Justia Contracts Opinion Summaries

Shipper engaged Common Carrier to transport computer equipment belonging to Company. Company claimed the shipment was damaged on arrival, and Common Carrier refused to pay the amount that Company claimed Common Carrier had agreed to settle the claim for. Company asserted a claim against Shipper, whose Insurer paid Company. As subrogee, Insurer sued Common Carrier for breach of the settlement agreement. Insurer avoided removal to federal court by not asserting a cargo-damage claim, but, on remand, amended its petition to assert one. Common Carrier contended the cargo-damage claim was barred by limitations because Insurer filed it more than four years after Common Carrier rejected Company's claim. Insurer argued the cargo-damage claim related back to its original action for breach of the settlement agreement and thus was timely filed. The trial court agreed and rendered judgment against Common Carrier. The court of appeals held the cargo-damage claim did not relate back and was therefore barred by limitations. The Supreme Court reversed and rendered judgment for Insurer, holding that Insurer's cargo-damage claim was not barred by limitations, as the cargo-damage claim and breach-of-settlement claim both arose out of the same occurrence and, therefore, the relation-back doctrine applied. View "Lexington Ins. Co. v. Daybreak Express, Inc." on Justia Law

OCV supplies equipment and licenses software for in-room hotel entertainment and sought a judgment of $641,959.54 against Roti, the owner of companies (Markwell, now defunct) that owned hotels to which OCV provided services. The district judge granted summary judgment, piercing the corporate veil, but rejecting a fraud claim. The Seventh Circuit reversed. While the Markwell companies were under-funded, OCV failed to treat the companies as separate businesses and proceed accordingly in the bankruptcy proceedings of one of the companies and made no effort to determine the solvency of the companies. View "On Command Video Corp. v. Roti" on Justia Law

Respondents brought an action against Appellants, alleging breach of contract and fraud- and tort-based claims based on their purchase of two furniture stores from Appellants. The district court entered judgment for Respondents. The court allowed Respondents to rescind the agreement and awarded them damages. Although they appealed the judgment, Appellants did not obtain a stay of execution. Thus, despite the pending appeal, Respondents obtained a writ of execution on the judgment, allowing them to execute against one appellant's personal property. Respondents subsequently purchased Appellants' rights and interests in the district court action. Respondents moved to substitute as real parties in interest and dismiss the appeal on the basis that they acquired Appellants' claims and defenses at the sheriff's sale. The Supreme Court denied Respondents' motion, holding that Nevada's judgment execution statutes do not include the right to execute on a party's defenses to an action, as permitting a judgment creditor to execute on a judgment in such a way would cut of a debtor's defenses in a manner inconsistent with due process principles. View "Butwinick v. Hepner" on Justia Law

MayPort Farmers Co-Op appealed the judgment entered after trial and the district court's order denying MayPort's motion to amend findings of fact and conclusions of law and to amend judgment. MayPort sued St. Hilaire Seed Co., Inc., alleging St. Hilaire owed MayPort money for storage of edible beans St. Hilaire purchased from MayPort. The district court concluded "usage of trade" applied as a gap-filler and found industry custom and standards rendered storage charges inappropriate because MayPort's inability to perform caused the need for storage. Upon review, the Supreme Court affirmed, concluding the district court's findings of fact were not clearly erroneous and the district court did not abuse its discretion by denying MayPort's motion to amend. View "MayPort Farmers Co-Op v. St. Hilaire Seed Company, Inc." on Justia Law

House of Flavors purchased equipment from Tetra and executed an agreement with Tetra to fund its installation. Under the agreement, Tetra paid for the installation, House of Flavors then transferred ownership of the installed system to Tetra, and Tetra leased the system back to House of Flavors. After House of Flavors began monthly lease payments, it sought to exercise the buy back option a year early. Notwithstanding the twelve percent estimate it quoted earlier, Tetra quoted a purchase price around forty percent of the equipment and installation costs. House of Flavors filed suit in federal district court, where it prevailed on its claims. The First Circuit Court of Appeals affirmed but remanded the case to reconsider the balance due between the parties. On remand, the judge recalculated the balance due and determined that, rather than owing House of Flavors, Tetra was in fact due $156,399. The First Circuit dismissed House of Flavors' appeal, holding (1) the attack on the recalculated figure was foreclosed by a jurisdictional objection, as the appeal was untimely; and (2) the appeal was jurisdictionally timely as to the district court's refusal to award attorneys' fees under a Utah statute, but the denial of attorneys' fees was affirmed. View "House of Flavors, Inc. v. TFG-Michigan, L.P." on Justia Law

Pielet Brothers Scrap Iron and Metal, was founded Arthur Pielet and his brothers shortly after World War II. Arthur sold his interest to his sons in 1986 through an agreement providing for a lifetime payment to him of a “consulting” fee, and, on his death, for a lifetime fee payment to his wife, Dorothy. The agreement was binding on successors and assigns. In 1994, the then- successor company, P.B.S., dissolved, but payments to Arthur continued until 1998, when its successor, MM, had financial difficulties. It filed for bankruptcy in 1999. Litigation began. The trial court awarded Dorothy almost $2 million. In the appellate court, P.B.S. argued the traditional rule that a cause of action that accrued (1998) after dissolution (1994) cannot be brought against a dissolved corporation. The appellate court rejected the argument, holding that Dorothy’s claim could survive, but remanded for determination of whether the companies could be relieved of liability for the fee under a theory of novation. The Supreme Court reversed in part, holding that the claim of breach of contract against P.B.S. could not survive the corporate dissolution. The issue of novation is relevant as to two other successor corporations and required remand. View "Pielet v. Pielet" on Justia Law

GTI went bankrupt after it purchased OAI, a subsidiary of Onkyo for $13 million in cash and $12 million in three-year promissory notes. Onkyo filed a proof of claim for $12 million. GTI responded by suing Onkyo under the theory that the OAI purchase was a fraudulent, voidable transaction. The bankruptcy court agreed, finding that OAI was worth $6.9 million at the time of the transaction, not $25 million. The court voided GTI’s obligation to pay the remainder of the purchase price and ordered Onkyo to repay GTI $6.1 million. The district court and Sixth Circuit affirmed. The bankruptcy court’s determination that the indirect benefits were insubstantial was valid without the necessity of providing calculations; its adoption of GTI’s expert’s value based on the comparable transactions method was not clearly erroneous. Once the bankruptcy court determined that the sale of OAI had been a fraudulent transfer and Onkyo was a good-faith transferee, awarding GTI relief was a simple matter of subtraction. View "Onkyo Europe Elec., GMBH v. Global Technovations Inc." on Justia Law

Northwest Building Company, LLC (Contractor) performed construction services for Northwest Distributing Co., Inc. (Owner) on a Taco John’s/Good Times facility in Gillette, Wyoming. Contractor brought an action against Owner seeking payment for its services, and Owner counterclaimed. After Contractor’s attorney moved to withdraw, the district court ordered Contractor to find substitute counsel in time for the pretrial conference. When Contractor was unable to find substitute counsel by the deadline, the district court sanctioned it by dismissing its complaint and granting judgment in favor of Owner on its counterclaims. Contractor appealed, raising a number of procedural issues. Upon review, the Supreme Court concluded that the district court did not abuse its discretion by dismissing the Contractor's complaint, and affirmed the lower court's judgment. View "Northwest Building Company, LLC v. Northwest Distributing Co., Inc." on Justia Law

In 2005, a Union Pacific train derailed in Oklahoma causing extensive damage to both the railroad and the train’s cargo. Kawasaki, K-Line, and Union Pacific sought damages, alleging that Plano’s steel injection molds were improperly packed, broke through their crate, and fell onto the track. The district court granted Plano summary judgment. The Seventh Circuit affirmed in part. Negligence claims were properly rejected, Plano had no indication that the parties with which it dealt would be unable to properly package and transport its steel molds from China to the United States, nor did Plano have any special knowledge of any unique danger the molds would pose during transit. Plano owed no special duty of care to the carriers. There were, however, unresolved questions of fact material to the determination of one contract claim, based on a bill of lading. It was unclear whether Plano or another arranged the molds’ shipment. View "Kawasaki Kisen Kaisha, Ltd. v. Plano Molding Co." on Justia Law

Petitioner appealed from a decision of the United States tax court concluding that he owed $128,292 in income tax for the 2004 taxable year. Petitioner entered into an agreement with Optech Limited pursuant to which he transferred floating rate notes (FRNs) worth approximately $1 million to Optech in return for a nonrecourse loan of ninety percent of the FRNs' value. The agreement gave Optech the right to receive all dividends and interest on the FRNs and the right to sell the FRNs during the loan term without Petitioner's consent. Instead of holding the FRNs as collateral for the loan, Optech sold the FRNs and transferred ninety percent of the proceeds to Petitioner. Petitioner did not report that he had sold the FRNs in his 2004 federal income tax return. The Ninth Circuit Court of Appeals affirmed the decision of the tax court, holding that Petitioner's transaction with Optech constituted a sale for tax purposes despite its taking the form of a loan because the burdens and benefits of owning the FRNs were transferred to Optech. View "Sollberger v. Comm'r of Internal Revenue" on Justia Law