Justia Contracts Opinion Summaries

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

Exercising jurisdiction over Defendant-insurer under the circumstances of this case was permitted by Connectictut’s corporate long arm statute, Conn. Gen. Stat. 33-929(f)(1), and comported with the due process clause of the Fourteenth Amendment.Defendant issued an automobile insurance policy covering a vehicle driven by Insured. The policy was written in New York at Defendant’s principal place of business, and Defendant did not direct or participate in any business transactions in Connecticut at the time. The coverage territory of the policy included Connecticut. Insured’s vehicle later collided with a vehicle occupied by Plaintiffs. A judgment was rendered against Insured in favor of Plaintiffs. Defendant failed to defend Insured or to indemnify him for the judgment rendered against him. Plaintiffs then brought this action against Defendant. Defendant moved to dismiss the action for lack of personal jurisdiction. The trial court granted the motion to dismiss. The Supreme Court reversed, holding that Defendant’s agreement to defend and indemnify Insured established personal jurisdiction under the long arm statute and that subjecting Defendant to the jurisdiction of this state comported with the due process clause of the Fourteenth Amendment. View "Samelko v. Kingstone Insurance Co." on Justia Law

This case centered on an agreement between the City of Rawlins, Wyoming, and Dirty Boyz Sanitation Services (Dirty Boyz) for local garbage collection and disposal. About two years after the parties executed the agreement, the State of Wyoming required Rawlins to close its landfill. Soon after, Rawlins opened a transfer station to process garbage for transport to a landfill elsewhere. Later, Rawlins adopted a flow-control ordinance requiring that all locally licensed garbage haulers take collected garbage to Rawlins’ transfer station. Dirty Boyz argued the ordinance violated the Contract Clause of the United States Constitution, and was preempted by the Federal Aviation Administration and Authorization Act (FAAAA). The district court granted summary judgment in favor of Rawlins. Finding no reversible error, the Tenth Circuit affirmed the grant of summary judgment in Rawlins' favor. View "Dirty Boyz Sanitation Service v. City of Rawlins" on Justia Law

University Park hired Linear as its Village Manager through May 2015, concurrent with the term of its Mayor. In October 2014 the Village extended Linear’s contract for a year. In April 2015 Mayor Covington was reelected. In May, the Board of Trustees decided that Linear would no longer be Village Manager. His contract provides for six months’ severance pay if the Board discharges him for any reason except criminality. The Village argued that the contract’s extension was not lawful and that it owes Linear nothing. The district court agreed and rejected Linear’s suit under 42 U.S.C. 1983, reasoning that 65 ILCS 5/3.1-30-5; 5/8-1-7 prohibit a village manager's contract from lasting beyond the end of a mayor’s term. The Seventh Circuit affirmed on different grounds. State courts should address the Illinois law claims. Linear’s federal claim rests on a mistaken appreciation of the role the Constitution plays in enforcing state-law rights. Linear never had a legitimate claim of entitlement to remain as Village Manager. His contract allowed termination without cause. His entitlement was to receive the contracted-for severance pay. Linear could not have a federal right to a hearing before losing his job; he has at most a right to a hearing to determine his severance pay--a question of Illinois law. View "Linear v. Village of University Park" on Justia Law

In this case alleging breach of contract, fraud, retaliation, constructive discharge, and invasion of privacy, the Supreme Court held (1) in Ohio, punitive damages may not be awarded for a breach of contract; (2) a party to a contract does not breach the implied duty of good faith and fair dealing by seeking to enforce the agreement as written or by acting in accordance with its express terms, and the implied duty is not breached unless a specific obligation imposed by the contract is not met; (3) a release of liability is an absolute bar to a later action on any claim encompassed within it absent a showing of fraud, duress, or other wrongful conduct in procuring it, and a party must prove duress by clear and convincing evidence; (4) the prevention of performance doctrine is not a defense to a release of liability and therefore cannot be asserted as a defense to a release; and (5) a claimant cannot rely on predictions or projections that relate to future performance or that are made to third parties to establish a fraud claim. View "Lucarell v. Nationwide Mutual Insurance Co." on Justia Law

Indiana law previously provided that, when school districts needed to reduce their teaching staffs, tenured teachers that were qualified for an available position had a right to be retained over non-tenured teachers. A 2012 amendment eliminated that right and orders school districts to base layoff choices on performance reviews without regard for tenure status. Madison Consolidated Schools relied on the new law to lay off Elliott, a teacher who earned tenure 14 years before the new law took effect, while it retained non-tenured teachers in positions for which Elliott was qualified. Elliott, who had been elected as president of his union, sued, claiming that the amendment violated the Contract Clause when applied to him. The Seventh Circuit affirmed summary judgment in Elliott’s favor. The statute, not the annual contracts, granted Elliott his contractual tenure rights, which became enforceable the year Elliott earned tenure. A decrease in job security necessarily impairs his rights under that contract. The change substantially disrupted teachers’ important and reasonable reliance interests. Improving teacher quality and public-education outcomes are important public interests of the highest order but even important goals and good intentions do not justify this substantial impairment of the tenure contract for already-tenured teachers. View "Elliott v. Board of School Trustees of Madison Consolidated Schools" on Justia Law

Robbin Taylor filed a statement of charges seeking recall of Black Diamond City council member Patricia Pepper. In November 2015, Pepper defeated opponent Ron Taylor (husband of Robbin Taylor) in an election for Black Diamond City Council in King County. Beginning in January 2016, a chasm developed with Mayor Carol Benson and council members Tamie Deady and Janie Edelman on one side, and a majority of the city council - Pepper, Erika Morgan, and Brian Weber - on the other. After Pepper, Morgan, and Weber passed R-1069, they voted to fire city attorney Carol Morris. Upon passing R-1069, Pepper and a majority of the council made decisions to alter contracts regarding the Master Development Review Team (MDRT) contracts for two large development projects planned in Black Diamond that had been approved by Mayor Benson and former council members. Mayor Benson hired emergency interim city attorney Yvonne Ward. Ward submitted two memoranda to the council, concluding that R-1069 violated the Black Diamond Municipal Code (BDMC) and the Open Public Meetings Act (OPMA), chapter 42.30 RCW. The council had also received advice from prior city attorney Morris and from the city's risk management pool that the resolution could create liability for the city if council members violated the OPMA. Ultimately, the council's decision to enact R-1069 and revisit the MDRT contracts, among other actions, led to a lawsuit: MDRT contractor CCD Black Diamond Partners LLC (Oakpointe) filed suit against the city and council members Pepper, Morgan, and Weber, alleging violations of the OPMA, which has led to litigation and costs for the city. Pepper was a member of council standing committees; allegations were made that Pepper, Morgan, and Weber held secret council and standing committee meetings conducting city business in violation of the OPMA. After approximately a year and a half of tensions, Taylor filed a statement of charges with the King County Elections Division, requesting Pepper's recall. The superior court ruled that four of those charges were factually and legally sufficient to support a recall petition. Pepper appealed. After review, the Washington Supreme Court affirmed the trial court's decision with regard to the first three charges, but reversed with regard to the fourth charge. View "In re Recall of Pepper" on Justia Law

The Supreme Court affirmed the district court’s dismissal of Plaintiffs’ putative class action lawsuit in which they alleged that Salt Lake City unjustly enriched itself by fining them for failing to use a parking meter at a time when there were no longer any parking meters in the City - only pay stations - but the City had not yet prohibited parking without paying at a pay station. Plaintiffs also alleged that the City’s notices violated due process. The district court granted the City’s motion to dismiss. The Supreme Court affirmed, holding (1) the City’s notices were sufficient to apprise Plaintiffs of both their right to challenge their parking tickets and their opportunity for a hearing on that challenge; and (2) because Plaintiffs did not exhaust their legal remedies before seeking to challenge their tickets through an equitable action Plaintiffs failed to state an equitable enrichment claim. View "Bivens v. Salt Lake City" on Justia Law

Under 42 U.S.C. 1485, the USDA's Rural Housing Service (RHS) makes loans for construction of affordable rental housing. From 1972-1982, each of 10 limited partnerships (with a common general partner, Olsen) entered into a 50-year loan agreement that stated that each borrower could pay off the loan and convert its properties to conventional housing after 15 or 20 years. The 1987 Emergency Low Income Housing Preservation Act, 42 U.S.C. 1472(c)), provided that before accepting prepayment, the USDA must attempt to enter into an agreement with the borrower. In 2002, Olsen was negotiating to sell to a nonprofit organization. He notified the RHS of “intent . . . to convert [some] units into conventional housing” and sought approval to pay off the mortgages. RHS responded with a checklist. Olsen did not proceed; the potential acquirer decided against purchasing the properties. In 2011, Olsen submitted more definite prepayment requests. RHS responded with an incentive offer concerning four properties, which Olsen accepted, remaining in the program. For three other properties, RHS informed Olsen that prepayment was not an option. Olsen purportedly believed that pursuing prepayment on any properties was futile. He did not submit additional applications. In 2013, the partnerships sued, alleging that the government, through the 1987 enactment or the 2011 correspondence, violated their prepayment rights. The Federal Circuit reversed the Claims Court's dismissal. The 2002 correspondence did not trigger the RHS’s duty to accept prepayment; RHS did not take any steps inconsistent with prepayment. The government did not breach its contractual obligation in 2002. Because the alleged breaches occurred no earlier than 2011, the contract claims are not barred by the six-year limitations period. The Claims Court implicitly premised the dismissal of takings claims on the same erroneous rationale. View "Airport Road Associates, Ltd. v. United States" on Justia Law