for repayment exclusively from the stream of rentals expected from Gerdau. Leasing made several warranties. Gerdau has never made a payment on the lease. Wells Fargo has taken control of the locomotive and is attempting to sell it. The district court granted summary judgment against Wells Fargo, ruling that Leasing had kept its promises. The court looked to the lease, and then to the Uniform Commercial Code, to see whether the locomotive had been “accepted” when the lease was assigned. Gerdau had an opportunity and the lease required Gerdau to inspect before shipment. The Seventh Circuit reversed. Gerdau did not acknowledge the locomotive’s receipt; Leasing did not live up to its warranties. It must repay Wells Fargo. Titan must perform the guarantees.View "Wells Fargo Equip. Fin., Inc. v. Titan Leasing Inc." on Justia Law

Plaintiff-school opened a bank account for its operating fund with Defendant-bank. One of Plaintiff’s employees later opened a bank account with Defendant that Plaintiff had not authorized and deposited into that account several hundred checks originating from, or intended to be deposited into, Plaintiff’s bank account with Defendant. Over the course of approximately four years, the employee deposited $832,776 into this bank account and withdrew funds just short of that amount. Defendant refused Plaintiff’s demand to return the funds that the employee had funneled through this account to himself. Thereafter, Plaintiff commenced this action, alleging breach of contract, violations of the Uniform Commercial Code (UCC), negligence, and common law conversion. The trial court rendered judgment in favor of Plaintiff on each of the counts and awarded $832,776 in total compensatory damages. The Supreme Court affirmed in all respects with the exception of the damages award, holding that some of Plaintiff’s claims under the UCC were time barred and that the trial court did not otherwise err in its judgment. Remanded with direction to reduce the award by $5,156 and to proportionately reduce prejudgment interest, .View "Saint Bernard Sch. of Montville, Inc. v. Bank of Am. " on Justia Law

Bill Head, doing business as Bill Head Enterprises (Head), hired Petroleum Solutions, Inc. to manufacture and install an underground fuel system at the truck stop Head owned and operated. After a major diesel-fuel leak occurred, Respondents sued Petroleum Solutions for its damages. The trial rendered judgment in favor of Head and in favor of third-party defendant Titeflex, Inc., the alleged manufacturer of a component part incorporated into the fuel system, on Titeflex’s counterclaim against Petroleum Solutions for statutory indemnity. The court of appeals affirmed. The Supreme Court (1) reversed the judgment as to Head, holding that the trial court abused its discretion in imposing the sanctions of charging the jury with a spoliation instruction and striking Petroleum Solutions’ statute-of-limitations defense, and the trial court’s abuse of discretion was harmful; and (2) affirmed the judgment as to Titeflex’s indemnity claim, holding that Titeflex was entitled to statutory indemnity from Petroleum Solutions. Remanded for further proceedings between Respondents and Petroleum Solutions. View "Petroleum Solutions, Inc. v. Head" on Justia Law

Jack Irwin owed a warehouse that Shade rented to store personal property. West Gate Bank held notes payable from Shade that were secured by Shade’s personal property. Shade later defaulted on the notes. Irwin and West Gate subsequently agreed to move Shade’s personal property pursuant to an “Abandonment” document. When Shade filed for bankruptcy, the bankruptcy court approved distribution of the proceeds in Shade’s personal property to West Gate, concluding that the Abandonment document was not an assignment or release of West Gate’s perfected security interest. Thereafter, Irwin filed this action against West Bank in district court alleging that West Gate breached its obligations under the Abandonment document by failing to pay the proceeds to Irwin. The district curt entered judgment in favor of West Gate. The Supreme Court affirmed, holding (1) the district court’s determination regarding the preclusive effect of the bankruptcy court’s ruling with respect to an assignment or release of West Gate’s security interest in Shade’s property was not relevant to this appeal; and (2) the district court did not err in concluding that the Abandonment document was not an enforceable contract or a warranty. View "Irwin v. West Gate Bank" on Justia Law

Appellee, which manufactures and distributes specialized products for use in the defense, security, and aerospace industries, entered into a consultant agreement with Appellant, under which Appellant agreed to identify buyers for Appellee’s products. Three years later, Appellee acquired the rights to manufacture and sell RH1280B field-programmable gate array (“FPGA”)s, which are semiconductor integrated circuits that are used in satellites and other space equipment. Operating under the terms of the consultant agreement, Appellant found customers for RH1280B FPGAs, accepted delivery of the PFGAs, and resold the goods to its customers. Before Appellant accepted delivery, however, Appellee warned it that the RH1280Bs failed to meet certain specifications. Appellant subsequently refused to pay an outstanding balance of $1,800,000, alleging that Appellee breached its express warranty regarding the performance characteristics of the RH1280B. Thereafter, Appellee terminated the consultant agreement. The district court granted summary judgment in Appellee’s favor. The First Circuit Court of Appeals affirmed, holding that, under the circumstances of this case, the district court correctly granted summary judgment in Appellee’s favor. View "BAE Sys. Info. & Elec. Sys. Integration, Inc. v. SpaceKey Components, Inc." on Justia Law

In 2004, Plaintiff, a manufacturer and distributor of medical devices, and Defendant, the developer and manufacturer of CoStar, a coronary stent, entered into an agreement designating Plaintiff as the exclusive distributor of CoStar for a worldwide market territory. In 2007, Defendant notified Plaintiff that it was recalling CoStar and removing it from the worldwide market. Plaintiff subsequently sued Defendant for breach of contract, seeking damages for lost profits related to its resale of the stents. Supreme Court granted summary judgment in favor of Defendant on the issue of damages, concluding that the lost profits sought by Plaintiff were consequential damages and subject to the agreement’s damages limitation provision. The court subsequently dismissed the complaint because, by denying Plaintiff lost profits as a remedy, the court effectively ended the lawsuit. The Appellate Division affirmed, concluding that Plaintiff’s claim was barred by the agreement’s limitation on consequential damages. The Court of Appeals reversed, holding that, under the parties’ exclusive distribution agreement, the lost profits constituted general damages, which fell outside the scope of the agreement’s limitation on recovery. View "Biotronik A.G. v. Conor Medsystems Ireland, Ltd." on Justia Law

Corning hired Hyundai, an ocean shipper, to transport thin glass sheets for use in televisions and computer monitors from the U.S. to Asia. Although it is not clear when the damage occurred, damage was noted when Hyundai unloaded the containers from flatcars operated by its subcontractors (Norfolk Southern Railway and BNSF, another rail carrier). Corning had no role in selecting and no relationship with the subcontractors. There were opinions that the damage was caused by movement of the railcars, not by packing, but the actual cause was not established. Corning’s insurer paid Corning $664,679.88 and filed suit. The district court held that the case would proceed solely under the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. 11706, apparently reasoning that the damage undisputedly occurred while the cargo was in the possession of a rail carrier. The court found that a Subcontracting Clause did not immunize the rail carriers from suit, but obligated Corning to indemnify Hyundai for any resultant claims by a subcontractor against Hyundai arising out of the same facts. The court held that a $500-per-package limit of liability did not apply to the rail carriers or Hyundai. After a jury trial, the court found Hyundai and the railroads liable, but denied prejudgment interest. The Sixth Circuit affirmed the judgment against Hyundai, reversed and vacated judgments against the railroads, and remanded for reconsideration of prejudgment interest.View "CNA Ins. Co. v. Hyundai Merch. Marine Co., Ltd." on Justia Law