Justia Contracts Opinion Summaries

Plaintiff brought a class action against the Bank, alleging that the Bank breached its contract by charging interest in excess of the rate specified in the promissory note. The court affirmed the district court's grant of the Bank's motion to dismiss where the district court correctly concluded that the relevant provisions were clear, did not conflict with one another, and adequately disclosed the interest to be charged.

The companies are direct competitors in importing and distributing pharmaceutical ingredients manufactured in China. Plaintiff claimed that defendant intentionally interfered with one of its contracts and sought damages. In court-ordered settlement negotiations, plaintiff demanded $675,000. Defendant made a counter-offer, demanding that plaintiff pay it $444,444.44 in order to settle the case and avoid a motion for sanctions and a suit for malicious prosecution. The court noted that the peculiar amount was due to the fact that the number four is considered an unlucky number in Chinese culture because it is homophonous with the Chinese word for death, but concluded that it was not a death threat and declined to impose sanctions. The court later entered summary judgment for defendant. The First Circuit affirmed the court's refusal to impose sanctions under FRCP 11. Plaintiff's claims were not patently frivolous.

In a loan-and-supply contract, plaintiff agreed to provide defendant with a $150,000 loan that would be gradually forgiven over five years as defendant purchased specified quantities of motor-oil products from plaintiff. The typewritten contract included a handwritten note stating that the "Agreement will terminate after 225,000 gallons and 225,000 filters of Exxon/Mobil is purchased or 60 months, whichever comes first." Defendant stopped buying products from plaintiff after only two years, having purchased only 55,296 gallons and 61,551 filters. The district court entered summary judgment for plaintiff. The Seventh Circuit affirmed, rejecting an argument that the handwritten provision relieved plaintiff of any liability after 60 months (after July 1, 2008) regardless of the amount of product it purchased.

A limited liability company (MIC) was formed for the purpose of building and operating a hotel. The original members of MIC were a revocable trust (the Trust), trustee Michael Siska, and Thomas, Jane, and Jason Dowdy. Later, Thomas and Jane Dowdy transferred, without the Trust's involvement, MIC's assets to Milestone Development, the Dowdy's family company. The Trust filed an amended complaint derivatively on behalf of MIC against Defendants, Milestone and the Dowdys. In its amended complaint, the Trust claimed that the transfer of assets to Milestone was not in the best interests of MIC or its members and alleging, inter alia, breach of fiduciary duty, breach of contract, unlawful distribution, and conversion, and seeking to recover damages. The Trust, however, did not join MIC as a party to the derivative action. The circuit court dismissed the Trust's amended complaint, holding that the Trust lacked standing to maintain the derivative action on behalf of MIC because the Trust could not fairly represent the interests of the Defendant shareholders. The Supreme Court reversed, holding that it would not entertain the appeal on the merits because MIC was a necessary party to the proceeding and had not been joined. Remanded.

Plaintiff Fox Rest Associates (Fox Rest) was formed to purchase Fox Rest Apartments. Defendants in this case were George Little, Fox Rest's legal counsel through his law firm, George B. Little and Associates (GBL&A), George Little's wife, and GBL&A. This action took place after Mr. Little sold the Apartments without knowledge of Fox Rest and transferred a portion of the proceeds from the sale in an account he held with Mrs. Little. Unable to satisfy a previous judgment finding Mr. Little and GLB&A liable to Fox Rest for, inter alia, malpractice and double billing, Fox Rest filed this action against Defendants, seeking to void various transactions by Mr. Little as fraudulent conveyances and voluntary conveyances. The court granted Defendants' motion to strike, finding that Fox Rest did not present sufficient evidence in its case in chief to establish a prima facie case for its claims. The Supreme Court affirmed in part and reversed in part, holding that, except for a portion of the claims relating to the sale of certain equipment, the circuit court erred in striking Fox Rest's fraudulent conveyance and voluntary conveyance claims. Remanded.

A successful Ford dealership in Iowa offered to assist struggling Middleton, Wisconsin dealership. The parties agreed that Iowa's general manager would provide management services to Middleton with compensation to begin after he turned Middleton profitable and also that Iowa would provide capital in exchange for an ownership interest. Negotiations continued after the manager started working at Middleton, but the parties never reached a more specific agreement. The relationship broke down after 11 months because Iowa failed to come forward with the expected cash. Still not earning a profit, Middleton did not pay for the manager's services. After a remand, the district court again entered judgment for Iowa, finding that Middleton became profitable during the manager's tenure and fired him before he had a fair opportunity to restore profitability. The Seventh Circuit reversed, stating that the factual findings were inconsistent and clearly erroneous. Iowa is not entitled to quasi-contractual compensation for services under either quantum meruit or unjust enrichment.

A company that provides employee training filed suit against a client, claiming breach of contract based both on alleged failure to pay a gain sharing fee and breach of confidentiality provisions.It sought an accounting for disclosures or uses of its materials inconsistent with the copyright license provided by the agreement. The court granted summary judgment for the client. The First Circuit affirmed, finding that the training company did not support its figures with respect to the fee or the breach of confidentiality.

At issue in this extraordinary writ proceeding was whether Nev. Rev. Stat. 11.259(1) compels dismissal where the initial pleading in an action alleging nonresidential construction malpractice was served without filing the attorney affidavit and expert report required by Nev. Rev. Stat. 11.258(1) and (3). The Supreme Court granted the writ, holding that a defective pleading served in violation of section 11.258 is void ab initio and of no legal effect and, thus, cannot be cured by amendment. The Court held that because the initial pleadings served by certain real parties in interest in this case did not include the attorney affidavit and expert report as required by section 11.258, those pleadings were void ab initio, and the district court did not have discretionary authority to allow the parties to amend their pleadings to cure their failure to comply with section 11.258.

In 2004 HD contracted with plaintiff, to develop an inventory classification system, called a taxonomy,for HDâs database. Plaintiff would own the intellectual-property rights and would license HD to use it at no-cost as long as plaintiff remained HD's data-pool vendor and HD continued paying for services. In 2008 HD began to develop an in-house database, incorporating the taxonomy that plaintiff had created. Plaintiff learned of the plan and registered a copyright. HD sent notice terminating the relationship, with a check for $100,000 to purchase a perpetual license, pursuant to the contract. HD notified suppliers to transmit their product data to its in-house system rather than to plaintiff, which returned the check and filed suit. The district judge dismissed. The Seventh Circuit affirmed, concluding that HD did not violate copyright law and that the case did not belong in federal court. HD acted in accordance with its contract rights.

Appellant Stivers Automotive of Lexington, Inc. (Stivers) and Respondent South Carolina Federal Credit Union (SCFCU) were parties to a Dealer Agreement (Agreement), under which SCFCU agreed to purchase sales contracts between Stivers and purchasers of its vehicles. Among other provisions in the Agreement, Stivers warranted certain representations made in connection to its sales contracts assigned to SCFCU. Hiram Riley (Riley) sought to purchase a vehicle from Stivers but was unable to qualify for financing. Stivers' salesman, Tom Roper (Roper), indicated that Riley could get the car if he found a co-signer. Riley contacted his sister, Mildred Higgins (Higgins), who agreed to co-sign for the car. Roper then visited Higgins at her home to sign the appropriate paperwork. After Roper thoroughly explained the documents, Higgins indicated she understood and signed the paperwork. As it turned out, the paperwork was drafted so that Higgins was the sole purchaser of the car, not a co-signer. Ultimately, SCFCU approved the loan to Higgins for the purchase price. Riley picked up the vehicle, with the understanding that he was to make the payments. Riley eventually stopped making payments on the car, stopped driving it, and told SCFCU where it could recover the car. SCFCU hired an agent to repossess the vehicle. SCFCU filed a complaint against Higgins, given that her name was on the loan. Higgins denied the allegations in the complaint, stating that she was incompetent at the time of the execution of the contract. Subsequently, SCFCU amended its complaint, alleging Stivers breached the Agreement. The trial court granted SCFCU's motion for a directed verdict against Stivers, finding Higgins lacked capacity to contract and Stivers breached the Agreement in that regard. The court also held that Stivers breached all contract warranties. Upon review, the Supreme Court found that the trial court erred by directing a verdict against Stivers on the issue of capacity. Additionally, the Court held that the trial court erred in granting a directed verdict to SCFCU as to the other warranties contained in the contract, as well as the amount of damages due SCFCU.