Justia Contracts Opinion Summaries

Pentonville Developers, Ltd. and Marblearch Trading, Ltd., two Cyprus oil brokerage companies, sued the Republic of Iraq for unilaterally terminating two contracts for the purchase and sale of Iraqi oil. The district court concluded it had subject matter jurisdiction notwithstanding Iraq's assertion of sovereign immunity under the Foreign Sovereign Immunities Act because the lawsuit fell within the "commercial exception" to that immunity. The Ninth Circuit Court of Appeals reversed, holding that because the lawsuit was not based upon commercial activity by Iraq in the United States, nor upon an act in connection with such commercial activity having a direct effect in the United States, the district court erred in denying Iraq's motion to dismiss for lack of subject matter jurisdiction.

Plaintiff filed a complaint against St. Patrick Congregation, alleging that her employment was terminated for an improper reason. The circuit court dismissed Plaintiff's complaint, concluding that because St. Patrick was a religious institution and Plaintiff was a ministerial employee, Plaintiff's complaint failed to state a claim upon which relief could be granted. The Supreme Court affirmed, holding (1) a court may not review whether St. Patrick improperly terminated its ministerial employee because St. Patrick's choice of who shall serve as its ministerial employee is a matter of church governance protected from state interference by the First Amendment and by Wis. Const. art. I, 18; and (2) accordingly, Plaintiff's complaint failed to state a claim upon which a court may grant relief.

Plaintiff brought a Deceptive Trade Practices Act suit against Company and its co-operators for violating the terms of a contract. Through a process server, Plaintiff served all three Defendants with citations, but one citation contained an error in a co-operator's name. Defendants failed to file a timely answer, and Plaintiff obtained a default judgment. Defendants filed a motion for a new trial, arguing that service on the co-operator was improper and that Defendants established the necessary Craddock elements to set aside the default judgment. The trial court denied the motion, and the court of appeals affirmed. The Supreme Court reversed, holding that Defendants asserted facts that, if true, established the first Craddock element, i.e., that the failure to appear was not intentional or the result of conscious indifference but was the result of a mistake or an accident. Remanded for consideration of the second and third elements of the Craddock test.

Defendant Brown University appealed a Superior Court judgment in favor of Plaintiff Beverly Haviland in her action for declaratory relief. The issue arose over placement of Haviland in a tenured teaching position as a condition to the employment contract her husband, another tenured professor would receive. The husband would not accept a position with Brown unless the university made room for his plaintiff. Through a series of letters ad negotiations, plaintiff accepted Brown's offer of employment. When her contract was due for renewal, issues arose over promises made in those letters and negotiations that became the subject of this dispute. Brown contended that there was no justiciable issue in this case because plaintiff could not demonstrate an injury in fact, as she did not face any actual or imminent loss of employment. Brown also asserted that the trial justice erred in determining the existence of an implied-in-fact contract between the plaintiff and Brown because insufficient evidence was presented to establish an enforceable promise of de facto tenure. Further, Brown contended that no tenure-like standard of review applied to plaintiff because only the Brown Corporation was vested with the authority to grant tenure and none of the University administrators who communicated with plaintiff were vested with actual or apparent authority to provide the plaintiff with de facto tenure. Upon review, the Supreme Court rejected Brown's arguments and affirmed the Superior Court's judgment in this case.

Roger Hooban sued Unicity International for breach of a distribution agreement. The district court entered summary judgment for Unicity, holding that Hooban was not a party to the agreement and lacked standing to sue for its enforcement. Unicity then filed a motion for attorney fees under Utah's reciprocal attorney fees statute, Utah Code 78B-5-826. The district court denied the motion on the ground that section 826 was inapplicable given that Hooban was not a party to the underlying contract. The court of appeals reversed, interpreting the Supreme Court's decision in Bilanzich v. Lonetti to dictate a fee award in litigation that is based on a written contract where the contract allows at least one party to the litigation to recover fees. The Supreme Court affirmed, holding (1) section 826 applied in this case; and (2) the statute thus authorized the court to award fees to Unicity.

Plaintiff Phaneuf Funeral Home appealed a superior court order that granted motions for summary judgment in favor of Defendants Little Giant Pump Company, Boyer Interior Design, Leviton Manufacturing Company and The Elegant Earth, Inc. Phaneuf hired Boyer to do interior design and light renovation work in the basement and adjacent hallway of the funeral home. In the hallway, Boyer installed a wall-mounted water fountain that it purchased from Elegant, an Alabama-based household goods retailer. Defendant Leviton supplied the fountain’s power cord to Little Giant, which manufactured the fountain. A fire broke out at the funeral home. Alleging that the water fountain’s defective pump and power cord caused the fire, Phaneuf brought negligence and strict product liability claims against each defendant, although it later withdrew its negligence claim against Boyer. Each defendant moved for summary judgment, arguing that Phaneuf’s claims were time-barred by RSA 508:4-b, I (2010), the statute of repose for “Damages From Construction.” The superior court agreed, and granted each motion. Upon review of the facts in the superior court record, the Supreme Court affirmed the lower court's grant of summary judgment as to Boyer, but reversed as to the remaining defendants. The case was remanded for further proceedings.

The United States Bankruptcy Appellate Panel of the Court of Appeals for the Ninth Circuit ("the BAP") certified a question to the Alabama Supreme Court: "In Alabama, is a 'default' judgment premised upon discovery sanctions or other post-answer conduct of the defendant sufficient to support the application of issue preclusion in a later proceeding?" Debtor-Defendant Anthony Malfatti was one of three principals of TA Financial Group ('TAF') purportedly designed to assist credit card holders in arbitration of disputes with the card issuers. The arbitration providers were selected by the card holders from a list provided by TAF. Among the arbitration providers was Arbitration Forum of America, Inc. ('AFOA'). AFOA was not conducting legitimate arbitrations; every arbitration resulted in an award in favor of the card holder, which was then reduced to judgment. Malfatti claims he was unaware that AFOA's practices and the judgments stemming therefrom were illegitimate. At some time after the banks involved learned of the judgments, they filed cross-complaints against the card holders to set aside the judgments as fraudulently obtained. In September 2005, the banks, including Bank of America, N.A. (USA) filed Amended Third Party Complaints against, among others, Malfatti and TAF, alleging tortious interference with contract, abuse of process, wantonness, and civil conspiracy, and sought an injunction against further arbitrations. The Banks moved for default judgments against Malfatti and TAF for failing to comply with discovery orders, repeated failures to appear for depositions, and failure to respond to written discovery. Malfatti and TAF filed a motion to set aside the defaults. The court found Malfatti and TAF to be jointly and severally liable for compensatory damages, awarded punitive damages against Malfatti, and found Malfatti to be liable for punitive damages awarded against TAF under the alter ego doctrine. Malfatti filed for Chapter 7 bankruptcy the Banks filed an adversary proceeding alleging the debt owed to them by Malfatti was nondischargeable. Upon review, the Alabama Supreme Court answered the certified question in the negative: "[f]or purposes of determining whether an issue is precluded by the doctrine of collateral estoppel, Alabama law makes no distinction between a simple default and a penalty default."

Plaintiff-Appellant Randy Kramer initiated a breach of contract action against Mike D. Murphy and the William F. Murphy Self-Declaration of Trust (Trust). Tri-State Ethanol, LLC owned an ethanol plant in Rosholt, South Dakota. Kramer was one of the members and managers of Tri-State Ethanol. Kramer was also a member of White Rock Pipeline, LLC, which owned a pipeline that supplied natural gas to Tri-State Ethanol. In order to comply with various federal regulations, Tri-State Ethanol determined it was necessary to purchase the membership interests of Kramer, Murphy, Woods, and the Trust. To accomplish this, Tri-State Ethanol entered into a loan agreement (Loan Agreement) with Murphy and the Trust. Tri-State Ethanol was unable to meet its financial obligations and eventually filed for Chapter 11 bankruptcy. During the course of the bankruptcy proceedings, Murphy and the Trust reached a settlement agreement regarding payment of the Loan Agreement and the Disbursement Agreement. Murphy and the Trust, through its trustee, represented to the bankruptcy court that they would use the settlement proceeds to pay Kramer the amounts owed under the Disbursement Agreement. The bankruptcy court approved the settlement agreement. After the settlement proceeds from Tri-State Ethanol’s bankruptcy estate were distributed, Murphy and the Trust refused to pay Kramer the full amount listed in the Disbursement Agreement. Kramer then filed a complaint against Murphy and the Trust for breach of the Disbursement Agreement. Murphy filed a motion to dismiss on the grounds of improper venue. He claimed that the forum-selection clauses contained in the Loan Agreement, the Balloon Note, and the Promissory Note controlled for any suit brought on the Disbursement Agreement. The circuit court agreed and dismissed the case. It found that while the Disbursement Agreement itself had no forum-selection clause, the other three agreements contained forum-selection clauses providing that the Fourteenth Judicial District in Rock Island County, Illinois was the proper forum. The circuit court reasoned that the agreements must be considered as a whole. After examining each of documents collectively as one contract, the Supreme Court held that the trial court did not err in finding that the parties intended the venue for any suit on the Disbursement Agreement to be the Fourteenth (14th) Judicial District in Rock Island County, Illinois. The circuit court’s dismissal of this case was affirmed.

Appellant Richard Freemantle challenged the legality of a severance agreement between Anderson County and Respondent Joey Preston, a former Anderson County administrator. Respondent was hired as County Administrator in 1998. His contract with the County provided for an initial employment term of three years, with an annual renewal in the absence of written notice not to renew the contract. The November 2008 election changed the "balance of power" on the Anderson County Council. One of the final acts of the outgoing Council was to execute a severance agreement for Respondent that provided him over one million dollars in benefits which was "well in excess of that provided in his employment contract." The severance agreement also included a release provision stating that the County would never seek legal redress against Respondent for any claims relating to his employment with the County. Appellant filed a complaint against Respondents on behalf of himself and all others similarly situated seeking monetary relief and various declaratory judgments. Specifically, Appellant alleged that Council's vote approving the severance agreement was invalid. In addition, Appellant contended the successor Anderson County Council was not bound by the severance agreement. Relief was sought pursuant to various causes of action, including covin and collusion, breach of fiduciary duties, illegal gift of county funds, misfeasance, malfeasance, conspiracy, violations of public policy, and violations of FOIA, The trial court dismissed the action finding that Appellant's status as a taxpayer did not confer standing to challenge the severance agreement. The Supreme Court agreed with the circuit court in most respects concerning Appellant's lack of standing. However, the Court disagreed with the trial court "only insofar as the FOIA claim is concerned, for traditional standing principles do not apply under FOIA because the legislature has conferred standing on any citizen to enforce the Act's provisions." Accordingly, the Court affirmed in part, reversed in part, and remanded the case for further proceedings.

Access to the Ambassador Bridge between Detroit and Windsor, Ontario necessitated traversing city streets. The state contracted with the Company, which owns the Bridge, to construct new approaches from interstate roads. The contract specified separate jobs for the state and the Company. In 2010, the state obtained a state court order, finding the Company in breach of contract and requiring specific performance. The Company sought an order to open ramps constructed by the state, asserting that this was necessary to complete its work. The court denied the motion and held Company officials in contempt. In a 2012 settlement, the court ordered the Company to relinquish its responsibilities to the state and establish a $16 million fund to ensure completion. Plaintiffs, trucking companies that use the bridge, sought an injunction requiring the state to immediately open the ramps. The district court dismissed claims under the dormant Commerce Clause, the motor carriers statute, 49 U.S.C. 14501(c), and the Surface Transportation Assistance Act, 49 U.S.C. 31114(a)(2). The Sixth Circuit affirmed. For purposes of the Commerce Clause and statutory claims, the state is acting in a proprietary capacity and, like the private company, is a market participant when it joins the bridge company in constructing ramps.