Justia Contracts Opinion Summaries

Articles Posted in Consumer Law
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A California consumer entered into an agreement with an RV manufacturer that stipulated all legal disputes would be resolved in Indiana under Indiana law. The consumer later filed a lawsuit in California under the Song-Beverly Consumer Warranty Act, alleging the RV manufacturer failed to repair or replace a defective motorhome. The manufacturer moved to stay or dismiss the action based on forum non conveniens, arguing that the case should be heard in Indiana. To address concerns about the consumer's rights under the Song-Beverly Act, the manufacturer offered to stipulate that California law would apply to the warranty claims in Indiana.The Superior Court of Los Angeles County granted the manufacturer's motion, stating that the forum selection clause was not unconscionable and that the consumer's rights could be preserved by staying the California action while the Indiana case was pending. The court concluded that if the Indiana court declined to apply the Song-Beverly Act, the consumer could move to lift the stay in California.The California Court of Appeal, Second Appellate District, Division Two, reviewed the case and found that the lower court erred in its application of the legal standard. The appellate court held that the stipulation to apply California law in Indiana did not cure the unconscionability of the forum selection clause. The court emphasized that the agreement, as written, was void and against public policy because it attempted to waive unwaivable rights under the Song-Beverly Act. The appellate court concluded that severing the unconscionable terms would condone an illegal practice and that the lower court's solution violated California public policy.The Court of Appeal reversed and remanded the case, ordering the trial court to deny the motion to dismiss or stay. The appellate court's decision underscores the importance of protecting California consumers' unwaivable statutory rights and ensuring that forum selection clauses do not undermine those rights. View "Hardy v. Forest River, Inc." on Justia Law

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Chesapeake Exploration, LLC (Chesapeake) and Morton Production Company, LLC (Morton) entered into a joint operating agreement for oil and gas development in Converse County, Wyoming. Morton sued Chesapeake for breach of contract, violation of the Wyoming Royalty Payment Act (WRPA), and conversion after Chesapeake adjusted Morton’s ownership interest and withheld production proceeds. Chesapeake counterclaimed for breach of contract, unjust enrichment, and breach of the implied covenant of good faith and fair dealing. The district court granted summary judgment in favor of Morton.Chesapeake appealed, challenging the district court’s summary judgment on Morton’s breach of contract claim, the supplemental decision on Chesapeake’s counterclaims and affirmative defenses, and the determination that Chesapeake violated the WRPA. The Wyoming Supreme Court reviewed the case.The Wyoming Supreme Court affirmed the district court’s decision. It held that Chesapeake breached the contract by adjusting Morton’s ownership interest and billing for costs beyond the twenty-four-month limitation period specified in the 1985 COPAS Form, which was incorporated into the joint operating agreement. The court found the language in the COPAS Form unambiguous and declined to consider extrinsic evidence. The court also upheld the district court’s use of Rule 60(a) to correct a clerical error in its original order and found that Chesapeake’s counterclaims were properly dismissed as they were rendered moot by the summary judgment on Morton’s claims. Additionally, the court ruled that Chesapeake violated the WRPA by withholding production proceeds without placing the disputed funds in escrow, as required by the statute. View "Chesapeake Exploration, LLC, v. Morton Production Company, LLC" on Justia Law

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Phillip and Sara Alig, along with Daniel and Roxanne Shea, filed a class action lawsuit against Quicken Loans, Inc. (now Rocket Mortgage, LLC) and Title Source, Inc. (now Amrock, Inc.). They alleged that during the refinancing of their home mortgage loans, they paid for appraisals that were not independent because the defendants had provided appraisers with the homeowners' estimates of their homes' value. They claimed this made the appraisals worthless and asserted statutory, breach of contract, and conspiracy claims.The United States District Court for the Northern District of West Virginia certified a class of West Virginia citizens who refinanced mortgage loans with Quicken and received appraisals that included an estimate of the property's value. The court granted summary judgment to the plaintiffs, awarding over $10.6 million in damages. The court found that the plaintiffs had established a conspiracy between the defendants.The United States Court of Appeals for the Fourth Circuit affirmed the class certification and summary judgment on the statutory and conspiracy claims but vacated and remanded the breach of contract claim. The Supreme Court vacated the Fourth Circuit's judgment and remanded the case for reconsideration in light of TransUnion LLC v. Ramirez, which emphasized that every class member must have Article III standing to recover damages.On remand, the district court reinstated its original judgment, stating that TransUnion did not affect the class's standing. However, the Fourth Circuit concluded that the plaintiffs failed to establish that class members suffered concrete harm from the defendants' actions. The court reversed the district court's judgment certifying the class and awarding damages, affirming the judgment on the named plaintiffs' statutory and conspiracy claims, and vacating the judgment on the breach of contract claim, remanding it for further proceedings. View "Alig v. Rocket Mortgage, LLC" on Justia Law

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In 2007, the Hobish Irrevocable Trust purchased a universal life insurance policy from AXA Equitable Life Insurance Company to insure Toby Hobish. The policy provided a $2 million death benefit and allowed flexible premium payments into a Policy Account, from which monthly cost of insurance (COI) charges were deducted. In 2015, AXA announced an increase in COI charges for certain policies, including the Trust's, leading to a significant rise in the monthly COI charge. The Trust surrendered the policy in 2016, receiving the remaining account balance minus a surrender fee.The plaintiffs filed a lawsuit in the Supreme Court, alleging breach of contract and violation of General Business Law § 349. They claimed the COI rate increase was not equitable to all policyholders of a given class and that AXA had misled elderly consumers about the likelihood of such increases. The Supreme Court denied both parties' motions for summary judgment on liability, finding the term "a given class" ambiguous and requiring further examination of extrinsic evidence. The court also dismissed several of plaintiffs' damages theories, including claims for the full value of the death benefit and restitutionary damages.The Appellate Division affirmed the Supreme Court's rulings, agreeing that the term "a given class" was ambiguous and that the extrinsic evidence did not resolve this ambiguity. The court also upheld the dismissal of plaintiffs' damages claims, including compensatory, consequential, and punitive damages, and limited punitive damages under General Business Law § 349 to three times the actual damages.The New York Court of Appeals affirmed the Appellate Division's decision, agreeing that the term "a given class" was ambiguous and that the extrinsic evidence did not resolve this ambiguity. The court also upheld the dismissal of plaintiffs' damages claims and confirmed that punitive damages under General Business Law § 349 are limited to the statutory treble damages. View "Hobish v AXA Equit. Life Ins. Co." on Justia Law

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Campbell and Jennie Clegg purchased first-class round-trip tickets from American Airlines for themselves and three family members for travel between Albany, New York, and San Francisco, California, in May 2022. They agreed to American’s Conditions of Carriage, which required check-in at least 45 minutes before departure. The night before their flight, the Cleggs were unable to check in online and were instructed to check in at the airport. They arrived at the airport at 4:47 a.m. for their 6:04 a.m. flight but were unable to check in due to a computer system issue. Consequently, they missed their flight and later found that their return flight was canceled. They did not receive a refund for either flight.The Cleggs filed a complaint in the Cumberland County Superior Court, alleging breach of contract, fraud, and breach of the Maine Unfair Trade Practices Act. The court granted American Airlines' motion for summary judgment, ruling that the Cleggs’ claims were preempted by the Airline Deregulation Act. The Cleggs appealed the decision.The Maine Supreme Judicial Court reviewed the case and vacated the Superior Court's judgment in part. The court held that while the Airline Deregulation Act preempts state law claims related to airline services, the Cleggs could pursue a breach of contract claim based on the Conditions of Carriage. The court determined that the Cleggs might be entitled to a refund for their tickets and any extras, as specified in the Conditions of Carriage. However, the court affirmed that the Cleggs could not recover consequential or punitive damages, attorney fees, or costs, as these were preempted by the Airline Deregulation Act. The case was remanded for further proceedings consistent with this opinion. View "Clegg v. American Airlines, Inc." on Justia Law

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Plaintiff leased a new 2021 Volkswagen Atlas from Galpin Volkswagen, LLC, and experienced several issues with the vehicle, including problems with the check engine and airbag lights, ignition, and door locks. After multiple repair attempts and delays due to a backordered part, the plaintiff requested Volkswagen Group of America, Inc. (VWGA) to repurchase the vehicle. VWGA offered to repurchase the vehicle, including reimbursement for payments made and additional attorney fees, but included a financial confidentiality provision in the offer. Plaintiff did not accept the offer and continued to use the vehicle.The Superior Court of Los Angeles County granted summary judgment in favor of the defendants, VWGA and Galpin, on the plaintiff’s breach of warranty claims. The court found that VWGA’s offer to repurchase the vehicle was prompt and compliant with the Song-Beverly Act, including the calculation of the mileage offset and the inclusion of a financial confidentiality provision. The court concluded that the plaintiff could not prove damages for the breach of the implied warranty of merchantability, as VWGA’s offer exceeded the restitution amount required by the Act.The Court of Appeal of the State of California, Second Appellate District, Division Three, affirmed the lower court’s judgment. The appellate court held that VWGA’s offer was prompt and compliant with the Act, including the use of the vehicle’s agreed value for the mileage offset calculation. The court also determined that the financial confidentiality provision was permissible under the Act. As a result, the plaintiff could not prove the necessary elements for breach of express or implied warranty claims, and the summary judgment in favor of the defendants was affirmed. View "Carver v. Volkswagen Group of America, Inc." on Justia Law

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Steven Andrew Clem, the former owner of a defunct homebuilding company, appealed a judgment regarding the nondischargeability of a debt incurred from a failed home construction project. An arbitration panel had found Clem personally liable to LaDainian and LaTorsha Tomlinson for breach of contract and violations of the Texas Deceptive Trade Practices Act (DTPA). Clem subsequently filed for Chapter 7 bankruptcy, and the Tomlinsons initiated an adversary proceeding. The bankruptcy court determined that Clem had obtained over $660,000 from the Tomlinsons through false representation or false pretenses, making the debt nondischargeable under 11 U.S.C. § 523(a)(2)(A).The bankruptcy court's decision was based on findings that Clem had committed fraud by nondisclosure during the performance of the contract, including failing to inform the Tomlinsons about the switch from concrete piers to helical steel piers, failing to disclose the puncturing of a water line, and misrepresenting the purchase of a Builder’s Risk insurance policy. The court also found that Clem failed to provide proper accounting for the Tomlinsons' funds. The district court affirmed the bankruptcy court's decision.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court concluded that the bankruptcy court erred in not applying collateral estoppel to the arbitration findings, which had already determined that Clem's actions did not constitute knowing violations of the DTPA or fraud. The appellate court found that the issues of fraudulent misrepresentation and nondisclosure had been fully litigated in the arbitration, and the arbitration panel had explicitly found no fraud or knowing DTPA violations.The Fifth Circuit reversed the bankruptcy court's judgment and rendered judgment in favor of Clem, holding that the Tomlinsons were collaterally estopped from relitigating the fraud claims and that Clem's conduct did not meet the criteria for nondischargeability under Section 523(a)(2)(A). View "Clem v. Tomlinson" on Justia Law

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In January 2019, Raymond Robinson and his son sued Emerald Homes, L.L.C., and 21st Mortgage Corporation in the Baldwin Circuit Court. Robinson had contracted with Emerald to purchase a mobile home, financed by a loan from 21st Mortgage. After tearing down his existing house in preparation for the new mobile home, the loan was not completed, allegedly due to Emerald and/or 21st Mortgage's refusal to finalize the transaction. The complaint included claims of breach of contract, misrepresentation, suppression, and negligence, seeking compensatory and punitive damages.The trial court compelled arbitration for claims against Emerald and granted summary judgment in favor of 21st Mortgage on Raymond's claims. The case proceeded to a jury trial on Robinson's claims against 21st Mortgage. The jury found in favor of Robinson on promissory fraud and the tort of outrage, awarding him $2,980,000 in total damages. 21st Mortgage's post-trial motions, including for judgment as a matter of law (JML), were denied.The Supreme Court of Alabama reviewed the case. It held that Robinson did not present substantial evidence of promissory fraud, as he failed to prove that 21st Mortgage had no intention to perform the loan promise at the time it was made or intended to deceive him. The court also found that Robinson did not meet all the conditions required for the loan, and the failure to close the loan was not due to any fraudulent intent by 21st Mortgage.Regarding the tort of outrage, the court held that the conduct of 21st Mortgage did not meet the extreme and outrageous standard required for such a claim. The court reversed the trial court's judgment and remanded the case for further proceedings consistent with its opinion. View "21st Mortgage Corporation v. Robinson" on Justia Law

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Medical Recovery Services, LLC (MRS), a medical debt collector, sought to collect $460 from Katrina Melanese (now Katrina Sullivan) for an emergency room visit in September 2017. Sullivan was treated at Eastern Idaho Regional Medical Center (EIRMC) by Intermountain Emergency Physicians (IEP), which did not collect insurance information directly from patients. Sullivan provided her insurance information to EIRMC, but IEP billed her outdated insurance information from a previous visit. When the outdated insurers denied the claim, IEP assigned the bill to MRS for collection.The magistrate court ruled in favor of Sullivan, finding that an implied condition precedent existed, requiring IEP to bill Sullivan’s insurance before seeking payment from her. The district court affirmed the magistrate court’s decision, agreeing that the condition precedent was not satisfied because IEP did not make reasonable efforts to obtain Sullivan’s correct insurance information.The Supreme Court of Idaho reviewed the case and affirmed the district court’s decision. The court held that an implied-in-fact contract existed between IEP and Sullivan, and that the contract included a condition precedent requiring IEP to bill Sullivan’s insurance before seeking payment from her. The court found substantial and competent evidence supporting the magistrate court’s finding of the condition precedent, noting that Sullivan provided her insurance information to EIRMC and that IEP’s general practice was to bill insurance before seeking payment from patients. The court also rejected MRS’s argument that the federal Emergency Medical Treatment and Labor Act (EMTALA) prevented the application of the condition precedent in emergency room settings.The court concluded that IEP failed to make reasonable efforts to satisfy the condition precedent and, therefore, MRS could not collect the debt from Sullivan. The court awarded attorney fees and costs on appeal to Sullivan. View "Medical Recovery Services, LLC v. Melanese" on Justia Law

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In 2014, Casey Moyer entered into an agreement with Doug Lasher Construction, Inc. for the construction and purchase of a new home, which was substantially completed in November 2014. Over the next six-and-a-half years, Moyer repeatedly informed Lasher Construction about issues with the home, particularly water leakage, and received assurances that the issues would be fixed. However, the problems persisted, and Moyer and Caitlin Bower filed suit against Lasher Construction in November 2021, alleging breach of contract and violation of the Idaho Consumer Protection Act.The District Court of the Fourth Judicial District of Idaho granted summary judgment in favor of Lasher Construction, ruling that all claims were time-barred under Idaho Code sections 5-241(b) and 5-216, which require that claims arising out of a contract for the construction of real property be brought within five years of the final completion of construction. The court also found that the Idaho Consumer Protection Act claims were time-barred under the two-year statute of limitations provided by Idaho Code section 48-619. The court rejected the homeowners' arguments for equitable estoppel and the repair doctrine, concluding that they failed to show that Lasher Construction prevented them from pursuing their claims within the statutory period.The Supreme Court of Idaho affirmed the district court's decision. The court reaffirmed that the repair doctrine is not available in Idaho and upheld the district court's conclusion that the homeowners failed to establish the elements of equitable estoppel. The court also agreed that the text messages and the July 2, 2021, response to the NORA demand did not constitute enforceable independent contracts. Lasher Construction was awarded attorney fees and costs on appeal as the prevailing party. View "Moyer v. Lasher Construction, Inc." on Justia Law