Justia Contracts Opinion Summaries

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

The Zylstras purchased their RV from a non-party dealership for $91,559.15. A one-year warranty covered portions of the RV manufactured by DRV. “Written notice of defects subject to warranty coverage must be given to the selling dealer or DRV … within 30 days after the defect is discovered.” The owner is required to take the RV to the selling dealer or factory for repair. Each DRV vehicle is custom-built for the purchaser. The Zylstras took the vehicle in for punch-list items and for warranty repairs. During a subsequent long trip, Zylstra discovered that the black waste tank valve was leaking and that sewage had been leaking into the insulation throughout the RV's underbelly. He could not find a DRV authorized dealer but an independent mobile technician came and completed the repair. After the leak, the Zylstras stopped using the RV out of concern for their health. They contend that it is not, and never has been, fit for its ordinary purpose of recreational use.They filed a complaint alleging breach of express and implied warranty, violation of the Magnuson-Moss Warranty Act (MMWA), and violation of state consumer protection laws. The Seventh Circuit affirmed summary judgment in favor of DRV. Even in the light most favorable to the Zylstras, DRV never had a reasonable opportunity to repair the defects as required under the warranty. View "Zylstra v. DRV, LLC" on Justia Law

After completing MoneyGram's Transfer Send Form, Fisher, a 63-year-old veteran with poor eyesight, initiated Moneygram money transfers at California Walmart stores, one for $2,000 to a Georgia recipient, and another for $1,530 to a Baton Rouge recipient. The funds were delivered to the intended recipients. Fisher never turned over the Send Form to read the Terms and Conditions, which included an arbitration requirement. He would have been unable to read the six-point print without a magnifying glass. Fisher sued MoneyGram, claiming that the transfers were induced by a “scammer,” and that MoneyGram knew its system was used by scammers but failed to warn or protect customers; MoneyGram’s service was used frequently in fraudulent transactions because the money was immediately available at a Walmart store or other MoneyGram outlet. Other services (bank transfers) place a temporary hold on funds to discourage fraudulent transactions. Fisher alleged MoneyGram had been the subject of an FTC injunction, requiring it to maintain a program to protect its consumers.Fisher’s class action complaint cited the unfair competition law. The court of appeal affirmed the denial of MoneyGram’s petition to compel arbitration. The provision was unenforceable as procedurally and substantively unconscionable, and not severable. The small font, placement, and “take it or leave it nature” were “indications” of procedural unconscionability. The one-year limitations period, a requirement that any plaintiff pay arbitration costs and fees, and waiver of attorneys’ fees were substantively unconscionable “in the aggregate.” View "Fisher v. MoneyGram International, Inc." on Justia Law

The United States Court of Appeals for the Tenth Circuit certified a question of law to the Oklahoma Supreme Court on whether Progressive Northern Insurance Company's Underinsured Motorist (UM) Exclusion--which operated to deny uninsured motorist coverage to insureds who recover at least the statutorily mandated minimum in the form of liability coverage--contravened Oklahoma's Uninsured Motorist Statute, codified at 36 O.S. section 3636. The Supreme Court responded "yes:" Because of the sweeping nature of the UM Exclusion contained in the insurance policy at issue, Progressive found a way to entirely avoid providing the promised coverage. "[A]n insurer in Oklahoma cannot deprive its policyholder of uninsured-motorist coverage for which a premium has been paid through an exclusion that effectively erases its policyholder's choice to purchase that coverage in the first place. We conclude that Progressive's UM Exclusion contravenes section 3636 and is therefore void as against public policy." View "Lane v. Progressive Northern Ins. Co." on Justia Law

Craig Stark entered into a contract with McCarthy Corporation to construct a storage facility for recreational vehicles and boats. The relationship turned sour after McCarthy sent Stark an invoice for work Stark believed he had already paid for in full. After the parties were unable to resolve their dispute, Stark terminated McCarthy’s contract. McCarthy then filed a lien against Stark’s property and brought suit for breach of contract and to foreclose its lien. Stark, Stark Investment Group, and U.S. Bank, Stark’s construction lender on the project, counterclaimed for breach of contract, breach of the implied covenant of good faith and fair dealing, fraudulent misrepresentation, slander of title by the recording of an unjust lien, and breach of the Idaho Consumer Protection Act (“ICPA”). After a bench trial, the district court largely agreed with Stark's counterclaims and dismissed McCarthy's complaint. McCarthy appealed the district court’s findings, damages award, and attorney fees award. Finding no reversible error, the Idaho Supreme Court affirmed the district court's holdings that McCarthy breached the contract between the parties and McCarthy violated the ICPA. View "McCarthy Corporation v. Stark Investment Group" on Justia Law

Stafford used his third-party insurance coverage to purchase prescription drugs from Rite Aid’s pharmacies. Rite Aid submits a claim for a prescription drug to an insurance company through a “pharmacy benefits manager” (PBM). The claim form that Rite Aid submits includes the “usual and customary” price of the relevant prescription drug.Stafford brought a class action, alleging that Rite Aid fraudulently inflated the reported prices of prescription drugs, which resulted in class members paying Rite Aid a higher co-payment for the drugs than they would have paid if Rite Aid had reported the correct price. After litigating several motions to dismiss, Rite Aid moved to compel arbitration. Although Rite Aid and Stafford had no contract between them containing an arbitration clause, Rite Aid did have such contracts with the PBMs who coordinated insurance reimbursements and co-payment calculations.The Ninth Circuit affirmed the denial of the motion to compel arbitration. Under California law, Stafford’s claims did not depend on Rite Aid’s contractual obligations to the PBMs. Consequently, equitable estoppel did not apply to bind Stafford to the arbitration agreements in those contracts. View "Stafford v. Rite Aid Corp." on Justia Law

TitleMax of Georgia, Inc., and its parent company, TMX Finance LLC ("TMX"), petitioned the Alabama Supreme Court for a writ of mandamus to direct the Talladega Circuit Court to vacate its order denying their motion to dismiss them as parties to the underlying action commenced against them and others by Phallon Billingsley and to enter an order dismissing them from the action based on the trial court's lack of personal jurisdiction over them. This case started over the repossession of a 2005 Range Rover. In December 2014, the individual who owned the vehicle at that time allegedly entered into a "pawn ticket" agreement with TitleMax of Georgia pursuant to which the owner borrowed money from TitleMax of Georgia and provided TitleMax of Georgia a security interest in the vehicle. In 2016, Billingsley purchased the vehicle from a dealer in Georgia, with financing from Coosa Pines Federal Credit Union ("Coosa Credit"), and received a certificate of good title. In 2014, after a "perceived" default on the "pawn ticket" agreement by the vehicle owner, TitleMax of Georgia authorized a vehicle-repossession company to take possession of the vehicle when it was located in Virginia in 2019. TitleMax of Georgia asked Insurance Auto Auctions Corp. ("IAA") to sell the vehicle; when the vehicle ultimately reached Billingsley, it was damages and inoperable. It was unclear when the damage to the vehicle occurred. Billingsley sued all entities involved in the sale and delivery of the repossessed vehicle; TitleMax of Georgia was added as a party in an amended complaint. The Alabama Supreme Court granted TitleMax of Georgia’s petition, finding there was no evidence to support a finding that an agency relationship existed between either TitleMax of Georgia or TMX and IAA or Attention to Detail (the transport company). View "Ex parte TitleMax of Georgia, Inc., and TMX Finance LLC." on Justia Law

Plaintiffs filed suit alleging that pressure tactics used by Quicken Loans and TSI to influence home appraisers to raise appraisal values to obtain higher loan values on their homes constituted a breach of contract and unconscionable inducement under the West Virginia Consumer Credit and Protection Act. The district court granted summary judgment to plaintiffs.The Fourth Circuit concluded that class certification is appropriate and that plaintiffs are entitled to summary judgment on their claims for conspiracy and unconscionable inducement. However, the court concluded that the district court erred in its analysis of the breach-of-contract claim. The court explained that the district court will need to address defendants' contention that there were no damages suffered by those class members whose appraisals would have been the same whether or not the appraisers were aware of the borrowers' estimates of value—which one might expect, for example, if a borrower's estimate of value was accurate. The court agreed with plaintiffs that the covenant of good faith and fair dealing applies to the parties' contract, but concluded that it cannot by itself sustain the district court's decision at this stage. The district court may consider the implied covenant of good faith and fair dealing to the extent that it is relevant for evaluating Quicken Loans' performance of the contracts. Accordingly, the court affirmed in part and vacated and remanded in part. View "Alig v. Quicken Loans Inc." on Justia Law

In 2012, Earl contracted for the purchase of a house in Allegheny County from NVR, the seller and builder of the house. NVR's agents made representations about the house’s construction, condition, and amenities, including that the house would be constructed in a good and workmanlike manner; that NVR would remedy any deficiencies; and that the house would be constructed in accordance with relevant building codes and standards. Construction was completed around March 2013. Upon moving in, Earl encountered several material defects. NVR’s attempts to repair the defects were inadequate and exacerbated some of the issues, despite NVR’s assurances that the problems were remedied. Several promised conditions and amenities that Earl had relied upon had not been provided.Earl, claiming that NVR’s failure to provide the promised conditions and amenities of the agreement were knowing and willful, sued for violation of the Unfair Trade Practices and Consumer Protection Law (UTPCPL) and breach of implied warranty of habitability. The Third Circuit reversed the dismissal of her UTPCPL claim. Rulings by Pennsylvania appellate courts subsequent to an earlier Third Circuit holding have cast substantial doubt upon the continuing validity of prior interpretations of the UTPCPL. The economic loss and “gist of the action” doctrines no longer bar UTPCPL claims. View "Earl v. NVR Inc" on Justia Law

Plaintiff filed suit under the Song-Beverly Consumer Warranty Act, popularly known as the lemon law, alleging claims related to defects with her car's throttle body connector. In this case, the trial court gave the jury a special instruction, at the request of plaintiff and over defendant's objection, that if a defect existed within the warranty period, the warranty would not expire until the defect had been fixed.The Court of Appeal concluded that the special instruction misstated the law and conflicted with another instruction given to the jury, CACI No. 3231, which correctly explains the continuation of warranties during repairs. Therefore, the trial court erred in giving the special instruction, and the error was prejudicial. The court reversed and remanded for further proceedings. However, the court affirmed the trial court's order granting a nonsuit on plaintiff's cause of action for breach of implied warranty. The court concluded that, under the lemon law, only distributors and retail sellers, not manufacturers, are liable for breach of implied warranties in the sale of a used car where, as here, the manufacturer did not offer the used car for sale to the public. Finally, the court reversed the attorney fee award to plaintiff. View "Nunez v. FCA US LLC" on Justia Law