Justia Contracts Opinion Summaries

The Ninth Circuit affirmed the district court's grant of summary judgment for the state in an action brought by LL Liquor, claiming that Montana's Senate Bill 193 impaired the company's contract to purchase liquor with the Montana Department of Revenue, in violation of the Contracts Clause. Montana's Senate Bill 193 restructured the formula for calculating the rate at which state-approved agency franchise stores could purchase liquor from the state.The panel held that Montana's Senate Bill 193, which applied a uniform commission structure to all franchise stores in the state, did not give rise to a Contracts Clause claim by LL Liquor against the state. In this case, the state did not impair its contractual obligation within the meaning of the Contracts Clause because it did not eliminate LL Liquor's remedy for breach of its contract with the state. View "LL Liquor, Inc. v. Montana" on Justia Law

At issue was various statutory amendments to the Kentucky Affordable Prepaid Tuition Fund (KAPT) contracts previously purchased by Appellants.The Court of Appeals reversed the judgment of the trial court concluding that the 2014 statutory changes affecting the 2003 contracts for prepaid college tuition entered into by Maze and the Board did not alter Appellants’ contracts, concluding that Appellants had expressly agreed to be bound by amendments to the contracts imposed by future statutory and regulatory changes. The Supreme Court reversed, holding (1) the KAPT contracts entered into by Appellants, and the underlying enabling statutes, did not authorize the contractual changes imposed by the retroactive application of the statutory amendments at issue in this case; and (2) the retroactive imposition of those amendments upon Appellants unlawfully impaired their contracts in violation of U.S. Const. art. I, 10 and Ky. Const. 19. View "Maze v. Board of Directors for the Commonwealth Postsecondary Education Prepaid Tuition Trust Fund" on Justia Law

The Supreme Court affirmed the district court’s denial of Defendant’s motion to vacate and the subsequent reinstatement of the sentences originally ordered, holding that the district court did not err by not addressing Defendant’s constitutional challenge.In this procedurally complex case, Defendant’s original sentences were reinstated by the district court, and Defendant’s motion to vacate his conviction for discharge of a firearm in certain cities, villages, and counties under Neb. Rev. Stat. 28-1212.04 on the grounds that the statute was unconstitutional on its face was denied. Defendant appealed the denial of his motion to vacate. The Supreme Court affirmed, holding that the district court did not err in failing to consider the merits of Defendant’s federal equal protection challenge on the basis of state procedural grounds. View "State v. Washington" on Justia Law

Judge had been principal of Oaklyn Elementary School for about three years when she was stopped by a Pennsylvania State Trooper for failing to signal. After acknowledging she had been drinking, Judge asked the trooper to release her because she was concerned about her job. The trooper took Judge to the barracks, where she was given a test, which showed that Judge’s blood alcohol content was .332, more than four times the legal limit. Three weeks later, Judge encountered Superintendent Kelley, who had been advised by school board members about the traffic stop. Kelley wrote: If you do choose to resign then I will offer a neutral reference in the future . . . . [I]n the alternative, if you decide not to resign and DUI charges are filed against you then I will be forced to issue a written statement of charges for dismissal. Judge did not contact a lawyer, although she had retained counsel after her arrest. The next day, Judge presented a letter of resignation, while stating she “was not even charged with DUI yet.” Kelley then handed Judge court documents indicating that she had been charged. Judge sued, asserting deprivations of procedural and substantive due process, violation of equal protection, and breach of contract, based on "constructive discharge." The Third Circuit affirmed the rejection of all her claims: Judge was presented with a reasonable alternative to immediate resignation and resigned voluntarily. View "Judge v. Shikellamy School District" on Justia Law

Perez‐Gonzalez pleaded guilty to first-degree murder for his role in a gang‐related killing and agreed to cooperate. His plea agreement stated: Any deviation from that truthful [testimony against a co-defendant] will be grounds for the [state] at [its] sole discretion–to withdraw its agreement to delete reference to a firearm as well as to withdraw its agreement to vacate the 15‐year add‐on. In such event, the defendant would then be required to serve the terms of the initial agreement. It makes no reference to refusal to testify. More than one year later, as the trial of a co‐defendant approached, Perez‐Gonzalez declined to testify. He was convicted of contempt of court, resulting in an additional 10‐year sentence. After exhausting his state court remedies, Perez‐Gonzalez sought habeas corpus relief, asserting the state breached the plea agreement by requesting the contempt sanction. The Seventh Circuit affirmed the denial of relief, rejecting an argument that the plea agreement immunized Perez-Gonzalez from contempt proceedings. Although he presented a reasonable interpretation of the agreement, he has not proved that the state appellate court’s alternative interpretation was unreasonable; the agreement contained no express or implied promise that the state would not bring contempt charges. Perez‐Gonzalez must do more than provide an alternative reading of the plea agreement. View "Perez-Gonzalez v. Lashbrook" on Justia Law

The Church’s Deacons recommended Lee as pastor under a 20-year agreement, subject to for-cause early termination. If the Church removed Lee without cause, it would be required to pay Lee salary and benefits for the unexpired term. The agreement specified that Lee could be terminated for cause if he “commits any serious moral or criminal offense” or if he became incapacitated; it allowed either party to terminate upon “material breach.” During a 2013 congregation meeting, Lee stated that “just cause” would occur if the Church was "not growing ... stagnant, ... not a better place,” and that “if [he did not] perform [his] duties well, [he would be] out.” Based on these statements, the congregation approved the agreement. In December 2014, Church leaders recommended voiding the employment contract, reporting that from 2013-14, there was a 39% decline in offerings, a 32% drop in Sunday worship attendance, a 61% decrease in registered members, a doubling of expenditures, and a decline in the quality of community outreach. Lee had scheduled but cancelled several meetings to discuss these issues. The congregation voted to terminate Lee’s employment. Lee sued, alleging breach of contract due to termination without cause, seeking $2,643,996.40 in damages. The Third Circuit affirmed rejection of the suit on summary judgment. Adjudication of Lee’s claim would impermissibly entangle the court in religious doctrine in violation of the First Amendment’s Establishment Clause. View "Lee v. Sixth Mount Zion Baptist Church of Pittsburgh" on Justia Law

Plaintiffs, licensed taxi and limousine operators, sued under 42 U.S.C. 1983, challenging an agreement between Newark and Uber as violating their rights under the Takings, Due Process, and Equal Protection Clauses. In order to operate in Newark without taxi medallions or commercial driver’s licenses, setting its own rates, Uber agreed to pay the city $1 million per year for 10 years; to provide $1.5 million in liability insurance for each of its drivers; to have a third-party provider conduct background checks on its drivers. The Third Circuit affirmed the dismissal of the suit. The agreement places the plaintiffs in an “undoubtedly difficult position” but the situation cannot be remedied through constitutional claims. Even if plaintiffs have a legally cognizable property interest in the medallions themselves, they remain in possession of and able to use their taxi medallions to conduct business. The decrease in the market value of the medallions is not sufficient to constitute a cognizable property interest necessary to state a claim under the Takings Clause. The city controls the number of medallions in circulation and maintains the ability to flood the market with medallions. With respect to equal protection, it is rational for the city to determine that customers require greater protections before accepting a ride from a taxi on the street than before accepting a ride where they are given the relevant information in advance. View "Newark Cab Association v. City of Newark" on Justia Law

The Supreme Court may question a university’s decision to suspend a tenured faculty member and must not defer to the university’s procedure for suspending and dismissing tenured faculty members.Marquette University suspended Dr. John McAdams, a tenured faculty member, because of a blog post. McAdams brought a breach of contract claim against the University, arguing that the parties' contract guaranteed the right to be free of disciplinary repercussions under the circumstances of this case. The University argued that courts may not question its decision so long as the University did not abuse its discretion, infringe any constitutional rights, act in bad faith, or engage in fraud. The circuit court concluded that it must defer to the University’s resolution of McAdams’ claims. The Supreme Court reversed, holding (1) the University’s internal dispute resolution process is not a substitute for McAdams’ right to sue in Wisconsin courts; and (2) the University breached its contract with McAdams when it suspended him for engaging in activity protected by the contract’s guarantee of academic freedom. View "McAdams v. Marquette University" on Justia Law

Kenosha used Comsys as its information-technology department. Comsys had its offices inside City Hall and stored its electronic information on the City’s servers. Their contract automatically renewed from year to year unless terminated, and provided that either party “shall have the right, with or without cause, to terminate the Agreement by written notice delivered to the other party at least twelve (12) calendar months prior to the specified effective date of such termination.” In 2014, hostilities broke out between the parties: a Comsys employee because a city employee with plans to bring the IT department in-house and there were allegations of stolen email and a search of the servers. The City’s Common Council voted to end the contract. The Mayor delivered formal notice days later. The contract ended a year later. Comsys sued, alleging First and Fourth Amendment violations. The district court dismissed several claims on the pleadings and dismissed the Council’s members on the ground of legislative immunity but denied motions for summary judgment on the First and Fourth Amendment claim and official immunity claims by the Mayor, City Administrator, and the City Manager. The Seventh Circuit reversed as to those officials, finding that they did not violate clearly established law and cannot be ordered to pay damages under 42 U.S.C. 1983, and noting that trying to isolate contract administration from speech may be impossible in this situation. View "Comsys Inc. v. Pacetti" on Justia Law

Minnesota law provides that “the dissolution or annulment of a marriage revokes any revocable . . . beneficiary designation . . . made by an individual to the individual’s former spouse,” Minn. Stat. 524.2–804. If an insurance policyholder does not want that result, he may rename the ex-spouse as beneficiary. Sveen and Melin were married in 1997. Sveen purchased a life insurance policy, naming Melin as the primary beneficiary and designating his children from a prior marriage as contingent beneficiaries. The marriage ended in 2007. The divorce decree did not mention the insurance policy. Sveen did not revise his beneficiary designations. After Sveen died in 2011, Melin and the Sveen children claimed the insurance proceeds. Melin argued that because the law did not exist when the policy was purchased, applying the later-enacted law violated the Contracts Clause. The Supreme Court reversed the Eighth Circuit, holding that the retroactive application of Minnesota’s law does not violate the Contracts Clause. The test for determining when a law crosses the constitutional line first asks whether the state law has “operated as a substantial impairment of a contractual relationship,” considering the extent to which the law undermines the contractual bargain, interferes with a party’s reasonable expectations, and prevents the party from safeguarding or reinstating his rights. If such factors show a substantial impairment, the inquiry turns to whether the state law is drawn in a “reasonable” way to advance “a significant and legitimate public purpose.” Three aspects of Minnesota’s law, taken together, show that the law does not substantially impair pre-existing contractual arrangements. The law is designed to reflect a policyholder’s intent and to support, rather than impair, the contractual scheme. The law is unlikely to disturb any policyholder’s expectations at the time of contracting, because an insured cannot reasonably rely on a beneficiary designation staying in place after a divorce. Divorce courts have wide discretion to divide property upon dissolution of a marriage. The law supplies a mere default rule, which the policyholder can easily undo. View "Sveen v. Melin" on Justia Law