Justia Contracts Opinion Summaries

The Supreme Court reversed the portion of the order of the circuit court applying prejudgment interest to the jury verdict in this lawsuit alleging breach of express and implied warranties and other claims but otherwise affirmed, holding that the circuit court erred in its assessment of prejudgment interest.Plaintiff sued Defendant, a car dealership, alleging breaches of consumer laws and contract principles. During discovery, DCW withheld requested documents even after the circuit court imposed monetary sanctions. When the requested documents appeared as an exhibit in DCW's motion for summary judgment the circuit court denied the motion and sanctioned DCW. The Supreme Court affirmed in part and reversed and remanded in part, holding that the circuit court (1) did not abuse its discretion by issuing the sanction, approving the jury's verdict, and ordering DCW to pay attorney fees and costs; but (2) erred by applying prejudgment interest to the entire verdict. View "Dan's Car World, LLC v. Delaney" on Justia Law

This appeal involved a challenge to how Geico General Insurance Company (“GEICO”) processed insurance claims under 21 Del. C. 2118. Section 2118 provided that certain motor vehicle owners had to obtain personal injury protection (“PIP”) insurance. Plaintiffs, all of whose claims for medical expense reimbursement under a PIP policy were denied in whole or in part, were either GEICO PIP policyholders who were injured in automobile accidents or their treatment providers. Plaintiffs alleged GEICO used two automated processing rules that arbitrarily denied or reduced payments without consideration of the reasonableness or necessity of submitted claims and without any human involvement. Plaintiffs argued GEICO’s use of the automated rules to deny or reduce payments: (1) breached the applicable insurance contract; (2) amounted to bad faith breach of contract; and (3) violated Section 2118. Having reviewed the parties’ briefs and the record on appeal, and after oral argument, the Delaware Supreme Court affirmed the Superior Court’s ruling that the judiciary had the authority to issue a declaratory judgment that GEICO’s use of the automated rules violated Section 2118. The Supreme Court also affirmed the Superior Court’s judgment as to the breach of contract and bad faith breach of contract claims. The Court concluded, however, that the issuance of the declaratory judgment was improper. View "GEICO General Insurance Company v. Green" on Justia Law

The Consumer Financial Protection Bureau (“CFPB”) sued Ocwen Financial Corporation (“Ocwen”) and several of its affiliates claiming some of the company's mortgage-servicing practices violated federal law. The CFPB’s suit was resolved by a settlement agreement that was memorialized in a formal consent judgment. The CFPB sued Ocwen a second time, alleging various consumer-protection law violations occurring between January 2014 and February 2017. The district court granted summary judgment to Ocwen on res judicata grounds, reasoning that the 2013 action barred the lawsuit.The CFPB contends that the 2013 action’s res judicata effect should be controlled by that case’s consent judgment, not its complaint and that the underlying settlement agreement shows that the parties didn’t intend to preclude a challenge to any conduct occurring from 2014 onwards. The court reasoned that determining the preclusive effect of a consent judgment requires applying contract law principles. The court found that the res judicata effects of an earlier lawsuit resolved by a consent judgment are measured by reference to the terms of the consent judgment, rather than the complaint. Thus, CFPB may sue Ocwen for alleged violations that occurred between January 2014 and February 2017, if the claims are not covered by the consent judgment’s servicing standard, monitoring, and enforcement regime. View "Consumer Financial Protection Bureau v. Ocwen Financial Corporation, et al." on Justia Law

The Supreme Court affirmed the order of the circuit court denying Petitioner's motion to compel arbitration, holding that the circuit court did not err.Respondents Louise McGraw and Charlotte Rodgers, by and through their daughters, Nancy Reuschel and Loretta Holcomb, filed a complaint against Petitioner, Chancellor Senior Management, Ltd., arguing that Petitioner defrauded their mothers by making misrepresentations and misleading statements and concealing material facts, in violation of the West Virginia Consumer Credit and Protection Act (WVCCPA). See W. Va. Code 46A-1-101 to -8-102. Petitioner filed a motion to compel arbitration based on an arbitration provision set forth in the residency agreement Reuschel and Holcomb signed on behalf of their motions. The circuit court denied the motion, concluding that the agreement could not be enforced as written. The Supreme Court affirmed, holding that the circuit court did not err in determining that the arbitration agreement could not be enforced as written because it did not "comply with its own stated standards." View "Chancellor Senior Management, Ltd. v. McGraw" on Justia Law

The Supreme Court accepted certified questions from the United States Court of Appeals for the Ninth Circuit in this arbitration dispute, holding that direct benefits estoppel cannot be invoked in a garnishment action to bind the judgment creditor to the terms of the contract because applying the doctrine in this context would contravene Arizona's statutory garnishment scheme.Specifically, the Court answered that in a garnishment action by a judgment creditor against the judgment debtor's insurer claiming that coverage is owed under an insurance policy where the judgment creditor is not proceeding on an assignment of rights, the insurer cannot invoke the doctrine of direct benefits estoppel to bind the judgment creditor to the terms of the insurance contract. View "Benson v. Casa De Capri Enterprises, LLC" on Justia Law

Caldwell signed an agreement to obtain a bail bond for her friend and was unable to pay the premiums. BBBB began collection efforts. Caldwell filed a putative class action. The trial court enjoined BBBB from enforcing bail bond premium financing agreements entered into by Caldwell and other similarly situated persons who had cosigned on behalf of an arrestee without having first been provided with notice under Civil Code 1799.91: if a creditor obtains the signature of more than one person on a consumer credit contract, and the signatories are not married, the creditor must provide the cosigner with a specified cosigner notice describing the financial risks of the transaction.The court of appeal affirmed, rejecting BBBB’s argument that because the Legislature adopted a comprehensive scheme to regulate the conduct of bail bond licensees, it intended to exclude from such transactions the consumer protections applicable to consumer credit contracts. A bail bond premium financing agreement between a cosigner and the bail bond agent is a consumer credit contract subject to the notice provision of section 1799.91 and related statutory protections. While acknowledging that it decision may upend business expectations for bail bond agents, the court declined to apply the injunction only on a prospective basis. View "BBBB Bonding Corp. v. Caldwell" on Justia Law

Plaintiff filed suit under the Electronic Fund Transfer Act (EFTA) against JPMorgan Chase Bank, alleging that she was the victim of unauthorized electronic fund transfers from her checking account at Chase. Chase reimbursed plaintiff for some of those losses, but refused to repay $300,000 of the funds stolen from her account. The district court dismissed plaintiff's complaint at the pleading stage on the ground that her lengthy delay in reporting the unauthorized withdrawals to Chase barred her claims as a matter of law.The Ninth Circuit concluded that the district court misinterpreted the relevant provision of the EFTA and reversed the dismissal of plaintiff's EFTA claim. The panel concluded that, under 15 U.S.C. 1693g(a), a consumer may be held liable for unauthorized transfers occurring after the 60-day period only if the bank establishes that those transfers "would not have occurred but for the failure of the consumer" to timely report the earlier unauthorized transfer reflected on her bank statement. In this case, plaintiff met her pleading burden by alleging facts plausibly suggesting that even if she had reported an unauthorized transfer within the 60-day period, the subsequent unauthorized transfers for which she sought reimbursement would still have occurred. The panel affirmed the district court's dismissal of plaintiff's state law claims, concluding that plaintiff's claim for breach of contract failed because a Privacy Notice appended to her Deposit Account Agreement did not impose any substantive duties on Chase. Furthermore, plaintiff's claim for breach of the implied covenant of good faith and fair dealing failed because the Deposit Account Agreement expressly permitted Chase to close plaintiff’s accounts. View "Widjaja v. JPMorgan Chase Bank, N.A." on Justia Law

Plaintiff Canuto Martinez successfully sued a car dealership, Defendant Larry H. Miller Chrysler Dodge Jeep Ram 104th (“LHM”), for violating section 6-1-708(1)(a), C.R.S. (2021), of the Colorado Consumer Protection Act (“CCPA”). The issue this case presented for the Colorado Supreme Court's review was whether the judgment was final for purposes of appeal when the district court determined that Martinez, as the prevailing plaintiff, was entitled to an award of attorney fees under the CCPA, but the court had not yet determined the amount of those fees. The Supreme Court resolved the tension between Baldwin v. Bright Mortgage Co., 757 P.2d 1072, 1074 (Colo. 1988) and Ferrell v. Glenwood Brokers, Ltd., 848 P.2d 936, 940–42 (Colo. 1993) by reaffirming the bright-line rule established in Baldwin: a judgment on the merits is final for purposes of appeal notwithstanding an unresolved issue of attorney fees. To the extent the Court's opinion in Ferrell deviated from Baldwin, "its approach lacks justification and generates uncertainty, thus undermining the purpose of Baldwin’s bright-line rule." The Court concluded that both litigants and courts were best served by the bright-line rule adopted in Baldwin. The Court therefore overruled Ferrell and the cases that followed it to the extent those cases deviated from Baldwin’s rule concerning the finality of a judgment for purposes of appeal. Applying the Baldwin rule here, the Court affirmed the judgment of the court of appeals dismissing LHM’s appeal in part as untimely, though under different reasoning. View "LHM Corp v. Martinez" on Justia Law

Sandra Gleason filed suit against Charles Halsey and Jim McDonough d/b/a Jim McDonough Home Inspection ("McDonough"), seeking to recover for damage that Gleason allegedly incurred as a result of defendants' allegedly negligent and/or fraudulent conduct associated with Gleason's purchase of a house from Halsey and McDonough's inspection of the house. Although Gleason's claims against Halsey and McDonough involve different legal theories, the issue underlying the claims was essentially the same: whether the house was inspected. The issue underlying Gleason's claims against Halsey was whether McDonough's inspection of the house could be credited to Gleason for purposes of determining whether Gleason may assert an argument under the health or safety exception to the doctrine of caveat emptor; the issue underlying Gleason's claims against McDonough appeared to be whether McDonough owed Gleason a duty in inspecting the house or in consulting with Gleason as she personally inspected the house. The Alabama Supreme Court found that Gleason's claims against Halsey, the judgment on which was certified as final under Rule 54(b), and Gleason's claims against McDonough that remain pending in the circuit court "are so closely intertwined that separate adjudication would pose an unreasonable risk of inconsistent results." As a result, the Court concluded that the circuit court exceeded its discretion in certifying the June 23, 2021, order granting Halsey's summary-judgment motion as final. The Court therefore dismissed the appeal. View "Gleason v. Halsey" on Justia Law

The federally-recognized Native American Tribe (in California) started an online lending business, allegedly operated by non-tribal companies owned by non-tribal Defendants on non-tribal land. The Plaintiffs are Virginia consumers who received online loans from tribal lenders while living in Virginia. Although Virginia usury law generally prohibits interest rates over 12%, the interest rates on Plaintiffs’ loans ranged from 544% to 920%. The Plaintiffs each electronically signed a “loan agreement,” “governed by applicable tribal law,” and containing an “Arbitration Provision.” The borrowers defaulted and brought a putative class action against tribal officials and two non-members affiliated with the tribal lenders.The district court denied the defendants’ motion to compel arbitration and motions to dismiss on the ground of tribal sovereign immunity except for a Racketeer Influenced and Corrupt Organizations Act (RICO) claim. The Fourth Circuit affirmed. The choice-of-law clauses of this arbitration provision, which mandate exclusive application of tribal law during any arbitration, operate as prospective waivers that would require the arbitrator to determine whether the arbitration provision impermissibly waives federal substantive rights without recourse to federal substantive law. The arbitration provisions are unenforceable as violating public policy. Substantive state law applies to off-reservation conduct, and although the Tribe itself cannot be sued for its commercial activities, its members and officers can be. Citing Virginia’s interest in prohibiting usurious lending, the court refused to enforce the choice-of-law provision. RICO does not give private plaintiffs a right to injunctive relief. View "Hengle v. Treppa" on Justia Law