Justia Contracts Opinion Summaries

This case arose when plaintiff filed a complaint asserting causes of action related to defendant's failure to repay certain loans. Defendant appealed from an amended judgment of the district court denying in part defendant's Federal Rule of Civil Procedure 60 motion to amend the court's August 28, 2008 judgment (original judgment), which, inter alia, requested that the court strike defendant as a party subject to the judgment because plaintiff had not moved for summary judgment against it. The court held that because plaintiff did not move for summary judgment against defendant, the district court erred in granting summary judgment against it. The court also held that the district court's determination that defendant defaulted in failing to file a timely answer to the complaint did not otherwise provide a valid basis for maintaining defendant as a party liable on the amended judgment. Therefore, the court reversed the decision of the district court insofar as it granted summary judgment against defendant and remanded with instructions to strike defendant as a party subject to the amended judgment.

The district court dismissed a complaint asserting breach of contract, breach of a covenant of good faith and fair dealing, breach of a settlement agreement, promissory estoppel, equitable estoppel, quantum meruit, unjust enrichment, constructive trust, accounting, reformation of contract, and several types of fraud in connection with agreements for "street furniture." After extensive discussion of whether the plaintiff, a sociedad anónima formed in Uruguay, was the equivalent of a corporation formed in the U.S., and the fact that the contract called for application of the law of Spain, the Seventh Circuit affirmed. The court concluded that, while the defendant did not treat plaintiff well, no rule of law entitles every business to a profit on every deal.

This case concerned the application of payments made in connection with a real estate transaction between Kang Park and Marsha Park and Gary Stanford. The district court granted summary judgment to the Parks, determining, as a matter of law, that none of the payments Stanford submitted to the Parks could be credited toward a personal guaranty Stanford had made on the note payable to the Parks. The court of appeals affirmed the district court's grant of summary judgment, concluding that no evidence indicated the Parks had actual knowledge that Stanford intended for the past payments to apply to his guaranty and no agreement or contractual provision expressly required the Parks to make such an application. On certiorari, the Supreme Court reversed, holding (1) the court of appeals applied the wrong test in its holding, and rather, a rule in which payments are credited toward a personal guaranty when the recipient of the payments has a reasonable basis to know the payments were submitted in satisfaction of the guaranty governed the application of payments toward a personal guaranty; and (2) genuine issues of material fact precluded summary judgment under the rule and the record required further development. Remanded.

This case centered on a dispute between Jack Link and his two sons, Jay and Troy. Jack and Troy filed suit against Jay seeking specific performance of an agreement that would require Jay to surrender his shares in Link Snacks. Jay filed counterclaims alleging Jack and Troy had breached fidicuiary duties owed to Jay by squeezing Jay out of Link Snacks to buy Jay's shares. The circuit court (1) granted specific enforcement of the agreement; (2) concluded that Jay had not been oppressed by Jack and Troy; and (3) remitted the jury's punitive damages award against Jack for breaching fiduciary duties to Jay. The court of appeals granted Jack partial dismissal of Jay's appeal and reversed the circuit court order remitting the punitive damages award against Jack. The Supreme Court affirmed in part and reversed in part, holding (1) the circuit court erred in remitting the award of punitive damages against Jack; (2) the court of appeals properly rejected Jay's oppression claim; and (3) Jay did not, under the benefit-estoppel doctrine, waive his right to appeal the circuit court's decision to limit the evidence Jay could present regarding his theory of damages relating to his breach of fiduciary duty claims. Remanded.

In April 2008, plaintiff American Asphalt sued CMX for professional negligence and breach of implied warranty. On October 1, 2008, the superior court issued an order informing plaintiff that if it did not file a motion to set as required by Ariz. R. Civ. P. 38.1(e), the case would be placed on the inactive calendar after January 20, 2009 and dismissed without further notice after March 23, 2009. American did not file a motion to set and the case was dismissed without further notice on April 29, 2009. Plaintiff moved to set aside the dismissal, contending that its failure to comply with Rule 38.1(a) was excusable because it had substituted counsel around the time of the Rule 38.1(d) filing deadline. The superior court denied the motion. The court of appeals affirmed, finding no excusable neglect partly because the court's order provided notice as required by the rule. On review, the Supreme Court vacated the court of appeals' decision and remanded, holding that a notice issued several months prior to placing the case on the inactive calendar does not comply with the rule because the rule requires contemporaneous notice when a case is placed on the inactive calendar.

Richard Orr and Sheldon Cook had a partnership agreement to conduct a cow-calf operation. The parties sold the cows and calves in the spring of 2007. Cook received $230,935 from the sale. Orr sued Cook, disputing the reimbursement amount Cook owed him from the sale and for the cost of feeding and caring for the cows during the winter of 2007. The trial court awarded Orr $41,614. The Supreme Court affirmed in part and reversed in part, holding (1) the trial court was not clearly erroneous in determining the value of the calves; (2) the trial court was not clearly erroneous in determining the amount of reimbursement Cook owed Orr for feed and veterinarian costs; and (3) the trial court did err in refusing to award Orr prejudgment interest because it was requested in a manner allowed by statute.

Plaintiff contracted to purchase 11 Burger King restaurants. A jury found that defendant had properly terminated the agreement but had breached the duty of good faith and fair dealing, and awarded $190,907.27. Over one year later, the district court entered a partial judgment denying specific performance and awarding $5,176.24 of the $424,282.19 in attorneysâ fees and expenses incurred in connection with the litigation. The Sixth Circuit reversed and remanded. The plaintiffs presented evidence that defendant hindered attempts to close the transaction, but defendant's actions in blocking due diligence and failing to provide financial information did not cause plaintiff damages because defendant properly terminated the agreement. The district court erred in calculating fees and expenses.

1/2 Price Checks Cashed (Half-Price) brought a suit in a Dallas County justice court asserting breach of contract on the basis of the obligation owed by the drawer of a check under Tex. Bus. & Com. 3.414 and requested attorney's fees. At issue was whether a holder of a dishonored check could recover attorney's fees under Texas Civil Practice and Remedies Code section 38.001(8) in an action against a check's drawer under section 3.414. The court held that Half-Price's section 3.414 claim was a suit on a contract to which section 38.001(a) applied and applying section 38.001(8) to the claim did not disrupt Article 3 of the Uniform Commercial Code's statutory scheme. Therefore, the court reversed the judgment and remanded for a determination of attorney's fees.

In this case the Kentucky Supreme Court considered whether to adopt the "economic loss rule," which prevents the commercial purchaser of a product from suing in tort to recover for the economic losses arising from the malfunction of the product itself. The case involved a claim to insurers for a damaged piece of machinery. The insurers sued the manufacturers to recover the amount paid, claiming several causes of action including negligence, strict liability, and negligent misrepresentation. The trial court held the economic loss rule barred the tort claims. The court of appeals affirmed the trial court's adoption and application of the rule. The Supreme Court affirmed the judgment of the trial court, holding (1) the economic loss rule applies to claims arising from a defective product sold in a commercial transaction, and that the relevant product is the entire item bargained for by the parties and placed in the stream of commerce by the manufacturer; and (2) the economic loss rule applies regardless of whether the product fails over a period of time or destroys itself in a calamitous event, and the rule's application is not limited to negligence and strict liability claims but also encompasses negligent misrepresentation claims.

ALC filed suit against Lamex in commonwealth court under Puerto Rico's Dealers' Contract Act (Law 75), which prohibits a principal from terminating a business relationship with a dealer without just cause. Before service of process, Lamex filed suit in federal court. The federal district court denied Lamex's requests to pierce the corporate veil and for preliminary and permanent injunctive relief, but granted Lamex's request for a declaratory judgment absolving it from liability under Law 75, ordered ALC to pay, and ordered the Superior Court of San Juan to release the money ALC consigned. The First Circuit affirmed the imposition of sanctions against ALC and the monetary judgment in favor of Lamex, but vacated the judgment with respect to Lamex's claims for a declaratory judgment and to pierce ALC's corporate veil. The district court erred in failing to provide indisputably clear notice of its intent to consolidate the preliminary injunction hearing with a trial on the merits under Rule 65(a)(2) and, in so doing, abrogated ALC's right to a jury trial.