Justia Contracts Opinion Summaries

Plaintiff appealed the district court's grant of summary judgment to defendant on his claim of malicious prosecution under Arkansas law. The district court held that plaintiff failed to present evidence sufficient to withstand summary judgment on two of the five elements necessary to sustain his claim. The court held that the district court erred in holding that the evidence was insufficient as a matter of law to sustain plaintiff's claim that defendant brought suit against him on the guaranty without probable cause. The court also held that a jury must decide what was defendant's motive or purpose in suing plaintiff if it in fact understood it had no reasonable chance of prevailing on the merits of its claim against plaintiff.

Defendant manufactures medical goods and has distributors all over the U.S., including plaintiffs, which had exclusive distributorship agreements. When defendant terminated the agreements, plaintiffs were forced to shut down their businesses and sued for breach of contract, intentional misrepresentation, and negligent misrepresentation. The district court dismissed a negligent misrepresentation claim. A jury returned a verdict against defendant on remaining claims, awarding actual and punitive damages. The magistrate set aside the punitive damages awards. The Seventh Circuit vacated the awards of lost profits as not allowed by the contract and affirmed the decision to set aside punitive damages, but affirmed verdicts against defendant on intentional misrepresentation and negligent misrepresentation. The court vacated awards of actual damages, as supported by insufficient evidence.

Central Mortgage Company (CMC) sued Morgan Stanley after mortgages for which CMC purchased servicing rights from Morgan Stanley began to fall delinquent during the early financial crisis of 2007. CMC subsequently appealed the dismissal of its breach of contract and implied covenant of good faith and fair dealings claims. The court held that the Vice Chancellor erroneously dismissed CMC's breach of contract claims on the basis of inadequate notice where CMC's pleadings regarding notice satisfied the minimal standards required at this early stage of litigation. The court also held that the Vice Chancellor erroneously dismissed CMC's implied covenant of good faith and fair dealings claim where the claims were not duplicative. Accordingly, the court reversed the Vice Chancellor's judgment dismissing all three of CMC's claims and remanded for further proceedings.

McKinnis Roofing and Sheet Metal and homeowner Jeffrey Hicks entered into two contracts. The first contract related to Hicks' roof, and the second contract related to copper awnings on Hicks' residence. McKinnis filed a complaint in the district court alleging that Hicks breached both contracts after Hicks refused McKinnis' demand for advance payment. After trial, he district court determined that Hicks had breached both contracts, awarding McKinnis damages in the amount of $4,419 with regard to the roofing contract and $789 with regard to the awning contract. McKinnis appealed, arguing that the district court erred in calculating the amount of damages to which it was entitled. Hicks cross-appealed and claimed that the district court erred when it determined that he breached the contracts. The Supreme Court reversed, holding that based on the facts and contract language, Hicks did not breach either contract.

Deutsche Bank National Trust Company, as trustee in trust for the registered holders of Ameriquest Mortgage Securities, Inc., appealed from a summary judgment entered in the district court in favor of Donald and Kim Pelletier on the bank's complaint for foreclosure. The district court concluded that Deutsche Bank had failed to dispute facts asserted by the Pelletiers demonstrating that they had asserted a right of rescission. On appeal, the Supreme Court affirmed the grant of summary judgment, but because the district court's order reached only the point of determining that the Pelletiers were entitled to rescission, the Court remanded for further proceedings to effectuate the rescission.

The company sued, in New Jersey, for breach of contract, conversion, and embezzlement, based on defendant's retention of checks worth $587,775.05. Defendant asserted counterclaims based on termination of an employment contract. While the lawsuit was pending, the company brought an identical action in South Korea. In 2005, a South Korean court entered judgment for the company in an amount equivalent to $587,755.05 plus post-judgment interest. In 2006, the U.S. district court entered judgment for the company, $587,755.05 on the conversion claim, and for defendant, $910,000 on the counterclaim. The U.S. district court declined the company's request that a turnover order include a setoff, reasoning that setoff would result in double recovery. The Third Circuit affirmed, but remanded pending enforcement of the Korean judgment. Defendant paid the Korean judgment. The district court rejected an argument that the Korean judgment should be equalized with the American judgment in the amount of $205,540.05, the difference between the American judgment ($587,755.05) and actual payments adjusted by currency devaluation ($382,215). The Third Circuit affirmed, characterizing the claim as an attempt to satisfy the Korean judgment for a second time.

Black Warrior Minerals, Inc. sued Empire Coal Sales, Inc. and John Fay, Jr. Black Warrior sought money allegedly owed pursuant to a coal-purchase agreement between Black Warrior and Empire and a personal guaranty executed by Mr. Fay. A trial court entered summary judgment in favor of Black Warrior, awarding it damages plus attorney fees and costs. The trial court held a bench trial on the breach-of-guaranty claim against Mr. Fay, entering judgment in favor of Mr. Fay. Black Warrior appealed the latter, arguing that the trial court erred in finding the language of the guaranty was ambiguous and applied only to amounts in excess of $1.2 million owed by Empire to Black Warrior. Upon review of the language of the guaranty and the applicable legal authority, the Supreme Court concluded the trial court erred in its interpretation of the guaranty's terms. The Court reversed the lower court's judgment and remanded the case for further proceedings.

Matador Holdings, Inc. and HoPo Realty Investments, LLC filed separate appeals to challenge elements of a circuit court's order involving commercial property owned by Matador. Matador sued HoPo for payment for materials and services Matador provided to HoPo's lessee Stratford Plastic Components of Alabama. The lease agreement contained provisions allowing for HoPo or its agents to enter the property during the lease-term to make inspections or repairs. Stratford had applied for and received a line of credit with Matador. After taking possession of the leased property, Stratford ordered materials from Matador to convert the property into one suitable for Stratford's production needs. Stratford vacated the property before the lease term expired without paying Matador for the materials. HoPo's agents testified that Stratford did not request any changes be made to the leased property and had no knowledge that Matador would supply materials to the lessee. To resolve the dispute, the trial court denied Matador's claim that HoPo was unjustly enriched by the services provided to Stratford that were unpaid, but the court placed a lien on HoPo's property for the unexpired portion of the Stratford lease. Upon review of the trial court record and its order, the Supreme Court affirmed the lower court's denial of Matador's unjust enrichment claim. Furthermore, the Court reversed the lower court's order insofar as it enforced any portion of a lien against HoPo's property or the improvements made to the property. The Court ruled the lien void.

This case arose from a contract for services between Defendant Erik Partin and Plaintiff Cody Schroeder under which Defendant assembled a specialty car engine for Plaintiff. A jury returned a verdict finding that Defendant assembled the engine improperly and breached the agreement which contained a liquidated damages clause. The district court granted Defendant's motion for judgment notwithstanding the verdict (JNOV), holding that no reasonable jury could find the liquidated damages clause to be valid. The court also awarded attorney fees to both parties. Plaintiff appealed the grant of JNOV and the award of attorney fees to Defendant. Upon review of the trial record, the Supreme Court found there was substantial evidence to support the jury's determination that the performance agreement was enforceable. Therefore, the Court vacated the trial court's grant of JNOV and reversed the lower court's order granting attorney fees to the parties. The Court remanded the case for further proceedings, and awarded attorney fees on appeal to Plaintiff.

This case stemmed from the replevin actions filed by Klein Bank against debtors. Klein Bank appealed from the Orders of the Bankruptcy Court denying its motions to remand its replevin actions which had been removed from the state court to the bankruptcy court. In denying the motions, the Bankruptcy Court concluded that replevin actions were core proceedings. While this appeal was pending, the United States Supreme Court clarified that core proceedings were limited to those "arising under or arising in" a bankruptcy case. Based on that, the court now concluded that the matters involved in the replevin actions were not core proceedings. Accordingly, the court reversed and remanded to the Bankruptcy Court for further findings on the question of whether the court was required to abstain under 28 U.S.C. 1334(c)(2).